I was reading through the March issue of Money magazine this morning. A short article asked the question “Should you fire your accountant?” and then do your tax return yourself.
I’ve wondered in the past if I should do my tax return myself. I thought I had a very uncomplicated return and should be able to figure it out no problem. So for the first two years of marriage, my husband and I did our tax returns yourself. We got some money back and were satisfied until just before our third year of filing, we received a notice from the government that we were being audited and that we owed some money to them.
We didn’t like that idea of having to pay so we talked to a friend of ours that is a financial planner that files tax returns for people. She didn’t charge an outrageous sum for her services (less than a $100). We thought she’d be able to help us figure out what we did wrong the first time around and if we really owed something.
After she reassessed everything (including the two years we had already done on our own), we were so glad we spoke with her. She ended up showing the errors we did in filing our own taxes for those two years and refiling them to get us over $5,000 more returned to us.
The Money magazine article suggested to file taxes yourself based on a few criteria:
- if your return is straight forward
- if you’ve got an afternoon to spare
- if you had no major life changes in the previous year (like if you got married or divorced, bought a new home, or other major changes like that)
- if you have no big questions
Some of the Do It Yourself Tax Return software packages are quite helpful, but be aware of your own limitations and don’t be afraid to ask questions.