Face it, taxes are complicated. And I mean complicated. The current federal tax code is more than 70,000 pages long! And each state has different tax rules. Then there are exceptions to the rules and rules to the exceptions. It’s enough to make you want to stash your W-2s under the bed and avoid tax season all together.
So who are you going to call to help with your taxes and get your financial life into shape? Well, that depends on how complicated your financial life is.
If you’re single or married, but don’t own a home or have kids, and your only income is the salary from your job and maybe some interest from savings, you can probably prepare your own taxes. Even if your life is a little more complicated — say, you’re married, have a newborn, own a home, have investments or run your own business — you can likely do it yourself with a program like TurboTax or TaxACT (which you can download right from their websites, and you’ll only be out the cost of the software).
The price to prep your taxes with these programs varies depending on how complicated your taxes are. And remember, you’ll need to file federal taxes and taxes for whichever state you live in. If you live in one state and work in another, you many need to file returns in both states; it’s an extra paperwork hassle, but you do get credit in your home state for anything you pay to your “work state,” so you’re not paying double taxes.
I suggest spending the money for the tax software. That way, you won’t have to deal with delays on your tax return because something was filed incorrectly — and who doesn’t want their refund back as quickly as possible?
If you’re not into the DIY idea for your taxes, or it feels too complicated, you can hire a pro. But think of it as going to a personal fitness trainer. Like working out with a trainer, you have a few options.
1. Turn yourself over completely and have your trainer/accountant tell you exactly what to do. This option will cost you some coin (albeit tax-deductible coin). According to the National Society of Accountants, the average cost to prepare a 2013 tax return with Form 1040 plus a state return was about $150; with itemized deductions it was about $260. You might spend more, but you get the benefit of having your tax guru whip you into shape in no time.
Or
2. Meet with your trainer/accountant once or twice and have her walk you through the basics of filing so you can do it yourself. This option is a lot cheaper and you get the benefit of understanding how your taxes work, so you can make the most of them. You can always check back in with your accountant down the road if your situation has changed, or just to make sure you’re doing things right — just like you would with your personal trainer.
A financial diet is like a regular diet, which is why if you can swing it, I advocate for using your accountant only when truly needed. You want to create a healthy, sustainable tax plan that works for you over time, and depending too heavily on your accountant will only slow you down in the long run. So study what they do — learn the workouts — and then get out there and get financially fit by yourself, for yourself.
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Why Doing Your Taxes Is a Lot Like Working Out originally appeared on usnews.com
