Is It Really Cheaper to Do Your Own Taxes?
Many people believe that personally preparing their own taxes is cheaper than hiring a professional, but saving money on tax preparation (especially for business owners) can cost you more in taxes. And since time is money, you’ll save countless hours by NOT doing it yourself; not needing to learn the new tax rules nor trying to determine which ones apply and which ones don’t.
One of the problems with self-prepared tax returns is that the software will actually do what you tell it to do based on data you entered and how you answered various questions. When you finish with your data entry, the software will create a tax return. You may not know whether it’s correct, but you’ll sign it under penalty of perjury.
Did you know that the IRS has three years to audit your tax returns? Would you know how to respond if the IRS demanded more tax while assessing a penalty for inaccuracy? Would you be able to defend yourself in a formal manner? Or would you simply pay out of frustration dealing with IRS employees who know very little about taxes? Our experience is that the IRS is wrong half the time.
Hiring a skilled tax professional can actually cost you less than doing it yourself. A good tax pro can often find tax benefits you missed, convert expenses you’re already paying into tax deductions or find some exception in the Code that can save you money now and into the future.
A smart tax pro can save you more than just money. He or she can save you time, help reduce your stress and can advise you when life’s circumstances change; whether you’re starting a new career or a business, getting married, having children, going through a divorce or being audited by the IRS.
At Incompass in Sacramento, we have corrected many errors made by those who prepared their own personal tax returns and have defended many against the IRS. We especially like getting them refunds. Usually they never do their own tax returns again.