Taxes are not a dinner conversation most enjoy but it’s a fact of life every year for as long as you want to retain your US citizenship. So as tax time approaches should you file yourself or have someone help file for you? The answer depends on your tax knowledge and how much you value your time.

Tax Expertise

Your tax knowledge may be limited and you may need someone to help you properly file. On the other hand, you may have working tax knowledge but still employ someone to prepare your taxes, Why? Tax laws are constantly changing, it’s this reason you find other CPA’s that aren’t in the business of tax hire CPA’s that is! A good tax professional will add value to your return by maximizing the deductions your eligible for along with tax strategy.

The above is an extremely simplistic rudimentary example but it shows how even simple-seeming tax situations may have some golden nuggets to be unlocked. Tax law is there so someone can maximize their deductions to the utmost. If someone doesn’t know or doesn’t use tax law that is there for them to benefit from legally, the IRS isn’t going to directly inform the tax return owner.

Time

You may be knowledgeable and armed with the power of a tax preparation software like turbo tax or tax slayer perfectly fine preparing your own tax return. You may do a great job maximizing your tax efficiency given your tax situation but still want to hire someone, why? Time is money! Just like many people know how to change their oil but still hire someone to do it. You may know how to prepare your return but taking the time to shop software, dust off your once-a-year unused tax knowledge to make sure it’s still sharp, and burn a weekend once you have everything in place may not appeal to you.

Who to hire

Like most professional services it’s hard to know the quality of your tax professional until you have some experience with them. That said there is a very important point to look out for when hiring someone to prepare your taxes. You want to make sure your tax preparer is either an Enrolled Agent (EA) or Certified Public Accountant (CPA). Many people assume if someone is preparing your taxes they must be a licensed CPA this couldn’t be farther from the truth. Anyone can file your taxes all they have to do is go to irs.gov and apply for a PTIN then presto they are a tax preparer. It is a bit scary isn’t it, especially if you assume everyone that does taxes is qualified. There are other credentials like the Annual Filing Season Program but if you want someone with the highest tax qualifications, you want either a CPA or EA.

Pricing

I always hear of cases where someone gets a ridiculously low price that is competitive with a DIY tax preparation software and they were able to write everything off. These cases I am dubious of and suspect the person they had filed their taxes was non-credentialed why they charged such a low rate or maybe they just found an extremely charitable person that likes to donate their time. The National Society of Accountants (NSA) surveys tax professionals across the country to get a barometer on what tax professionals charge for different tax situations and the results are as follows.

Average fees that tax preparers charge include:

• $273 for a Form 1040 with a Schedule A and state return
• $176 for a Form 1040 (non-itemized) and a state return
• $184 for a Form 1040 Schedule C (business)
• $124 for Schedule D (gains and losses)
• $135 for Schedule E (rental)
• $180 for Schedule F (farm)
• $656 for a Form 1065 (partnership)
• $826 for a Form 1120 (corporation)
• $809 for a Form 1120S (s corporation)
• $482 for a Form 1041 (fiduciary)
• $733 for a Form 990 (tax exempt)
• $69 for a Form 940 (federal unemployment)
• $1,563 for a Form 706 (estates)
• $413 for a Form 709 (gift tax)
• $242 for a Form 8824 (like-kind exchanges)
• $532 for a Form 5500 (pension/profit-sharing plans)
• $282 for a Form 3115 (application for change in accounting method)
• $59 for a Form 8962 (premium tax credit calculation)
• $53 for a Form 8965 (health coverage exemptions)
• $58 for a Form 1095‐A (health insurance marketplace statement)
• $57 for a Shared Responsibility Payment Calculation

These fees also do not include a disorganization fee. You heard that right, a disorganization fee, 71% of tax preparers will charge an average of an additional $117 if you hand them a box or receipts or they have to go back and forth with you to get complete documents. This makes sense, time is money. As a client, this is one fee you can avoid by keeping complete tax records and organized bookkeeping. Simply having the documents is not enough, if the preparer has to dig through stacks of crumpled paper to figure out what they need to prepare your return you can expect to pay more.

Taxes may seem like a dry impersonal commoditized service to some. However, hopefully you see a glimpse of the wide variety of experiences you can have when going through your next tax return come April 15^th.