What to Consider Before You Do Your Taxes

Should you hire an accountant, use tax software, or do them on your own?

woman-making-taxplan
Photo by Bloomberg/Getty Images

This article originally appeared on LearnVest.com.



Doing taxes certainly isn’t fun, but it is necessary. Even Albert Einstein once said, “The hardest thing in the world to understand is the income tax.” Harder than quantum physics? Really?

Well, we dare say, we disagree with Einstein. With a little preparation, taxes are not that hard. So no whining. Paying taxes is not optional. Let’s get organized and get them done.

Taxes are not something to fear. They are something to tackle and tackle correctly. Your number one priority should be to make sure you have the time and resources to get your taxes done error-free.

The IRS website has great resources, and there are plenty of free tax software options to use if you have had a relatively simple financial life this year. What do we mean by “simple?” If you receive the bulk of your income from one source and you are not changing your filing status this year (single, married filing jointly, married filing separately, head of household, etc.), you qualify as having a “simple” financial life.

The more complex your financial situation, the longer your taxes may take you to complete. The IRS estimates that it takes each American an average of 26 hours to file their taxes! If any of the below situations apply to you, a paid version of a tax software, such as TurboTax (about $30), or hiring an accountant, may save you significant time.

If…

  • You’re newly married
  • You bought a home or moved to a new state
  • You just had a baby
  • You’re self-employed
  • You received an inheritance
  • You sold securities (stocks, bonds, mutual funds)
  • You incurred job related expenses for which you were not reimbursed
  • You incurred educational expenses (tuition, school loan interest)

Consider a paid version of a tax software or an accountant.

If you decide to hire a tax professional, this still takes a little time as you will want to find someone you trust. Do your research and find someone qualified. Most people report paying around $200 or more to have someone do their dirty (tax) work. We’ll walk you through the process in the LearnVest checklist “I Need to Find an Accountant.”

Your To-Dos:
1. Get out your calendar and mark March 15th as the latest day for you to get cracking. Then, mark April 18, 2011 on your calendar as TAX DAY. (It’s usually April 15th, but in 2011 the government pushed it back in order to recognize Emancipation Day.)

2. Set aside time on your calendar to prepare your taxes. Even if you use an accountant, you’ll need some time to prepare all of your financial info for him or her.

3. Evaluate the best way to get your taxes done. Your options are to do them on your own, with the help of a tax software, or to hire a tax professional.

If you decide to do your taxes completely on your own, block out lots of time. E-filing with the IRS will save you time, but you want to make sure you have all the time you need to get your taxes right.

These tax programs are LearnVest-approved for being easy-to-use and providing great value. Click on a company’s name to learn more:

TurboTax

  • 24/7 online chat support
  • Accuracy guarantee
  • Tracks audit risk & audit support

H&R Block

  • Branch offices throughout U.S.
  • Accuracy guarantee
  • Audit support

FreeTaxUSA

  • Lowest cost
  • Accuracy guarantee
  • Audit support