When it comes to preparing your taxes, there are often many tough decisions to make. Should I take a deduction? Does a credit apply? How can I find ways to boost my refund? Oh, and before having to do any of this, you need to answer this: Should I use a tax professional or should I file my own taxes? Well, as should be no surprise, there is no clear-cut answer.
Source: Shutterstock But it’s worth noting that tax software — say from the main providers like Intuit’s (NASDAQ:INTU) TurboTax, TaxSlayer and TaxAct — is quite sophisticated. So when you’re wondering if you should file your own taxes, know that tax software can handle most tax scenarios. These software offerings also have free versions. And even when there is a fee, it is usually reasonable — say under $100.
Some of the software providers also have access to tax experts, who can answer questions and guide you through the tax preparation process. For example, TurboTax Live has real-time video that appears within the tax software. There is even the option for line-to-line review of your return.
Now when it comes to using tax software, the main considerations are your comfort level with doing taxes and your need for getting advice on planning. Let’s face it, preparing taxes is time-consuming. The IRS estimates that the average is about 16 hours per return.
Many people just don’t want to deal with the aggravation. This year’s tax season is also likely to add to this. This is the first year where you will need to deal with the many changes from the tax reform bill. Even if you are comfortable with doing your taxes, it still may be a good idea to get advice from a tax professional.
The tax reform bill has made some of the following changes:
- There are new reporting requirements for charitable contributions.
- The personal exemption has been eliminated.
- You can deduct only up to $10,000 for property and state income taxes.
- The child tax credit has been increased.
- If you recently got a divorce, you will not be able to deduct alimony.
- There have been substantial increases in the standard deduction.
All these present interesting options for planning — which could have a big impact on your taxes. What’s more, a tax professional can also review your prior tax returns. This may uncover missed deductions and credits that you may be able to get a refund for.
Hiring a Tax Professional
When it comes to having someone prepare your taxes, there are various options. One is to go to a major tax chain like H&R Block (NYSE:HRB), Liberty Tax and Jackson Hewitt. These companies have the benefit of substantial resources, which can mean better training and access to more services like loans.
But seeking help from a local tax firm can be good as well. You may get more personal service and attention. And the fees could be lower.
However, it’s a good idea to do some research, such as by searching the web for any reviews. You should also see if a tax professional has a credential (note that the IRS does not require that a tax preparer be certified). The main ones include: CPA (Certified Public Accountant) and EA (Enrolled Agent). Both require intensive exams and continuing education requirements.
A good way to find a tax pro is to use the Find An EA service, which you can find here.
Finally, you may be eligible for free tax preparation services. One is the Volunteer Income Tax Assistance (VITA) program that is for those who make $55,000 or lower. For this program, you can get the help from IRS-certified volunteers. You can find more about this here.
AARP also has its own program, called Tax-Aide, which is for those 50 and older and who cannot afford tax preparation services. This service is available across more than 5,000 locations across the US.
Tom Taulli is an Enrolled Agent and also operates PathwayTax.com, which is a tax advisory and preparation firm. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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