Taxes Taking a Toll?
According to Pew Research, one-third of Americans say they prepare and file their own income taxes, while more than half report they rely on someone else.
(We're not sure about the remaining folks, but perhaps the Internal Revenue Service is looking into it.)
Most of those do-it-yourselfers choose to fill out the forms on their own. Some do it to save money. Others know that, because their returns are so simple, they can easily complete the forms with pencil and paper or tax preparation software like TurboTax®.
But as life becomes more complex -- if you get married, have children, buy a house or broaden your investment portfolio -- your tax responsibilities also become more complicated. So how do you know when it's time to call in a tax professional?
Here are three signs:
1. You are math-phobic.
If you're not a numbers person -- if preparing your income taxes feels like doing quantum physics -- then don't try to do it yourself. At best, you could miss out on potential deductions that would save you money; at worst, you could make an error that gets you into legal trouble.
2. Your return is too complex.
If you have one job, no dependents and no other source of income or investments, you can probably file using either the simple 1040 or 1040EZ form.
However, if you find yourself trying to decode the intricacies of a K-1, struggling to understand the implications of a rental property or needing to submit more forms than you can count, it may be time to turn to an expert. While tax prep software can make it easier to do a more complex return, you may have to pay extra to upgrade the program.
3. You're a "grown-up" now.
As we age, life changes and our finances become more complicated. If you experienced one or more major life events during the previous year, such as inheriting money, starting a small home business or relocating (especially to a new state), these could greatly increase the complexity of your tax return.