For most Americans, tax return season is an exciting time. In fact, roughly 75% of Americans receive a tax refund each year. Many Americans depend on a sizable tax refund to pay down debt or take a family trip. According to the Internal Revenue Service (IRS), the average tax refund is approximately $3,000.
The question that many Americans grapple with is whether they should prepare their own taxes. Some choose to use tax software or even file a paper copy. Others use a professional tax service to submit their tax package.
Read on to learn the benefits of hiring a tax professional. Explore topics like DIY taxes and whether you need a professional CPA.
What Are the Benefits of Self-Prepared Tax Returns?
Self-prepared tax returns are growing in popularity. This comes as no surprise as there are great software programs to help prepare your taxes.
Software from Turbo Tax and H&R Block are quality products. They walk users through tax preparation in a thorough and deliberate manner.
Convenience is one benefit of using tax preparation software. You can complete your tax return from the comfort of home. No appointments are necessary and the process is efficient.
It also saves money to prepare your own taxes. Postage is the only expense if you mail a copy of your tax return.
There is a small cost associated with purchasing tax software. However, it comes at a fraction of the cost of a tax professional.
There is a cost to electronically file your tax return. However, this cost is present whether you self-prepare taxes or use a tax service.
What Are the Benefits of Using a Tax Professional?
It is well-established that using a tax professional costs more money. It also may require more of your time. You are asked to fill out a questionnaire and schedule an appointment to discuss your return.
The primary benefit of hiring a professional is accuracy. The odds of an IRS audit are significantly lower when an experienced professional does your taxes. In the rare event that an error occurs, the burden is shifted towards them to correct it.
Another benefit is that tax services provide recurring consultations. They will help you complete a W-4 form and estimate the proper withholdings. Some companies like shorefp.com provide year-round tax advice.
While a tax professional may cost more upfront, the net result may be a larger refund. With their experience and credentials, they can maximize your refund.
Tax professionals know every deduction, credit, and adjustment to make. They are experts on both the federal and state tax code.
Professional Tax Service vs. Self-Preparation: A Recap
This is a tough decision that millions of Americans grapple with each year. Do you save a few bucks and prepare your own taxes?
The answer depends on your knowledge of the tax code. If you can maximize your tax return without hiring a professional, self-preparation may work for you. If you have complex income streams and are uncertain how to report, a tax professional is recommended.
If you enjoyed this debate over professional tax service vs. self-preparation, check out our blog for more great content.