By now, you should have started receiving information in the mail regarding your taxes—1099s, W-2s, etc. Hopefully you’ve been setting these aside in a safe place for when you are ready to file your 2012 taxes.

We’ve talked here before about tax preparation, and whether you should do-it-yourself or hire a tax professional to prep your return. Both options have merit; however, we are of the opinion that those people with complex tax situations should not attempt to do it themselves. Paying the cost of hiring a professional can be well worth it in complex tax situations.

Even if you have a simple tax return, you may feel more comfortable hiring out the job. Whatever situation you are in, we came across the post “Tax Prep Costs: What’s it worth to you? by guest poster Richard Barrington over at Get Rich Slowly. Barrington takes a look at an annual survey Get Rich Slowly does on the average cost of a number of tax preparation options. This is a great resource for anyone trying to decide how they want to file their 2012 returns.

Additionally, Barrington makes a few good points about hiring a tax professional:

“Getting professional help with tax preparation may be more important than ever with respect to the 2012 tax year, because the tax code wasn’t completely set until the passage of legislation to avoid the fiscal cliff. While most of the discussion of the fiscal cliff focused on tax rates for 2013, some changes, such as reinstating certain energy-efficiency tax credits, were made retroactive to 2012.

This means that the tax code for 2012 wasn’t even set when the year ended. Unless you have the time and resources to keep track of the final changes, some assistance – either via software or a paid professional – might be crucial this time around.”

  • “According to IRS statistics, more than 110 million tax refunds were issued last year, averaging $2,803 apiece. So, getting what you’re entitled to can more than pay for the cost of tax preparation. Even if you don’t get a refund, the difference between paying too much and paying the right amount can similarly outweigh the cost of paying for tax preparation.
  • The cost of making a mistake on your taxes could add more to your tax bill in penalties than you would have paid to have a professional prepare your return.
  • A paid preparer might be able to give you advice on actions you could take now to reduce your tax bill in future years, so there could be a payoff beyond just this year’s return.
  • You have to weigh the cost of having someone else prepare your taxes against the amount of time it would take you to do it. After all, your time is valuable.”

Whatever you decide, make sure you have all the relevant information gathered together before you begin.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.
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