Tax Dilemma: DIY or Call an Accountant?
NEW YORK ( MainStreet) There's no room for error when it comes to the IRS, which is probably why 59% of Americans pay someone to do their taxes for them. According to the National Society of Accountants, taxpayers with straightforward returns will pay an average of $152 this year, while those who itemize their deductions will pay $261. H&R Block, which employs tax preparers rather than certified accountants, charges an average of $198.
Those prices may seem like a steal, but online tax software is significantly cheaper, and is free for the one hundred million Americans who qualify for the IRS free file program. So which option is best for you? We've got guidelines to help you decide between taking a DIY approach or paying a professional.
You may have always been told to itemize your deductions, but seventy percent of Americans are actually better off taking the standard deduction. For those taxpayers, completing a tax return is pretty easy. Even if you do itemize your deductions, online tax software makes the process relatively painless. In fact, if you work with someone at a national chain, they're usually just filling out the exact same software you could use at home for a fraction of the price.
Think of it this way--you have to gather all your documents either way. Getting organized is really the hard part, and you can't pay a tax preparer to open your mail and find your receipts. For most taxpayers, the actual data entry isn't that challenging, and with the step-by-step prompts from online software you're unlikely to miss something.
Pay a Professional
The main value of a tax professional, especially a Certified Public Accountant, is their understanding of tax laws, changes and deductions that you may not be aware of. If you're self-employed or have a variety of income streams, an accountant can be a valuable resource in minimizing your tax bill.
It's also a good idea to pay a professional if you've recently had a big life change, like a new job, home or baby. Even if you're comfortable doing your own taxes, it doesn't hurt to check in with an accountant from time to time to make sure you're on the right track.
If your main concern is audit protection, make sure to clarify ahead of time whether or not it's included. Not all tax preparers offer this service, and some aren't even qualified to represent taxpayers if the IRS comes calling.
If you're still not sure which approach is best for you, start with a DIY test run. Online tax software programs don't charge you until you submit your returns. That means you can go through the entire process for free. You might just be surprised how easy and convenient it is. Then again, if you wind up feeling more confused than ever, simply delete it and make an appointment to see your accountant.