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Do You Need an Accountant to Do Your Taxes?

Posted By Miranda Marquit On 01/22/2013 @ 12:10 pm In Taxes | 16 Comments

When it comes to tax preparation, it can be tempting to just do it yourself with the help of some sort of tax software [3]. However, as your taxes become increasingly complex, it might make sense to hire an accountant to help you sort through your taxes.

Back in the days when I had a sole proprietorship and no investments to speak of, I did my own taxes. Entirely by hand (this was before fillable forms from the IRS). Now, though, my business is a LLC, and we occasionally sell investments for gains or losses. Things are a little more complicated now, what with K-1 forms and Schedule D forms. And we recently transferred our Roth IRA from one custodian to another, and that means a paper trail needs to be established so that we aren’t hit with penalties.

Having an accountant has been a great time-saver for me, and I’m glad that I have one to do my taxes. If you have complicated taxes, it might help to hire an accountant, rather than rely on yourself, or even tax software, to get the job done.

How Complex are Your Taxes?

Think about how complex your taxes are. While companies like TurboTax or TaxAct offer you the ability to buy a business package for your S Corp, C Corp, or multiple-owner LLC [4], the reality is that this type of software package doesn’t include the ability to figure your state taxes without paying extra. On top of that, you might not be able to do your personal taxes with the same package. You’ll have to buy the software for personal taxes, and do them separately — after you finish the business tax return, of course.

If you have investments and/or rental property you want included in your taxes, whatever basic version of tax prep software you find is going to be inadequate. You will need to get some sort of premium version for your personal taxes, and that still won’t cover if you have a business beyond being a sole proprietorship. In my case, the accountant only costs $100 more than buying all of the versions of tax software I would need to adequately do my own taxes.

The more complicated your taxes are, and the more that needs to be done with them, the better off you are likely to be with an accountant. In many cases, tax software can’t take the place of a thinking human being who can look at your individual situation and personalize your tax solutions to your needs.

How Valuable is Your Time?

Another reason I like using the accountant is because I value my time rather highly. Paying a little extra to save my own time makes sense for me. The more complicated your taxes are, the more likely it is that you will need several hours to make sure everything is in order — even if you do use tax prep software. I figure I save about four or five hours by using the accountant. That’s well worth the extra $100 for me.

Only if you have relatively simple taxes should you consider using tax software instead of hiring an accountant. If you have only a few deductions, and your investments are fairly straightforward, and you have a relatively small amount of side income, you might be just fun zipping through the forms offered by tax prep software.

(Photo: billypalooza [5])


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[3] tax software: http://www.bargaineering.com/articles/2009-tax-software-shootout-turbotax-vs-taxcut.html

[4] S Corp, C Corp, or multiple-owner LLC: http://www.bargaineering.com/articles/incorporating-your-business-sole-proprietorship-llc-or-corporation.html

[5] billypalooza: http://www.flickr.com/photos/billypalooza/2524413773/

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