Personal income tax returns are filed once a year, every year. There are pros and cons to preparing your own personal taxes rather than by another method. Alternate ways to file tax packages include using online software, completing an electronic tax package, and working directly with a tax company.
A lot of personal data and forms are required to complete your personal tax return. For example, work income for the prior year needs to be included on your return, as well as expenses such as medical receipts.
You may not want to disclose your personal data to a tax professional or to a friend who offers to help you complete your taxes. Perhaps you are embarrassed that you earned less money than the previous year or that you take certain medications. The advantage of preparing your own personal taxes is that you are the sole person to see your personal figures and receipts, aside from the government tax section. You do not have to discuss your information with anyone else to complete the calculations.
Control over the Process
Another pro, or advantage, of preparing your own personal taxes is that you have complete control over the process. You decide when during the week you will work on your return and whether you will use a paper or electronic method to process your taxes.
You fit the preparation of the tax return into your own schedule as you see fit. If you work with a tax professional instead, you would need to book an appointment and the timing may not be optimal for your schedule. You also must follow the rules of the tax preparation company and use the software they provide for their customers. The tax professional may use software you have never heard of before. As a result, you may feel uncomfortable and out of touch with your own information.
You lay your trust in the tax company that they know the process and you give them control over preparing your personal taxes. You, therefore, may wish to prepare your own taxes.
The environment provides another advantage to preparing your personal taxes. You can complete your tax package within the comfort of your own home. Use your favourite pen to fill out the papers or use your computer to submit an electronic version. You have choice and you have comfort.
Some tax companies, on the other hand, require you go to their offices to complete paperwork. The office location may be unfamiliar to you and the atmosphere of the office may be anxiety-provoking for you. As well, discussing your personal finances with a stranger is likely a stressful environment.
Many tax professionals charge fees to process your personal taxes. Another pro, or advantage, of preparing your own taxes is that you don’t have to lay out this fee. H&R Block Canada for example, requires customers pay 15% off the first $300 CDN of the income tax refund and 5% of the remaining refund amount. Money is saved by computing your own tax return!
On the con side, however, you may miss recording all deductions of which you are eligible without the aid of a tax professional. Remember that tax preparation companies train their staff in the latest tax updates and knowing deductions is a key part of their jobs. Perhaps you are not aware which of your receipts can be included in your tax return and therefore you pay more then is needed. You may not get as much of a refund by completing your own personal taxes rather than working with a tax company.
Another disadvantage of preparing your own personal taxes is the burden that the process carries is on you alone. Working with a friend or tax professional, you are able to shift some of the responsibility for calculating numbers to the other person. Perhaps that person is also more familiar with certain sections of the tax package than you. The process can go more smoothly and more quickly with a second person to help you.
As well, working with a tax preparation company keeps you on schedule. When you book an appointment, you ensure that your taxes will be sent either by mail or electronically before the deadline. There is a specific date that your taxes need to be sent and a penalty may be charged under specific circumstances if the package is sent late. You lower the risk of procrastination and late payment fees by working with an organized tax professional.
There are pros and cons to preparing your own personal taxes. While you may wish to keep your personal information private, working with a tax professional helps ensure deductions are not missed and that the payment is sent on time. Weigh the decision and make the one best suited to your personal circumstances!