It may seem early to broach this subject, but tax season will be here before we know it. As individuals and business owners wind down the current year and start organizing financial documents and gathering receipts, they’re confronted with the age-old question: Should they hire an accountant this time or try to do their taxes themselves?
It’s a conundrum. Small business owners often have more complex tax needs than individual taxpayers. For them, it makes sense to hire someone intimately familiar with the IRS tax code. While it sometimes hurts to pay a CPA to prepare and file your taxes, it’s often better than the alternative: missing something that might leave money on the table or result in you owing hundreds of dollars in interest, fees, or penalties.
Individual taxpayers also benefit from professional services. Accountants find ways to minimize tax liability by taking full advantage of the IRS tax code, listing as many deductions as possible for the best financial outcome. On the flip side, it could make sense to prepare your taxes yourself if your situation is fairly straightforward.
Introducing IRS Free File
One option for those who want to prepare their taxes independently is IRS Free File, an alliance between the government and several private-sector tax preparation software providers. The program has been around since 2003. In spite of that, only 2% of taxpayers use it, according to industry specialists.
IRS Free File allows taxpayers to prepare and file their federal taxes at no charge through a portal on the IRS.gov website. Behind the web page interface is a bevy of tax providers offering free online tax preparation and filing services. The Free File program has restrictions and income thresholds attached to it, so it doesn’t work for everyone. But for those who qualify, it’s a viable option.
Two types of tax help can be obtained through IRS Free File:
- Guided Tax Preparation: Taxpayers are guided through the process of preparing and filing their taxes at an IRS partner site. Income restrictions apply.
- Free File Fillable Forms: These electronic tax forms are available to anyone who knows how to prepare their own taxes. No guidance is offered, so you must know what you’re doing.
States Get Involved
When first implemented, IRS Free File only provided taxpayers with free filing services for federal tax returns. However, a change in the program’s reach now extends it into 22 states and Washington D.C., allowing residents to use the program to file state tax returns in addition to federal returns. According to irs.gov, Free File state partners charge a fee for the state filing unless otherwise noted. At the time of writing, Missouri is an eligible Free File state; Kansas is not. For an updated list of states participating in the Free File program, click here.
The Burning Question
This brings us full circle. Just because you can file your taxes for free on your own, does that mean you should?
This is a question every taxpayer has to answer for themselves. Doing your taxes on your own is a viable option for individuals with straightforward tax situations. Many user-friendly software programs and online resources help make the process relatively simple. However, if you choose this option, you need to have a clear understanding of tax laws and regulations to ensure accuracy in your filing and avoid potential penalties or audits.
Conversely, enlisting the aid of a tax preparation specialist is advantageous if you have more complex investments, portfolios, or business interests. Tax professionals offer valuable insights you don’t get when working alone. They identify potential deductions and credits often overlooked and provide guidance on tax planning strategies to help you meet future financial goals. While this option costs more than doing your taxes on your own, the benefits greatly outweigh the cost.
Let Adams Accounting Solutions Be Your Go-To for Tax Preparation
If you’re on the fence about whether to get help preparing and filing your taxes this year or not, give us a call at Adams Accounting Solutions. We specialize in all aspects of tax preparation for individuals and small businesses. We can walk you through the pros and cons and help you make the best decision for your situation. Give us a call today!
Richard Adams is a graduate of Benedictine College in Atchison, Kansas, with dual majors in Accounting and Business Administration. He is also a graduate of Wentworth Military Academy in Lexington, Missouri.