Complexity, convenience and cost are factors individuals must consider when deciding to use an accountant or tax preparation software to do their taxes
The eternal tax preparation debate: Hire an accountant or go it alone using tax software? Each option has its pros and cons. According to the IRS it can take up to 32 hours for the average person to do their taxes. In addition to the time commitment, one must weigh whether the expense of hiring a professional preparer is worth the access to their presumed expertise and knowledge of the latest tax laws. The more complicated your return, the more it will cost to prepare.
In choosing to be more self-directed, the convenience and cost-effectiveness of using tax preparation software such as TurboTax must be considered against one’s comfort level working with software and the confidence it will catch the tax breaks to which they may be entitled. There is also the danger that a software program won’t catch a mistake that appears to be legitimate.
According to our research, nearly 70% use an accountant to prepare their taxes. Of these, women (71%) are more likely than men (62%) to go this route. Millionaires (73%) are also more likely than non-millionaires to use a professional preparer. Not surprisingly, 90% of business owners entrust their tax preparation to an accountant. Of those across the retirement levels, those who still work are slightly more likely to hire an accountant to do their taxes than those who are retired, while nearly three-quarters of those who identity themselves as semi-retired use a professional preparer.
Tax software has gained in popularity over the years, but it still has a long way to go before replacing accountants. A quarter of respondents said that they use tax software such as Turbo Tax. Of these, men (27%) were more likely than women (23%) to use the software without consulting an accountant. Nearly 30% of non-millionaires said they used tax preparation software, as opposed to 23% of millionaires, while only 10% of business owners say they use this option.
Will you be using an accountant this year of using tax preparation software? Have you used both options over the years? Which gained you the best results? Share your stories in our Discussion Board and ensure many happy returns.