Savvy consumers are always looking for ways to save a few bucks. This often extends to tax preparation. The IRS will let anyone file their own taxes, so there’s no real need to have someone else prepare your taxes and file them for you. On top of that, if you feel like you do need a little bit of help and guidance, you can take advantage of tax preparation software. It usually costs less than a trip to the accountant, and it’s mostly do-it-yourself.
As tempting as it is to save money by doing your taxes on your own (or with a little help from software), there are times when it makes more sense to just pay an accountant. I used to do my taxes completely on my own, and then I added tax prep software when things started getting serious. After a few years I realized that I needed a little more help. Here are the 3 signs that led me to hire an accountant for my taxes:
1. So. Many. Forms.
As my taxes became increasingly complex, I had more and more forms to fill out. When my husband and I formed the LLC for my freelancing business, not only did we have more forms to fill out, but we had a completely different tax return on top of it. Between the business and the investments, it became clear that there were too many forms for us to manage without going crazy.
Bringing everything to a professional who has experience doing this for a living was a great help. The accountant knows exactly which forms to use, and it’s much smoother. Yes, tax prep software could help identify the proper forms, but with the more complex returns, sometimes the software gets it wrong — or doesn’t have the form unless you buy a more expensive premium version. It’s just easier to have the accountant handle it.
2. Missed Deductions
With complex tax returns come missed deductions. While I try to stay on top of tax law changes, and the latest versions of tax software can help you find deductions, the reality is that the software sometimes misses something. My accountant asks probing questions, and gets to the bottom of the situation to determine what is tax deductible and what I might be missing.
The first year I used the accountant, he found deductions I had missed using a tax program. The deductions and credits he found more than made up for the higher cost of hiring him.
3. Too Much Time Wasted
The biggest benefit to using the accountant, though, has been the time factor. Back when my taxes were simple, I could do them myself in a little more than an hour. By the time I resorted to the accountant, though, I was up to more than four hours, even with the tax software (sometimes I think the software hindered me more than just me doing it on my own).
Now, I spend about half an hour organizing my documents (I keep them mostly organized throughout the year), and between 60 and 90 minutes with the accountant. The time I save is worth the price I pay, even without the improved deductions and credits. I can use that time to make more money, or to just do something I enjoy. That time is irreplaceable.
If you have complex, time-consuming taxes, consider switching to an accountant. You might be glad you did.