Why I hire a tax professional instead of doing my own taxes

by Nick on March 22, 2012

It’s the most… wonderful time… of the year…. It’s tax time!

That’s right.  I love tax time.  It’s not that I like paying taxes (I don’t).  But there’s something fun about closing out the year and getting all the numbers down on paper.  Call me crazy (go ahead, it’s fine).  Plus, although we can disagree about “how much” taxes we should pay and “for what” they should be used, I understand that they’re here to stay and I need to pay whatever the rules require.  So there’s no reason for me sit and pout about something I can’t really change.

So… last night was the night.  I got home and had a FedEx waiting for me from my tax gal.  I couldn’t wait to get upstairs to open it up, so I rrrrripped it open in the elevator and there they were: my 2011 tax docs, along with a cover letter, a couple of “sign here” pages and two payment vouchers.  Oh oh, payment vouchers, I thought.  It’s all good.  I’d rather pay a few bucks than get a return.  (Yes, I’m one of those “don’t give the feds free loans” folks.)

Happily, if she did everything right (semi-big if… long story… but I looked them over very quickly and they seem fine…) between writing a check to the Feds, getting a refund from NY, and writing a check to Gov. Christie, I’ll end up paying about $400.  Not too shabby!  I’ll take it.

It certainly cost me a few bucks to have this all done – $475 to be exact.  But it was worth every penny (again, assuming they did everything right…).  You couldn’t pay me enough to do my own taxes (I’m exaggerating – you definitely could, but it would be a lot…).  I love numbers and don’t mind the tax code, but I have no interest in spending the time to do it.

And it turns out the brilliant and attractive folks over at WiseBread agree with me, listing three reasons to hire a tax pro even if you don’t mind the work.  (Yes, I know they’re brilliant and attractive because of this and this :)  Dumb, ugly people don’t give shout-outs to SAFTM.)

Curious as to the 3 reasons?  Let’s dig in:

  • You can focus on saving more money.  I like saving more money… My tax gal is just “up” on more tax crap than I am, so I believe she finds me as much as she can and more than I would, even with some animated paper clip asking if I had any more deductions…
  • You can get advice if you’re audited.  I’m sure I’ll be audited one of these days.  I have way too many 1099s, W2s and deductions to not get audited.  Plus my 2009 taxes were filled with drama, so I’m sure there’s a file on me over at the IRS.  That being said, I’m really not incredibly aggressive with my taxes and the 2009 drama was a stupid mistake by my tax gal, which she discovered the next year so I filed an amended return.  I also should have caught the mistake.  Long story short, she entered my then-working wife’s W2 more than once, so my original return showed we made a lot more than we did and then had to write a large check.  I was so swamped at work that I just signed the papers and wrote the check.  When she discovered the eff-up, we filed an amended return asking for a large chunk of cash back, which we got.  Then last month the IRS sent me a bill for about $1,100, including penalties and interest for 2009 (after writing me a check for way more than that just a few months ago…).  As you can see, there were a lot of moving parts (the IRS even lost my file for a while…).  You see why I’m sure it’s just a matter of time before they want to do a full audit to confirm everything is legit?  (Don’t worry, it is.)  So I like that I’ll have someone to represent me (or for me to blame) if that happens!  For a few hundred bucks, it’s totally worth it for this alone.
  • You have another point of contact for your financial needs.  I had a pretty good conversation with my tax gal the other day about tax planning.  I’ll definitely save more than the $475 they charge me in 2012.  For example, I don’t plan on leaving many losses on the table at the end of this year.  I had a few more losses I could have locked in for 2011, but I was too dumb and lazy to do it (again, swamped at work so I prioritized making it through a big project – not an “unwise” move considering my gig pays me more than the tax write-off could have provided, although I could have done both, I’m sure…).  Basically, I generally try and sell stocks, no-fee mutual funds and ETFs that are down in December to lock in investment losses to offset gains and then shift that money into other funds.  It’s a great way to not change much about my portfolio other than tax treatment (in essence I’m buying the new investment at a discount of my tax savings from selling the losses).

Those 3 reasons alone are worth way more than the $475 I spent.  No question.  

Not convinced?  Wait!  There’s more!

You know me better than to keep my mouth shut and stop at three, right?  :)  No way I can resist adding another from yours truly.  Have you ever tried to do your own taxes?  Well I have… and it’s painful!!!  I’m pretty sure I’d rather watch the movie Glitter in slow motion three times than do my taxes once!  Yes, that painful…

In fact, just for the fun of it I took my copy of the crap I sent to my tax gal and started some tax pro software federal return this year.  (yes, pretty masochistic, I know…)  After about 45 minutes I was ready to throw myself in front of a moving train… and I wasn’t even halfway done.  Never again.

