Americans spend more than 7 billion hours each year doing their taxes, and less than half of people do their taxes on their own. With the IRS tax code constantly becoming more complex — the number of pages in the code has increased almost 17% over the last century — it makes sense to consider hiring a certified public accountant to do your taxes.
There are both advantages and disadvantages to hiring a CPA at tax time. Here’s a look at some of each.
Hiring a CPA makes your job much easier. You don’t have to worry about plugging all of your financial info into a computer program to try to figure out whether you owe more taxes or are getting a refund. You still need to keep good records, but now you can pawn them all off on your accountant and let him or her get to work.
Another advantage of using an accounting professional to do your taxes for you is that you are less likely to make a mistake, either one that overestimates your tax liability and causes you to overpay or, worse, one that makes you underestimate your liability, in which case you could wind up paying a penalty. Bookkeepers and accountants who specialize in doing tax returns tend to keep up on changes and know the tax laws so they are less likely to make a mistake.
On the downside, there is the expense of hiring a CPA. Accountants usually charge by the hour, and most charge more than $100 an hour. Even a simple tax return can easily take a couple of hours for an accountant to prepare, so you are looking at at least a couple of hundred dollars to get your taxes done. If you have a more complex return, it could cost you considerably more. Compare that with using automated tax software that usually will do your return for $79.99 or less.
Another disadvantage to using an accountant to provide tax services is you may not get your taxes done as quickly as you want. When you are doing them on your own, you can start as soon as you have all of your tax information, which is usually by early February. With an accountant, you usually have to make an appointment, and because of how busy they are around tax season, you might have to wait until March or even early April. That could be a big problem if you are counting on refund money.
When considering whether to hire a CPA to do your taxes, you have to weigh the time you will save vs. the money you will spend as well as a host of other pros and cons before making a decision one way or the other.