With tax season just around the corner, many people are wondering how they can lower their tax bill or better yet, score a refund.
Attempting to save money on taxes is often thwarted by a second statement that we somehow always forget about: the bill from the accountant. We get it. The last thing you want to do after giving your money away is to spend more on CPA services.
Do you think about filing your own taxes every year? Will this be your year?
Here’s what you need to know before taking the plunge and filing your own taxes.
Benefits of Filing Your Own Taxes
Here are a few of the easy benefits that tempt you into filing your own taxes:
#1 Saving that Sweet, Sweet Money
Tax preparation is relatively unique to each individual or family because of the various types of filing and deductions.
But one thing that remains the same is the opportunity to save on filing fees. Whether you use software or hit the books with a TI calculator, it’s likely that you’ll spend less on filing your own taxes than you would on an accountant.
#2 Learning About Your Finances
Are you one of the 63% of Americans who are financially illiterate? There’s no better time than the present to learn about money – and how much you have.
Filing your own taxes is the perfect opportunity to learn about the true state of your finances. You’ll be required to get down and dirty with that shoebox of receipts and understand:
- How much you earn
- What you spend
- The total value of your assets
- Size of your debt
You might be shocked to learn how healthy – or not – your finances are.
Drawbacks to Consider
There are two primary disadvantages to think about before forgoing an accountant.
#1 Tax Law Is Hard… and Boring
Want to make the most of your deductions? You’ll need to read your state’s and the federal government’s tax laws.
Being an accountant isn’t simply number crunching. Much of what we do is related to interpreting IRS guidelines and state tax laws to file our clients’ tax returns correctly the first time.
Ultimately, failing to file your tax return correctly doesn’t just mean you need to file again. Major errors can lead to financial penalties, an audit, or both. If you end up owing more money, you may even need to pay interest on the balance.
That money you saved on CPA fees? It’s gone.
#2 Time Invested May Be Worth More Than Your Tax Bill
It’s estimated that individuals spend a total of 6.1 billion hours on their tax returns.
Unless you’re intimately familiar with the tax code and have an incredibly simple filing, you may spend more time on your tax return than your tax bill is worth.
You could end up being one of those people who loses several weekends to their tax bill before racing to the post office on filing day.
Make the Most of Your Tax Savings
There are real benefits to filing your own taxes, but unless you possess intimate knowledge of the changing tax codes and are financially literate, you may struggle to complete your return on time.
Let a CPA help you make the most of your tax savings by saving you time, money or even both. Click here to schedule a free consultation.
About the Author:
Chris Duncan, CPA
As a South Carolina native, Chris has spent the better part of his life in the Charleston area. Chris graduated from The Citadel with a degree in Business Administration (Accounting Concentration) in 1999. In 2006, Chris launched his own CPA firm. For the past twelve years, Chris has worked as a local CPA and provided services to both individuals and commercial clients in a variety of industries to include accounting, bookkeeping, tax, and payroll service