There may be a couple of reasons why someone might prefer to use a tax preparer. First, your tax situation may be so complex that there's no way you could ever figure out what's going on. Second, you're more than happy to pay for the peace-of-mind of having someone else prepare your taxes and to be able to represent you in the unlikely event the IRS comes knocking.
However, thanks to the evolution of tax-preparation software and Web-based services, though, you might want to consider doing your own taxes, even if your tax situation is pretty complicated. Here are four choices for would be do-it-yourselfers.
- Prepare it by hand. This is the old-fashioned way, which, before the invention of tax software and websites was the only available choice. But thanks to a round after round of "tax complification" legislation, few of us can easily and confidentially complete the returns by hand.
- Tax preparation software. Fortunately, tax preparation software has evolved to the point where anyone with a modicum of computer knowledge can complete and efile even very complex federal and state tax returns. The software leads you through the return preparation process in a simple "Q&A" format, and the cost of the software is a fraction of what it would cost to pay someone to do your returns.
- Tax preparation websites. Rather than purchase and install the software, you can access tax preparation software remotely on any of a number of websites that also use a convenient interview method to walk you through your return. You can also stop when you want and continue where you left off at a later time.
- Free income tax preparation services. The IRS website (www.irs.gov) provides a list of free tax preparation service providers. Depending on your particular situation, these providers may take care of your tax preparation needs for free. But be sure to read the fine print on these offers.
There's an additional benefit to preparing your own taxes in addition to the obvious money savings. Rather than relying on your tax preparer to give you ideas about ways to save taxes, by doing them yourself, you'll be better able to understand your own situation and what strategies may help you pare down your tax cost.