Online Tax Filing vs. Tax Preparer
Tax Preparer | Filing taxes can be a simple task for some individuals that are familiar with the process. For others, it can be a scary thought and a time-consuming activity.
There are a few talking points when choosing between a tax preparer and filing online taxes yourself. Let us discuss them briefly.
Filing Taxes Online
The complexity and timings are two important factors when choosing to file taxes online. Individuals and small business owners can always choose to use tax software within their budget to file their taxes.
The most important factor will be your tax proficiency. As an individual or a small business owner, you should consider whether you want to include itemized or standard deductions.
Then, consider factors like having a marital status change, buying or selling property, owning a business, special relief funds, debt reconciliation, and retirement events.
In a nutshell, if you have been filing taxes online earlier as well and there are no major complex tax issues, you can opt for tax software easily.
Pros and Cons of Filing Taxes Online vs. Tax Preparer
Filing online taxes, yourself has some advantages and disadvantages.
In the short term, filing online taxes can be cost-effective. You can select a basic tax software package that offers basic features and limited filing options.
The cost of a suitable tax software package will also depend on your income and the complexity of tax returns. For instance, if you are filing taxes as a business owner that include your individual tax returns, it will cost you more.
If your annual income is less than $72,000, you can use the free tax filing tool offered by the IRS as well. However, you’ll need to familiarize yourself with the process.
The biggest disadvantage with online tax filing is the lack of proficiency with the tax code. The IRS or any other tax software wouldn’t teach you much.
If you are good at number-crunching, you can do the job easily. However, if you haven’t filed taxes, you’re likely to face a few difficulties.
Keeping up with the regulatory changes and applying them practically is also challenging for novice tax filers.
Also, if you are short of time, your tax software cannot offer you much. You’ll have to input the vital information by yourself.
Record-keeping and tax filing for an individual and business owner can be cumbersome that gets difficult to manage.
How and When to Use a Tax Preparer?
There are a few options for you when choosing the right tax preparer. You can choose an enrollment agent, an accountant, or a professional CPA as your tax preparer.
The choice between the different tax preparers will largely depend on your tax filing complexity. For instance, if you expect an IRS representation as a business owner, you should choose a CPA that offers full representation rights.
Another key factor to decide will be your work schedule. Business owners should prefer a tax preparer to continue devoting time to their prime task of managing a business.
Pros and Cons of Using a Tax Preparer
The foremost benefit of working with a tax preparer is to get the right advice. A tax pro will help you make a proper tax filing strategy.
You’ll get the right advice on issues like choosing between standard or itemized deductions. Then, a tax professional will help you decide on issues like employee stock options, retirement plans, changing regulatory tax requirements, and so on.
Saving time can be an enormous advantage for busy individuals and business owners. For complex tax filings, using a tax preparer can ease the burden as well as save time.
In the long run, using a tax preparer will save you cost as well. The cost of penalties for late filing or erroneous filing can easily overweigh the professional fees of a tax preparer.
The upfront cost of hiring a tax preparer can be a hurdle for a few taxpayers. Also, if you can’t find the right fit, you are going to face a few difficulties.
If you have been filing taxes regularly and do not file complex forms, you can opt for online tax filing.
Another drawback of using a tax preparer is when you can’t find the IRS representation from the same professional. Therefore, it is important to consider the right tax preparer such as a CPA that offers IRS representation when needed.