Filing your taxes is one of life’s annoyances that no one ever wants to deal with. You have to spend tedious amounts of your own time filling out complex forms in order to make sure you’re paying someone else money without seeing any sort of tangible return. Even worse, if you get it wrong, it’s possible to serve jail time. All in all, it’s hard to imagine a more unpleasant yearly chore, and yet, paying taxes is the price we have to pay to live in a civilized society. Therefore, many people choose to hire someone else, a tax professional, to prepare their tax returns for them. So when should you do your own taxes, and when should you hire someone to do them for you?
Time vs. Money
Time and money are the two great commodities in life. They often play against each other, too: the person who works 80 hour weeks at a high-powered firm certainly has a low availability of time, but likely has a large amount of money to dispose of. Conversely, someone who is working a part-time job at a coffee shop has a lot of time on their hands, but not very much money. When dealing with filing your taxes, just like when you pay any professional to provide a service instead of doing it yourself, you really need to measure the time it would take to do the taxes against the money it would cost to have them done.
The Relevant Factors
So to determine which is best for you, you really need to know what the cost is to file your taxes, in time and in money. Well, there are three different tax returns that you might have to file; one for low income earners, one for the middle class, and one for the very highest earners. Chances are you fall into the middle class category, along with 69% of the country. Well it turns out that this tax return takes approximately 16 hours to fill. The low-income return is much quicker, and the high-income return is so situationally dependent that it would be impossible to gauge. For that 16-hour return, though, the average cost in tax preparation services is approximately $270. This can be regionally dependent, though, and tax return preparation in Yonkers, NY area, might cost a different amount than in Tulsa, OK.
So at the end of the day, you must decide which is more valuable to you, 16 hours of your life, or $270 in your wallet. There is one more thing you’re paying for, though, if you go with a professional: peace of mind. After all, there can be dire consequences for failing to fill out your return properly, and if you hire a professional, you won’t need to worry about that.