Taxes: To Outsource or Not?

Published Thursday, March 17, 2011 7:00 PM

The U.S. tax code isn't easy to navigate. Just ask current U.S. treasury secretary Timothy Geithner, who oversees the IRS. Geithner's nomination was almost derailed by his failure to pay four years of Social Security and Medicare payroll taxes, a failure that Geithner chalked up to error,  errors which tax experts agree are all too easy to make when filing.

Geithner had been filing his own taxes. Would hiring a pro have made a difference? 

The Pros & Cons of Professional Tax Preparation

The Upside

  • Hiring a pro can save you time. The IRS estimates that individuals spend nearly 25 hours preparing their taxes. Time is money!
  • Tax preparation costs can be tax deductible.
  • Pros can find deductions or credits that you might otherwise miss.
  • Pros make fewer mistakes than the average tax filer.
  • In need of audit assistance? A pro can help you navigate the paperwork and can event represent you to the IRS.

The Downside

  • Ka-ching. Professional tax preps costs money. Depending on the complexity of your taxes, a filer can expect to pay a flat fee of $130 for simple forms with no deductions and up to $120 per hour for complex taxes.
  • You don't always get what you pay for. Not all tax pros are equal (or competent). In 2008, the Better Business Bureau reported that complaints on tax preparers were up a whopping 80 percent. Vet your pro before entrusting your highly personal information.
  • You need to plan ahead. Pros are not for procrastinators; they book up early in the spring and generally require paperwork weeks in advance of April 15th.

 

If you wish to find a CPA to help with your taxes be sure to check their reputations before entrusting your documents. If you chose to use one of the big nationwide tax prep firms such as H&R BlockJackson Hewitt or Liberty Tax Service, consider requesting a senior-level tax preparer.

Need a laugh this tax season? Check out ten humorous  (and true!) tax tales including one intrepid filer's attempts to declare pet food tax deductible and attempts by the IRS to collect four cents.

Do you prepare you own taxes? What tips do you have for foolproof tax filing? If you use a professional, how do you get your paperwork ready? Share your thoughts here and on the Pendaflex Facebook page.

 

 

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Comments

# Demarlo said on Tuesday, January 10, 2012 3:04 AM

This piece was cogent, well-wrtiten, and pithy.

# oem software said on Tuesday, May 01, 2012 11:09 AM

mHuM34 Very neat blog post.Thanks Again. Much obliged.

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