Deciding who should do your taxesDate posted: 1/5/17 10:15:00 AM
The New Year is finally here, and before you know it, tax season will arrive. It's time to start making your plans for completing your taxes.
Whether you want to tackle them yourself, or you want to hire a professional, there are a few things you should consider prior to making your final decision.
Do you have the time?
Doing your own taxes takes time. According to U.S. News & World Report, you will likely need to dedicate your energy toward both learning the U.S. tax code and accurately submitting your return.
If you feel that you cannot commit the time and energy necessary to do your taxes on your own, consider hiring a professional instead. It will likely be worth the investment.
Can you get organized?
Whether you are doing your own taxes or hiring a professional, you need to make sure you have all the necessary documents readily available. According to Bankrate, you will receive a W-2 form from every employer you receive income from around the end of January or beginning of February. This form is a critical document for properly filing your taxes.
Have you overlooked deductions?
Gathering your W-2s isn't all you will be responsible for. Many taxpayers don't include information that can ensure they receive a deduction. These include charitable donations, dependent care credit, expenses associated with a job search or earned income tax credit.
Make sure you are aware of all potential deductibles and that you can provide the appropriate documents to indicate this.
How unique is your tax situation?
After gathering your critical documents, you can evaluate how straightforward your tax situation is. According to Business Insider, the more basic your taxes are, the easier they are to do on your own.
However, if you find that you have a more unique tax situation, you may want to leave your taxes to a professional who can ensure you properly file taxes and get the most on your return.
You will likely want to hire a professional if:
- A major life change occurred in the last year, such as getting married or the birth of a child
- You earn more than $200,000 annually
- You have dependents
- You own a business
What is your comfort level with filing your own taxes?
If you decide to do your own taxes, ask yourself whether you trust yourself with the responsibility. First, determine if you have a solid grasp of what is expected and needed while filing your taxes. If you feel confident in yourself, consider going solo on completing them. However, if you have doubts, hire a professional. Remember, your taxes are important, and you don't want to mess them up. If you have any bit of doubt, defer to the services of someone who has experience.
When can you get started?
Bankrate urges individuals not to procrastinate when it comes to your taxes.
"You want to leave ample time before the April 15 deadline in case you run into issues, have questions or have trouble getting an appointment with a tax preparer," noted Melinda Kibler, a certified financial planner with Palisades Hudson Financial Group.
During the cold winter months it might seem like the middle of April is still pretty far in the future, but it will be here before you know it. Gathering documents and making the decision of who will do your taxes now will save you time and energy when the deadline is on the horizon.
Before settling on a decision it is helpful to consider all the pros and cons of hiring someone to do your taxes as well as doing it yourself.
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