You Can Do Your Own Taxes and Save!

1040 Do your own taxes and save
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I’m not a tax professional, but I look forward to doing my taxes. I know that sounds crazy, but if you knew how empowering it is, you might be too. I used to hire a professional because I thought my taxes were complicated and I believed that by hiring a “professional”, I would get the maximum refund. After all, this is their job and they should know what to look for to get me the maximum refund. I finally realized this wasn’t the case when I filed my taxes in 2013.

The last time I hire anyone to do my taxes

I had an eBay business at the time buying and refurbishing used phones and selling at a profit. (If you’re curious about buying and selling online, you can read about how to buy and sell on Facebook here.) I had a full-time job and also had investments from a regular, non-qualified (cash) account. When I went to my tax guy, I provided all the required paperwork to file (W-2, 1099, bank and investment statements, etc).

When my appointment came, he called me back to his cubicle and started filing. He had my name and address from the year before, but with a few minor adjustments. As he entered my information, I noticed he was a slow typer. It didn’t bother me at first until he got to my investments. Watching him slowly type the information in the system was like watching:

Flash the sloth from Zootopia. Time is money for these guys and the longer they take, the more money they make. Not to mention each additional form (schedule A, schedule C, 1099-Misc) had a fee.

After 2 hours, my taxes were complete and I got a refund. I was relieved and happy that I got a refund. However, my satisfaction was short lived when I went to pay for their services. I realized each form in addition to the 1040 form had a fee. They were $100 to be exact. Then you add his atrocious hourly rate and the fee for filing. The bill ended up being $579. After seeing that bill, I told myself that I would never hire anyone to do my taxes again. He didn’t do any magic–it was basically just watching someone slowly fill out tax software I could buy myself.

You can do this!

The following year I finally filed my own taxes. I didn’t realize that it was a lot less complicated than what my mind had me believe. I finished in about the same time as the hired “professional”. After I filed, I felt great! I raised my arms up and said, “I did it!” From that point on, I believe everyone should be able to do their own taxes to save money.

The following year, I was able to complete my taxes in under 2 hours. This year, I finished in 90 minutes.

When deciding whether to file your own taxes or to hire a professional, consider the following:

  1. Your Tax Situation. Do you have a complicated tax situation where you have investments, real estate properties, or own a business?
    1. If yes – consider hiring a tax professional because they may know the best way to navigate through your unique situation.
    2. If no – consider doing your own taxes. It will save you hundreds this year and thousands in the years to come.
  2. TimeThis is important. Do you have the time and patience to go through your paperwork to file your own taxes?
    1. If yes – do your own taxes.
    2. If no – consider hiring a tax professional
  3. CostSoftware ranges from $20 to $100, depending on your tax situation. I would buy tax software from TurboTax, H&R Block, or TaxAct as they’re the top 3 companies that offer tax software. Costs will vary if you hire a tax professional. 
  4. Peace of Mind. Worried about a potential audit? Hiring a tax preparer will put you at ease. However, nowadays tax software has online and over the phone audit support. “You’ve received a notice from the IRS, and you’re not sure what to do. We’ve got you covered.” – TurboTax. If you use H&R Block, they offer in-person audit support.

To save money and to get the maximum refund, you should plan throughout the year. At the very least, contribute to your retirement accounts and keep track of every donation you make to your church or other charitable organizations. If you have a business, you will need to keep all receipts and business expenses. For a more complete list of deductions, check out this infographic.

(Related: Why You Should Invest in the Stock Market)

Know what you’re paying for

If you decide to file your own taxes, I recommend buying tax software. Personally, I use H&R Block. I chose H&R Block because when I was shopping for software, it was cheaper, they have a maximum refund guarantee and they offer free in-person audit support. If you decide to hire a tax preparer, be mindful of the costs. They will take their time to ensure you have the maximum refund at the cost of paying them more too.

Don’t hire a professional unless your taxes are super complicated and the person you’re hiring is an actual tax professional. A few days after the last time I filed my taxes with a preparer, I saw my preparer coming out of the train station when I was picking up my wife from work. I realized that he was returning home from his full-time job and that preparing taxes during tax season was just a side hustle for him. Beware when you’re hiring a professional – filing taxes may not be their full-time jobs.

If you want to know more, let us know in the comments or reach out to us on Facebook.

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