Should Someone Else Do Your Taxes?

April 15 is fast approaching — it’s just over a month away. And that means that some people are still getting their stuff together for taxes. But one question that gets asked every year is this one:

Should I hire someone else to prepare my taxes?

In many cases, you can do your own taxes. In fact, I did my own taxes while I was still a sole proprietorship. Schedule C and the Form SE really weren’t that onerous. If you have a simple return, such as a 1040 with a standard deduction, or even a limited amount of itemized deductions on Schedule A, you can do your taxes yourself and/or with the aid of tax preparation software. However, if you are adding more and more schedules and forms,  and if your taxes are becoming more complex , you might consider hiring a professional.

As I’ve started dabbling in investing, switched to a LLC and received foreign income, it’s become worth my while to hire an accountant to figure my taxes, especially since I was spending hours and hours looking up forms and instructions. Here are some indications that you might be better off having someone else do your taxes:

• You own your own business.
• You have significant gains or losses from investments (including sold assets, such as real estate).
• You have paid foreign income tax on foreign earnings.
• You have multiple sources of income (side businesses, rental income, etc.).
• You are unsure of the deductions and credits you are eligible for.
• You think you must pay the Alternative Minimum Tax.

It is a good idea to go over your return with your preparer, however, to get an idea of what he or she did. You should have an idea of taxes work, and what (and why) you are paying. But you don’t need to spend the hours it takes to do them yourself.

image source: sxc.hu