It is that time of year again. It is time for all of us to submit our 2016 tax returns. I am sure you have received all kinds of mail including your W-2s, student loan interest payments, 1099s for interest, property tax statements, mortgage interest produced, etc. All of that paperwork can be daunting.
It is also that season when you get all kinds of ads for people to do your taxes. H&R Block, Liberty Tax Solutions, Jackson Hewitt, etc are some of my favorites (and all three places I have had my taxes done). They also charge anywhere between $150 to over $250, sometimes more to often do a simple return.
About four years ago I said no more. And I started doing my own taxes. However, the majority of Americans still use a tax preparer.
I am here to say that if doing your taxes scares you then it is time to overcome your fear.
I am no financial genius, but using some basic tax software I have done our taxes since Mrs. ROB and I have been married and I have never gotten audited.
Use a Tax Return Software
If you go to a number of places, including Target, Staples, Wal-mart, most of them will have some kind of tax preparation software that you can buy. I choose Turbo Tax for my personal returns. And I log right into the website so I don’t have to buy the software. They keep all of my returns right there and I file the paperwork (e.g. the W-2s, etc in a file folder I have in our office).
You don’t have to use Turbo Tax. There are a number of different places you can do your taxes online (e.g. Tax Act, H&R Block, etc).
I fully admit that I started doing this because I saved about $100 in doing my own taxes.
This is particularly true if you don’t itemize your taxes. If you are just putting in your W-2s and some smaller items then I don’t see the need to use H&R Block or whatever service you might choose. Why pay someone $250 (the average was $273 in 2015) when you can do it yourself for $100 or less.
The great thing about the tax preparation software is that they walk you through each item step by step.
And if you are worried about getting audited you can pay a little extra (which we do just in case…it is about $15) and you have their full protection.
What If You Itemize Deductions?
Even if you itemize deductions I think you should do your own taxes. Right now Mrs. ROB and I do itemize. We have enough in property taxes, mortgage interest, charitable contributions, and work expenses to justify it. However, I am sure that will change as our mortgage interest deduction goes down, our charitable contributions go down (I am technically no longer a Big Brother/Big Sister volunteer), and the like.
Again, the software walks us through all of these deductions. And we don’t deduct anything really exotic.
When You Should Use a Tax Professional
While I still favor doing your taxes most of the time there are some caveats to that. For example, if you have your own business I think hiring a professional is a good thing. If you are someone without access to a computer then, of course, you should hire a tax professional.
Finally, if you have some weird deductions or if you are harvesting investing losses or whatever it might be then using a tax professional might be for you. If I win the lottery tomorrow you can bet your sweet bippy (my dad’s phrase) that I will meet with an investing and tax professional because I don’t want the IRS coming at me.
Generally, however, if you follow the basics of the software, you don’t try to cheat the government (e.g. you claim you drove 300 miles a day for work at multiple places when you drove 10), and you don’t have a lot of funky deductions then I think doing your taxes is something everyone can accomplish.