At tax time, the question always comes up about whether to use software or hire someone to do your taxes for you. While this post is titled, TurboTax versus CPA, those are really just specific examples of each side of the argument.
When I say Turbo Tax, I mean:
- Filing online at irs.gov
- Filing out a paper 1040
When I say CPA, I mean:
- A CPA
- An accountant
- H&R Block, Jackson Hewitt, or a similar service
Tax software has gotten better and better over the years and can handle just about any situation. If you are going to do your taxes yourself, I highly recommend using software (even online versions) as opposed to filing out a paper form. Let the software do the work for you!
When deciding between doing it yourself, or using a professional, the general consensus is that most returns can be handled by the software route, for less money. Since the guys at H&R Block (and similar businesses) basically just use the same software you would be using, you’re probably better off doing it yourself if you think that they could handle your taxes.
So the only real question is whether to do it yourself, or get a real professional, like a CPA, involved. You probably don’t need a CPA if you have pretty straightforward return with income from wages and interest and limited investments. If your return is fairly similar to the previous year, then you can probably handle it yourself as well. For most people, particularly those without any big areas of uncertainty, doing it yourself will suffice. It will take a little longer to do it yourself (about 4 hours vs an hour for a CPA), but the lower cost usually makes that time well spent.
If you have a more complicated return, need to file many forms, have had a major life event in the past year, or have some pressing questions, then you may be better served by using a CPA. It will cost you more ( I’ve paid about $300 with a CPA versus $50 with Turbo Tax), but you may sleep better knowing that everything was done by a qualified professional in these cases.
The bottom Line:
Easy returns are easy for you and not worth the premium pricing of a CPA. Difficult returns quickly make the extra cost of a CPA well worth it.
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