Tax season creates a lot of uncertainty for people who don’t know whether they should prepare their tax documents independently or hire professionals to do the work for them. For many people, the decision comes down to whether hiring a tax professional will increase their chances of getting higher refunds.
While hiring a professional doesn’t necessarily mean you will get a larger refund from the government, it increases the likelihood that some people will benefit.
One benefit of hiring a tax professional is that you can take advantage of the latest deductions. Lawmakers adjust the tax code frequently, so it’s difficult for average people to keep up with what they can deduct. Professionals, however, have to pass tests showing that they understand the latest tax codes. You can avoid tax mistakes by using a professional.
Knowing the latest tax laws matters most if you plan to itemize your deductions. You’ll probably want to itemize your deductions if you:
Hiring a tax professional will likely lower your local, state and federal taxes, especially if you want to itemize your deductions. Remember, though, that you need to pay the tax preparer.
On average, you can expect to spend $270 to have a professional complete Form 1040 with itemized deductions. Some CPAs, however, charge significantly higher rates.
If hiring a tax professional costs more than you will save on your taxes, then it doesn’t make financial sense to use the pro. In that instance, you may consider doing your own taxes online. Getting quotes from several tax preparers will help you choose an affordable option.
While many people benefit from hiring tax preparers, not everyone will get a larger refund by consulting professionals. For instance, you probably don’t need a tax professional if you plan to file a 1040EZ.
If you qualify to file a 1040EZ, then you have rather simple finances that won’t benefit from itemized deductions. The form is very easy to complete, so you can save yourself some money by doing the work yourself.
If you feel nervous about filling out simplified tax forms, you can use online tax preparation software to do the work for you.
Overall, some people benefit from hiring tax professionals while others do not. Let your unique circumstances help you decide whether you want to hire someone to help.
Advertising Disclaimer: Simple. Thrifty. Living. does receive compensation for some of the services that we recommend, although we only recommend services that we truly believe are the best.