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How To Do My Own Tax Return
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Steps To Maximize My Tax Refund In
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Since most people’s financial situation changes every year, whether to do your own taxes or hire an accountant is a question worth asking annually.
Just Started As A Contractor
1. Do it yourself with tax software or through the IRS website. The IRS does not charge for filing taxes. If you are well versed in tax law (most are not), you can print and mail your paperwork or request the paper forms in the mail. However, the IRS encourages online filing and directs taxpayers with income up to $73,000 to its free filing portal, which lists eight qualified tax preparers offering free services (there may be an additional fee for state filing).
For people with incomes over $73,000, you can still find free filing options if you have a simple income. A more complex situation — like self-employment or complicated investments — means you’ll likely need to pay an online tax preparer, which can range from about $25 to $100 or more for federal and state filing.
2. Hire a tax preparer to do it for you. The only professionals qualified to help you are tax attorneys, CPAs, and enrolled IRS agents. You can search for suitably qualified preparers attaxpreparegistry.com.
Preparers typically start at around $100 and vary depending on where you live and how complex your taxes are, and accountants may well charge at least double that, with similar price variations based on location and complexity. According to the National Association of Tax Professionals, the average fee to prepare and file a tax return is a little more than $200.
How Do State And Local Individual Income Taxes Work?
Tell TurboTax about your life and it will guide you step by step. Start your taxes with last year’s information.
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Tip: You can also find a tax expert through an online tax preparer, such as H&R Block or TurboTax. These companies offer full-service packages that allow you to share your documents with a tax professional and receive a complete return within days. They are generally double the price of a standard DIY kit.
So, should you prepare taxes yourself or hire someone to help you? For most people, it’s not just about the price. In the end, it comes down to what you are most comfortable with.
Doing Your Own Business Taxes
You have the time and patience to deal with it. Taxes probably aren’t something you should be doing with Netflix in the background. Expect to set aside some time to give it your undivided attention—the IRS estimates that the average person spends up to seven hours collecting forms and preparing their tax return. If you’re a business owner, expect to spend about 20 hours on your taxes.
You have a straightforward tax situation with no dependents, no investments other than retirement accounts, and no significant assets or charitable contributions. These basic free versions of tax preparation software mentioned above were created for people like you, who have few deductions or other financial factors to consider.
You own a business or are self-employed and feel comfortable navigating business-related tax forms. Corporate income adds another layer to preparing and filing a tax return. If you’re experienced with business-related tax forms or want to save some money on an accountant, you’re sure to find tax software that meets your specific needs.
You feel comfortable pressing submit and want that control over your money. Taxes are a big deal. If you feel comfortable navigating the software, looking up questions on the IRS website, and the thought of having to fix any errors doesn’t scare you, then you’ll probably feel more comfortable doing your own taxes.
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You don’t have the time and patience to deal with it. If you feel that the significant amount of time you would have to devote to doing your taxes better would be better spent elsewhere, you may want to outsource it. It’s probably more prudent than rushing through your filing and making a mistake.
You have a complicated tax situation with dependents, investments or significant assets or charitable contributions, or you own a business. Almost every financial transaction comes with some sort of tax consequence, and the more transactions you have, the more things you have to consider. People who own businesses, freelance or are self-employed in particular may want the help of a professional to sort out their atypical tax situations – deductions for home office, business meals and travel, and vehicles are also audit red flags.
You plan to itemize your deductions. If you have large medical expenses, a mortgage, or make large charitable donations (among other factors), itemizing your deductions can save you more money than taking the standard deduction. But itemizing can be tricky to navigate on your own, especially if it’s your first time.
You’ve had a big change in life this past year. Did you get married? Buy a house? Have a child? All of these affect your tax filing, and at least the first time you document them on your taxes, you may want someone to show you how best to do it.
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You don’t trust that you cover all your bases. If the thought of entering numbers and talking about dependents and deductions makes you break out in a cold sweat, you might want to leave the prep work to a professional.
Use our tax calculator to estimate how much of a tax refund you’ll get, or how much you’ll owe the IRS
Use our income tax calculator to estimate your federal tax refund, or how much you owe, in a few quick and easy steps.
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Yes, I’m Still Working On My Own 2012 Tax Return
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Tanza is a CFP® professional and former correspondent for Personal Finance Insider. She broke down personal finance news and wrote about taxes, investing, retirement, wealth building and debt management. She contributed a bi-weekly newsletter and a column answering readers’ questions about money. Tanza is the author of two e-books, A Guide to Financial Planners and “The One-Month Plan to Master your Money.” In 2020, Tanza was the editorial director of Master Your Money, a year-long original series providing financial tools, advice and inspiration to millennials. Tanza joined Business Insider in June 2015 and is an alumna of Elon University, where she studied journalism and Italian. She is based in Los Angeles.
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