Should you Prepare your own Taxes?

Posted on Posted in Taxes

This year, I paid to have my taxes done.  I had been preparing my own taxes since my Mom shut down her tax service many years ago.  I finally got fed up with doing my own taxes and went into H&R Block.  It was a positive experience and I wish I had of done it years ago.  Now, I am kicking myself for all of those years where I had to suffer through late nights with a calculator at the deadline.

Getting the Maximum Refund

This Man Hates Taxes
Image by QRRTY

One thing I had always suspected was that I wasn’t getting the maximum refund when I did my own taxes.  That was confirmed this year when I got a much bigger refund than last year.  So, I had my 2010 taxes reviewed by the Second Look program and I will probably get more back.  Even though it cost quite a bit to have my taxes done, I was losing considerably more money by trying to do it myself.

The biggest mistake I was making was by taking the personal deduction, instead of itemizing.  I didn’t think I had enough deductions to itemize, but the H&R Block agent showed me a number of items I didn’t realize were deductible.  This boosted my refund quite a bit and made me realize how much money I had lost.  I own a house, have investments and a family, so it’s a lot of work to do my taxes.  There are a lot of schedules and forms and it’s easy to mess up.  I should have gone to a professional years ago.

Taxes are Way Too Complex

I’m a pretty sharp guy and was the top student in my college Algebra class.  I program computers all day and solve dozens of difficult problems in a typical week.  But, I made a couple of errors on my past taxes that created problems for me with the IRS.  Luckily, I didn’t owe them any money, but I had to fill out extra forms to straighten things out.  I am so glad I had my taxes done this year, to reduce the chances of errors.  The last thing I need is to waste time dealing with the IRS.

The IRS is Antiquated

The IRS should create an online tax filing website, like most of the sates have.  Instead, they have fill-in PDF forms, which are difficult to follow and easy to make mistakes.  If they weren’t stuck in the stone ages with their technology, it would be easier for individuals to do their own taxes.  I honestly think they are keeping accountants, tax preparers and the post office in business.  The IRS spent billions of dollars trying to upgrade their computer systems a while back, but that was a colossal failure.  They have no incentive to modernize or make things easier for taxpayers.

The Bottom Line

The bottom line is that there are some things you should have done and some things you should do yourself.  If you are spending too much time with taxes and you aren’t getting the maximum refund, you should have your taxes done by a professional.

“The taxpayer – that’s someone who works for the federal government but doesn’t have to take the civil service examination.”

Ronald Reagan – 40th President of the United States

Recommended Reading

Barbara Friedberg – Why I usually do my Own Taxes
Green Panda Tree House – Two Ways to Make Money
Thousandaire – What if you Don’t File your Taxes On Time

29 thoughts on “Should you Prepare your own Taxes?

  1. File on your own. Figure out how to file a schedule A. It’s really simple and a tax form you don’t even really need the instructions for.

    H&R block would be the last place I would go to get my taxes done. Losers abound there, and if I paid them to do my taxes, I would still go over it with a fine tooth comb, in which case, I should have just filed myself.
    Bichon Frise recently posted..Why we want the standard tax deductionMy Profile

  2. You hit the big nail on the head with “taxes are way too complex.” I have an engineering degree and a MBA-Finance, and I’ve given up doing tax returns myself. We need to ditch the tax code and start over. My proposed Rule #1: Tax code for individuals should be no longer than 5 pages!
    Kurt @ Money Counselor recently posted..Tax Deadline Panic CureMy Profile

  3. It’s pretty hard to know if you’re not getting the maximum refund if you only ever do your taxes by yourself. 🙂 My wife and I have used Turbotax the last few years, and we’ve done okay (as far as we know).
    Bryan recently posted..Some Great NewsMy Profile

  4. In my opinion, the thing that prevents the IRS from doing away with interactive forms is the prevalence of hacking. A hacker who can find his way inside an online filing system can wreck a lot of havoc.
    Richard recently posted..painting dvdMy Profile

    1. No website is hack-proof and that is a serious problem. Look at all of the recent breaches, including the credit card and SS#s that have been compromised.

      But, many of the states offer online filing and banks offer an array of online services. I suspect a lack of will and technical ability, rather than concerns about security.
      Bret recently posted..3 Reasons to Control your own AssetsMy Profile

  5. I tried doing it myself, but it really eats a lot of my time just calculating and seeing how much tax would I pay. I was lucky that I have my brother as an accountant. Ha ha! Use your resources wisely, right? 🙂
    Martha recently photography schoolMy Profile

    1. Thanks for stopping by Mary.

      I have heard of people defrauding the government by filing online, but I haven’t heard of anyone getting their identity stolen from this. I used the State of California’s website to file taxes and it’s great. It’s much faster than the forms, it eliminates math errors and ensures all of the fields are filled in. If the IRS had something like this, I would probably do my own taxes.
      Bret recently posted..3 Reasons to Control your own AssetsMy Profile

  6. I bought Taxes For Dummies 10 years ago and never looked back. I just can’t abide paying someone to do what I can do myself. The last time I went to a paid service, I got stuck with a young girl who made mistakes that cost me money and I had to refile. I did have H&R block check my work a few years ago, and they said I did everything right. The only down side for me is the time it takes, it is definitely time consuming. I start in February so when I come up against a puzzle I have plenty of time to sort it out.
    Marc recently posted..Celebrate!My Profile

    1. Hi Marc,

      You are smart for starting early. I would always wait until the last minute. Then, I would be working at the deadline and rushing to only post office open late in the area. What I realized is that I really hated doing my taxes, which is why I put it off, even though I was expecting a big refund. Having someone else do it made me feel a lot better about filing.
      Bret recently posted..Should you Prepare your own Taxes?My Profile

  7. I had an accountant friend and I was about to pay her to do my taxes. She gave me a better alternative, to teach me how to do things right (for free).

    She told me not to share this story, but I just can’t help it.
    Victoria recently posted..the best scrubs for menMy Profile

    1. I have never tried an online service, other than the State of California’s website. It’s way easier than using the forms or fill-in PDFs.

      The bummer is that it only works if your taxes are relatively simple. Some years I can use it and some years I can’t.
      Bret recently posted..3 Reasons to Control your own AssetsMy Profile

  8. Getting organized and preparing your own taxes does take some time. If you’re making the move to doing your own taxes for the first time you might consider having them double checked by a CPA.

    1. Hi Mantyla.

      Usually, people doing their taxes for the first time can use the really simple EZ forms. It’s the people who have a house, family, investments or are self-employed that have a tough time preparing taxes. If someone is self-employed, a tax preparer or CPA is highly recommended.
      Bret recently posted..10 Reasons why Banks Must be Closely RegulatedMy Profile

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