Should I pay a tax professional to file my income taxes?
Let’s be real. No one likes doing their taxes. There are so many rules that you may or may not be following correctly, even with the help of online software. If your financial situation is straightforward, filing your own taxes could be your best bet. But the truth is, most of us could benefit from having a tax professional provide their expertise.
Whether you’re a planner or a procrastinator, this article will help you decide if you should use a tax professional or file your taxes yourself. Don’t worry, I’m going to make this easy for you!
Do you need a tax professional?
You’ve heard me talk about the importance of getting professional help to build and protect your wealth. Now, I’m not just talking about working with a financial advisor. That’s one person you need on your side, but they’re not the only person. Another person you need to meet with is a tax professional.
People will ask me, “Hogan, how do I know if I need to work with a tax professional?” I get it. You want to save money where you can. There are some situations where you can probably file by yourself. For instance, if you’re a single filer with no dependents to claim and don’t want to itemize any deductions, you’re probably okay to file your taxes on your own.
Now, even if you could file on your own, you need to decide if you want to. Is it the best use of your time? Do you like crunching numbers? If not, you might want to use a tax pro to save yourself the time and headache that can come with self-filing.
You need a tax pro if…
In some circumstances, you absolutely need to work with a tax pro. Do any of these apply to you?
• You bought or sold property in the last year
• You own a business
• You do a large amount of freelance work
• You have a lot of investments
• You experienced major life changes (marriage, birth of a child, divorce) in the last year
• You have multiple jobs
• You give charitable donations
• You intend to itemize expenses
• You wonder how the 2017 Tax Bill affects you
If you’re still not sure, I would encourage you to work with a tax pro. When it comes to the IRS, it’s better to play it safe now than regret something later!
Don’t believe the myths you’ve heard
Some people may think they’ll be better off using software than working with a tax pro. That’s likely because they’ve bought into one or more of the tax myths out there. Maybe you’re familiar with these myths, or even believed them yourself.
Myth #1: A tax pro costs too much money
The cost of working with a professional to file your taxes can vary widely, depending on how complex your finances are. On average, fees range from $176 to $457. The higher costs are for those who have extra forms, like if you have rental property or state income taxes. Before you decide to file on your own, listen up: A recent survey of 2,000 Dave Ramsey Facebook fans found that people who worked with a tax expert got an average of $791 more in their refunds than those who self-filed.
Myth #2: If I use tax software, my results will be 100% accurate
I don’t know about you, but I’ve seen my computer software do some wacky things. Call it user error if you want, but computers and software aren’t perfect. No, a human tax pro isn’t perfect, either. But the good ones will back up their work with some kind of guarantee. And, you can ask a tax pro questions that are specific to your situation. Try doing that with software.
Myth #3: It will be faster to do it myself
The American Action Forum estimates that taxpayers spend an average of 17 hours doing paperwork and preparing to file their taxes. Seriously, you need to ask yourself if filing your own taxes is worth the time and effort. Yes, you’ll still need to gather receipts and other paperwork if you meet with a tax pro. But if you keep up with that paperwork during the year, it shouldn’t take that much time to get things in order. Certainly not 17 hours…
Think about it this way: If a tax pro finds even one deduction, it was probably worth the cost. Not only that, but the fee you pay them may be deductible on next year’s tax return!
* Chris Hogan is a #1 national best-selling author, dynamic speaker and host of The Chris Hogan Show. For more than a decade, Hogan has served at Ramsey Solutions, equipping and challenging people to take control of their money and reach their financial goals. His second book, Everyday Millionaire: How Ordinary People Built Extraordinary Wealth — And How You Can Too, was released in January. You can follow Chris Hogan on Twitter and Instagram at@ChrisHogan360 and online at chrishogan360.com or facebook.com/chrishogan360.