There is a well-known idiom “In this world, nothing can be said to be certain, except death and taxes” attributed to Benjamin Franklin. Benjamin wrote it in 1789. in a letter addressed to Jean-Baptiste Le Roy, a long time has passed and it is still true to this day. As the end of the year approaches so does the tax filing time.
Whether you should or should not do your own taxes is a complex question because it depends on a lot of factors. Maybe you are an enthusiastic person who prefers the DIY approach. Maybe you are that kind of guy (or gal) that would build DIY bookshelves for your home. But I must say it is very different.
Firstly, if you fail to build a bookshelf it is not a big deal, but if you fail in your tax paper it is a very serious issue. Secondly, building things can be fun, on the other hand, filling taxes carries no joy whatsoever.
Why do people do their own taxes?
There are different motives that drive people to the idea to do their own taxes. For some, it is the idea that they will save money. For others, it is a firm belief that you should do everything yourself. It is worth noting that doing taxes is a real job, a legitimate craft. As with all other jobs or crafts, it takes a long time to get good at it. So, the first thing we can conclude is that filling your own taxes will be time-consuming and tedious.
However, all things considered there are few cases where is safe to do it yourself. The precondition is that you have time and skill to learn and to execute it.
If you have a simple tax situation you can probably do it. Simple tax situation means: (I) you don’t own a business, (II) you have no tax dependents, (III) you don’t own any major assets, (IV) no charitable contributions. If you are in that kind of situation you can use tax software to help you out. Just remember that the software only helps, but your tax filing can be still compromised by human mistake (your own).
If you have some experience in filing your taxes, you could try filing taxes for your business. But you should do it only if: (I) you are self-employed and have no other employees and (II) if your monthly revenue is not higher than 400$.
Why you should not do your taxes
If you don’t have a lot of time for filing the taxes and experience in that field you should not do it. The main reason is that small mistakes can generate big problems. The more complex your tax situation is the more unrealistic is the ambition to do it yourself. Tax laws change regularly and if you are not aware you can make a big mistake. Since the lawmakers introduced the “strict liability” offence you can even go to jail.
“Better safe than sorry” is another useful idiom. Hiring a professional accountant to do your taxes is very liberating, and not expensive. You should always be careful about your choice of the professional you will hire. I would recommend you try and find a reliable company with a lot of experience, like Premier Brains Accountants & Auditors. Companies with qualities like that are not reliable but also more cost-efficient.
There are also occasions when it is not advisable to do it yourself. For instance, if there has been a death in your family. There is a lot of technical tax work for filing income before and after someone’s death. In those times your should not burden yourself with that kind of thing and should hire a professional.
Now that you are aware of the benefits and dangers of doing your own taxes you can decide for yourself. The average time people spend doing their personal taxes is 13 hours, and for doing taxes for a small company they own up to 20 hours. There is always a risk that you will make an error due to an accident or now knowing that some law has changed.
Also, you should take into account the amount of money you would earn in that time doing your job. Compare the value you would earn if you didn’t do it yourself with the amount of money you would pay a professional tax management company. In most cases, it pans out that is much cheaper and safer to hire a professional to do your taxes.