So yeah, in addition to having a point of contact for financial needs, learning ways to maximize tax savings and having someone to blame or represent me in an audit, I’m happy paying a few hundred bucks to avoid having to lock myself in a padded room with no shoelaces or belt just to safely navigate tax software….

So there you have it.  3 reasons to hire a tax pro and one bonus reason from me.  

How many of you are DIYers?  How many folks are all tax pros all the time?  Any reasons I forgot to list for going pro?  What about DIYers?  Are your taxes just too simple to justify the cost?  Or are you just into pain… Oh, and DIYers, how long did it take you to put your taxes together this year? 

Until next time, put your credit card down and slowly step away from the mall!

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{ 32 comments… read them below or add one }

Michelle March 22, 2012 at 8:16 am

I do my taxes myself, mainly because my taxes aren’t too complicated.

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Nick March 23, 2012 at 2:47 pm

Ahh… mine got way too complicated pretty quick. A W2 or two and a couple 1099s are easy enough to manage. Plus I own rental property with a buddy who has all the records, so that complicates the heck out of my taxes.

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Jana @ Daily Money Shot March 22, 2012 at 8:31 am

We have someone do our taxes, too. It’s just easier because of the multiple jobs we each work. We get a pretty sweet deal on the price because it’s a former co-worker of my husband’s (so…free, except for the gift we buy him around Christmas). He does a great job and as long as we can keep up this arrangement, we will. And when he stops doing it, we’ll pay someone else. Totally worth every penny to not have to do it ourselves.

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Nick March 23, 2012 at 2:48 pm

I’m with you – and for only a Christmas gift! Great stuff.

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MoneySmartGuides March 22, 2012 at 10:47 am

I do my taxes myself and enjoy doing them. However this year I began to rent out my primary residence so I’m thinking next year I’ll but the bullet and hire an accountant. I am sure I can figure it out on my own, but once it starts getting involved to the point where I need an entire weekend to complete my taxes, that is the time to stop doing it myself. Right now, my taxes are terribly complicated so I do them myself.
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Nick March 23, 2012 at 2:50 pm

Enjoy! Wow. To tell you the truth, I “like” the numbers and the tax code a bit – I’m somewhat of a “puzzle” guy I guess… But dealing with all of the intricacies under the threat of Big Bad Uncle Sam enforcement if I’m wrong helped make the decision easy… If they’re simple and you’re comfortable with it that does change the mix though.

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Kris @ BalancingMoneyandLife March 22, 2012 at 1:26 pm

I do my own, for a couple of reasons – I’m a trained accountant, I have a hard time justifying paying someone else for work I can do myself, and our taxes are super simple. This year has taken longer than they should because the online version of Turbo Tax has a glitch specific to my province; once the bug has been fixed, we’ll be done. In all, it took about 2 hours, and should have taken less.
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Nick March 23, 2012 at 2:52 pm

You’re good Kris! I hear you on having a hard time hiring someone when it’s your field and your stuff is simple though. I’d certainly have a hard time hiring someone to babble incoherently on SAFTM all day when I can do a perfectly good job myself… :)

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Karunesh @ chase-a-dream.com March 22, 2012 at 1:46 pm

A tax professional can help you save some extra bucks. I have myself experience it sometimes they give really good suggestions that wouldn’t have occurred to me otherwise.

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Nick March 23, 2012 at 2:52 pm

Yep – my gal has certainly saved me some money. Good to know there’s someone with me!

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Modest Money March 22, 2012 at 1:48 pm

I’ve tried both options in the past – doing my own taxes and paying someone else to do it. It was a lot less stressful having someone else handle it, but lately I’ve switched back to doing it myself. Mostly that’s because I feel that my taxes are fairly simple these days. I do have to worry about a big chunk of side income, but the tax guys I’ve used before usually couldn’t find any extra deductions.
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Nick March 23, 2012 at 2:54 pm

I have some buddies who claim to deduct thousands of dollars of expenses. They also do the taxes themselves so I guess they don’t have somebody saying “that’s not a real deduction moron!” My tax gal finds a few more deductions for me although maybe it’s just because I don’t look for them very hard, knowing she is there…

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Modest Money March 25, 2012 at 5:26 pm

Yes I sometimes have some doubts about whether my deductions are being claimed properly. I just hope I don’t have to go through all that mess with an audit.
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Thad P @ thadthoughts.com March 22, 2012 at 2:23 pm

My situation is, at present, not past my ability (or time), but I am not averse to seeking professional assistance. There’s a reason it is called professional!
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Nick March 23, 2012 at 2:56 pm

Very true! I skip personal trainers and personal chefs, so why not splurge on a personal tax coach, who helps me sleep at night for a few bucks, right?

