For years, I have done our tax returns myself using tax preparation software from Intuite or H&R Block. The reason for not using a CPA for our taxes wasn’t about a few hundred dollars we have saved by filing our taxes ourself, but that with software tools like TurboTax and TaxCut, I felt that we don’t really need to be a tax expert in order to file our own taxes. I mean whether it’s TurboTax or TaxCut, the software basically asks everybody the same sets of questions that pretty much cover every possible deduction we can legally have. And if tax pros are using the same software as I am, I don’t see why the two results should be significantly different. With this reasoning, I have resisted the idea of hiring a professional for our taxes and insisted on doing the job myself. The whole process usually only took a day or two to finish, so it was a lot of efforts, even though we had a lot of forms needed to be entered into the software manually.
Even though I don’t mind keeping the task to myself, I have to admit that I am not very happy with the job I did so far. For the past few years, we owed taxes on the filing day every year. While paying more taxes means you make more money, I had no idea whether there was any dedution that we could have used, but was ignored instead because, after all, I am still not a professional and there are many rules that I don’t know, even with the help from the tax preparation software. And since there is nobody we could ask to check our filings, I am not entirely confident about whether I have done everything correctly or not.
This year, I got the TurboTax as I always did in the past and started preparing our 2011 tax returns in early March (I am in no rush to finish and file it early because, again, we will owe taxes even though I have made estimated tax payments throughout the year and withheld additional taxes on my paychecks). Then mid-way through the process, I changed my mind and wanted to have a CPA do the job for us. The reason was that I wanted to see whether there will be any difference between what the CPA does for us and my own preparation. Since I already have the software, I thought I could continue what I have already started as if I were still filing it myself and compare my data with the CPA’s at the end. If the accountant could reduce our tax liability by $400 (that’s how much the service will cost us) or more, then it’s worth it. Also, after the taxes are done, I want to hear from the CPA regarding what we could still do this year to lower our taxes in 2012, especially the business I run on the side.
So over the week, I had the first meeting with the accountant and turned over our tax documents together with last year’s 1040. Surprisingly, he didn’t ask for any additional document that I didn’t prepare for him, except the 8801 Form from last year. In about a week, I will know whether the $400 was well spent or not.
Photo credit: nazan27
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