Yes, taxes can be frustrating or even scary to do on your own, but you are wasting your hard earned money on accountants when you can do it yourself quicker, easier and much cheaper.
You Know Exactly What’s Being Reported
When you prepare your own tax return, a couple of things happen. You learn more about how the tax system works. You not only learn what forms you need to file taxes, but you also learn about the various credits and deductions available. Many people using an accountant just turn in forms and wait for the accountant to fill out the return. They don’t even bother to ask questions or challenge the numbers. By learning the system better, you know if you’re getting short changed anywhere.
Even if you use online tax preparation services, you end up gaining useful knowledge. Most programs are intuitive and will point out deductions you may not know about. For example, many people overlook the Earned Income Credit due to lack or knowledge or because it’s viewed as “too complicated.” You don’t need an accountant to do taxes. You just need the right program and to take the time to do them yourself.
Fewer Errors With E-filing
The reality is that accountants are only human. That’s why they have to take out insurance to protect themselves against errors and omissions. Just because they are a CPA doesn’t mean they are going to get you the most money back on your return. The IRS estimates over 20 percent of all returns contain errors or some kind. Imagine having an accountant mess up on a deduction that significantly reduces your refund, or worse still, causes you to have to pay.
When using the best online tax filing services like Online Taxes or TurboTax, you eliminate the chances of a third-party making a mistake on your return. Most programs not only double-check all calculations but they also perform data check to ensure accuracy.
Accountants Don’t Challenge Data or Audit Returns
While an accountant should be looking out for your best interests, some are basically only trying to push your return through and move on to the next client. In many cases, they don’t challenge the information you provide on your return.
For example, let’s say that you are self employed and you try and claim expenses equaling approximately 40 percent of your annual income. While you can do this, odds are that the IRS is going to flag your return for an audit.
Sadly, some accountants are just going to plug in the numbers and ship the return to the IRS. The best tax software apps are programmed to warn you if your return has inconsistencies that may trigger an audit. In most cases, you won’t even be able to file your return until you either correct inaccuracy or acknowledge that you understand the risks.
You Will Save Significant Money
You will save a lot of money by e-filing over using an accountant for your tax returns. On the low end, you’re probably going to spend $40 to $50 per hour to file your return and most accountants are going to charge a minimum of two hours for their services.
According to the CPA Practice Advisor, expect to pay between $176 to $273 for a CPA to file your taxes in 2016. Depending on your situation, this fee could jump up to $400 or more.
If you’re self-employed or operate a small business, chances are you’re going to pay a lot more. In the case of business taxes, some people pay in thousands each year for tax services.
You can significant reduce these expenses by filing your taxes online. For those filing simple taxes such as the 1040EZ, you may even qualify for totally free filings. Otherwise, programs average from $10 to $50 depending on your filing status.