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Michelle March 22, 2012 at 3:40 pm

I do my own taxes because ours are not complicated at all. This year, it took about 2-3 hours.
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Nick March 23, 2012 at 2:57 pm

You’re better than me, Michelle (although mine are complicated…)! By the way, nice irony with your commentluv post.

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Michelle March 24, 2012 at 7:08 pm

Ha, didn’t notice that! I’m no better than you, Nick…just cheaper ;)
Michelle recently posted..The Art of DIYMy Profile

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Frugal Fries March 22, 2012 at 8:24 pm

I am a DIYer myself, but mainly because mine aren’t that complicated. My dad used to have his guy do them for us for a really good price, but since I moved out this year I decided to do them myself :)
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Nick March 23, 2012 at 2:58 pm

Wow – you’re adventurous! Let me know how the maiden voyage goes!

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Kacie March 22, 2012 at 9:48 pm

If there were any year for me to hire out our taxes, THIS would be the year. I can’t even begin to explain how nutso our tax year was. But I did them myself anyway (with Turbo Tax).

I just get some sort of sick satisfaction out of it, I guess. I like seeing the process.
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Nick March 23, 2012 at 2:59 pm

Wow – DIY in a nutso year! There’s a home for people like you, haha! Way to go though. Like chicken nuggets, I’d rather just see the end result and not the process :)

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Kooz March 23, 2012 at 10:48 am

When I made a very low salary, I did my own. When I started making real money, but wasn’t filing jointly, didn’t own a home, and didn’t have kids, I went to HR Block. When I started filing jointly, got my hands on some real estate, and had a child, I started using an accountant. So far it’s all worked out for me.
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Nick March 23, 2012 at 3:00 pm

I like the progression, Kooz! Sounds like you’ve thought this through. I went to HR Block one year and they were double what my gal was (although I think it was about what she is now…).

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Thomas - Ways to Invest Money March 23, 2012 at 12:23 pm

I am willing to do a lot of things on my own but my taxes are not one of them. I just simply like the safety I feel going to my CPA. Its not about the returns but knowing that a professional is taking care of it.
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Nick March 23, 2012 at 7:05 pm

I’m with you, Thomas. My gal helps me sleep at night for sure.
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Real ideas to make money and save money! March 25, 2012 at 4:59 am

Hmm it appears like your blog ate my first comment (it was super long) so I guess I’ll just sum it up what I submitted and say, I’m thoroughly enjoying your blog. I as well am an aspiring blog writer but I’m still new to everything. Do you have any helpful hints for inexperienced blog writers? I’d definitely appreciate it.

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Nick March 26, 2012 at 11:37 pm

Check out this movement from a bunch of bloggers with my take here: http://www.stepawayfromthemall.com/for-those-about-to-blog-i-salute-you/
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Geoff March 27, 2012 at 8:49 am

I do my own tax return, though at one time I did use an accountant. When deciding whether or not to use a professional much comes down to complexity of the business, and what sort of level of turnover is involved.
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Nick March 27, 2012 at 10:10 am

Yeah, my taxes got real complicated really quick. Very impressed with all of you who tough it out and do your own!
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Joe Morgan March 27, 2012 at 1:10 pm

Let me get this straight… spending $475 was worth every penny to get $400 back?

Call me crazy, but I’d rather do it myself and come out ahead $475.

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Nick March 27, 2012 at 5:31 pm

Actually it’s even worse than that! I’m PAYING $400 to the government and still think it was worth it to pay the $475. But it’s totally personal.

My taxes are pretty complicated (I work in NYC, live in NJ, my wife has a few bucks in work-from-home-for-a MA company income, I own a rental property with a buddy in MA and my wife owns another rental property in MA….and that’s just the beginning of it, haha).

So it would take me a pretty long time to probably screw it up… With all that I’m not sure I would have gotten to the $400 number without a LOT of time and work over multiple sittings to find information, etc. I also like having someone to be my buffer/rep. So I spent the $475 and spent an extra day with my family when the accountant was doing my taxes… :)
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