Advantages of calculating taxes yourself:
- You can save some money by preparing your tax return yourself and not paying a tax preparation fee and e-filing fee.
- You do not need to go anywhere and spend your time there.
- You don’t have to share your personal information with anyone except for the IRS.
- You can even earn some extra money by helping your friends and relatives to prepare their tax returns when you get comfortable enough to do your own taxes.
Disadvantages of calculating taxes yourself:
- If you are not experienced, the possibility of making errors in your tax return for the year is very high and you might get a letter from the IRS.
- You might miss some credit that you are entitle to which may significantly reduce your tax refund or increase your tax due. By trying to save on a tax preparation fee you might rob yourself more that get a benefit from the saving.
- If you file your tax return yourself you most likely do a paper return which will delay receiving of the refund. When you e-file you might get a refund in a couple of weeks, but with a paper return it may take even a couple of months.
- You might spend lots of time to prepare your very first tax return.
Pros of asking a tax professional to calculate your taxes:
- You will get tax advices not only for the current, but for the next tax year as well.
- You can contact the tax service company all year around if you have any questions or concerns.
- They can represent you in front of the IRS if the need arise.
- You will be advised on how to avoid occurring some tax liabilities by planning ahead (tax avoidance).
- Your taxes will be calculated relatively fast.
- Your tax return will be error free. They usually guarantee their accuracy and if the error will occur because of their fault the tax service company will pay for the interest and penalties.
- You do not need to worry that the IRS won’t get your tax return by the due date.
- Tax preparers store your paperwork at least for few years, so if you lose your copies you may be able to retrieve them.
- If you choose to e-file, you will get your refund fast.
- You can earn money by referring your friends and relative to do their taxes with the tax services company. Many of these tax preparation firms give their clients cash for each customer you’ve referred to them.
Cons of asking a tax professional to calculate your taxes:
- If you come at the end of a tax season, you might wait in line for awhile.
- Tax preparation fees might be high depending on your situation and a number of documents they have to work with. Tax preparers will charge you for each document they have to open in their system. Taxpayers with complicated tax returns get higher fees.
- They might charge you for all the time they spend with you even though the delay may be because of their fault and not yours. For example, their system might be down or your taxes do a slow tax preparer.
- You might get a bad experience depending a person who served you.