Tax preparation is the process of preparing tax returns. You can prepare taxes with the help of tax preparation software or online services. The process might also be undertaken by a licensed professional, such as a licensed accountant or attorney.
When the deadline for tax filing approaches, Especially, US tax preparation or Cross-border aka Canada-US tax preparation, it becomes an overwhelming task to decide whether to do the task oneself or hire a professional. But to choose one of the two, it highly depends on some factors that must be put into consideration. Financial experts suggest being cognizant of the following situations before embarking on any path:
Complexity of the Financial Situation
The earnings of individuals can come from differing sources. To be aware of the complexity of one’s financial situation matters most. You can do it yourself, but if you cannot take optimal advantage of each deduction, the process is likely to of little benefit. The tax system itself is so overwhelmingly complex that having the information about how your particular financial situation relates to the system can be a somewhat difficult task.
A complicated financial condition may include owning a business, holding some investments, being divorced and paying alimony, or working freelance. Such conditions call for professional help. Contrarily, if earning a regular salary at one full-time job, being single, renting or the like are the situations you currently encounter, it may be feasible to file your taxes using tax software. But also consider that these situations change into the former as soon as you decide on starting a family, which brings us to;
A Change in the Financial Condition in the Past Year
Getting married, having a child, buying a house, or starting entrepreneurship is the kind of examples that require you to do your research on all the parameters around those situations and equip yourself with the knowledge of deductions and credits that might go with them. Also, often amongst the hassles of daily life or otherwise not having enough information about the DIY tax software and the whole related procedure ends up delivering no benefit, in which case, hiring an accountant might be more feasible.
Also, tax credits and deductions for seniors often go unnoticed. There are several income-based advantages that seniors can take but if they are doing it themselves, it might go overlooked, and the government apparently will not tell them about it. Hiring a professional might not guarantee the chances of seniors getting them, but it sure does increase them.
Affordability
The DIY method is likely to save some money but it has its pros and cons, and again, the recommendation is only made when you know all ins and outs of the procedure and know best where such software can be accessed for free. Contrarily, hiring a professional might cost money, but it ensures you have all the information and clarity regarding your tax situation. Therefore, the final decision rests with the taxpayer once he/she takes all relevant factors into account.
