Doing your own taxes may seem like a good idea to some, but for others, not so much. The main reason that some people choose not do their own taxes is because they worry about getting into legal trouble. Ultimately, the decision is entirely up to you, but before making this decision, you should weigh the positives and negatives.
Table of Contents - Everything PR News
The Pros and Cons:
There are both positives and negatives of doing your own taxes. Arguably, the biggest positive is that you can save a lot of money by using a government site. If you don’t trust a government site, and insist on using a tax program, the opportunity to save money is still there. The simplest tax program may only cost you around $20, whereas if you hired a professional tax specialist to do it for you, it may cost you around $100 or more. In the end, doing your own taxes will save you money and for this reason, many people choose this route.
The negative of doing your own taxes is that you take on full responsibility of whatever is entered into the forms. Therefore, you will be responsible for any mistakes that you might enter accidentally, and this could cause some legal issues with the I.R.S. If you hire someone else to do your taxes for you, that individual becomes responsible if the I.R.S. needs to audit you, and you have zero liability.
When DIY Is a Good Choice and when it isn’t:
Even though we just established that there are pro’s and con’s to doing your own taxes and to hiring a professional, that doesn’t mean that there isn’t an obvious choice in certain scenarios.
The ideal situation for doing your own taxes is one where you have one W-2 form to file and no itemized deductions. The reason for this is because the less information you have to put in your file, the lesser the chance you have of making a mistake. Other scenarios in which doing it yourself would be the logical choice is if you were a regular employee of one company for the entire year, live in one state and didn’t have any changes to your dependents or marital status. You could even get away with filing a 1040 EZ form, which is extremely easy to complete. You may only have to complete one page of question answers to get to the end of the form and be done with it. There is virtually no stress involved whatsoever and again, the probability of error is low.
Situations in which it might be in your best interest to hire a professional include if you are a business owner or a freelance worker. It may also be a good choice to hire a professional if you own a home, sold your home, have an IRA, invested a lot of money, or went to school during the year. The reason is because in those situations, you will be required to complete additional information on your form which can sometimes get complicated and therefore will increase the risk of making an error.
After reading all of the above information, making the decision on whether or not to do your own taxes should be a fairly easy one for you from here on out. To recap, you should always choose the option that gives you the greatest benefit. If you’re confused about anything, you can always just ask your local tax advisor or visit the I.R.S.
Davenport Laroche is a leading shipping container investment agency based out of Hong Kong.