Where Should You Get Your Taxes Done?

How I recommend people get their taxes done. Should you go to an accountant, or one of the companies that have the guy dressed as the statue of liberty standing outside waving a banner, or TurboTax (or the like)?

I couldn’t resist this topic as I just received a question from a reader.

They were asking where I recommend that people get their taxes completed. Here’s the question:

“How do you recommend people get their taxes “done”? Should we go to an accountant, or one of those companies that have the guy dressed as the statue of liberty standing outside waving a banner, or TurboTax (or the like)?”

My answer: Start your tax return for free with a service like TurboTax online.

If you get to the end and feel confident in your own efforts, then pay for the service and file your return. If you don’t feel confident at that point, then take your information to a retail shop or CPA (depending on what you can afford, although I highly recommend the later) and compare their results with your online results.

Next year you might be more confident in doing your taxes yourself.

If you need another rule of thumb, then consider this: the more complex your financial situation becomes (i.e. rental properties, heavy stock trades, small business), the more likely it is that you should use a professional, like a CPA, to help you with tax planning and filing your taxes.

More Detail: The 3 Places to Get Taxes Done

This really is the ultimate tax preparation question isn’t it?

There are basically three major players in the tax preparation game:

  1. the public accountants (CPAs and Enrolled Agents) and other traditional practitioners,
  2. retail/franchise tax preparation services (i.e. H&R Block and Liberty Tax), and
  3. do-it-yourself tax software (i.e. TurboTax).

From what I could find in my limited research, H&R Block does 1 out of every 7 tax returns. TurboTax claims to prepare more than anyone, so that leaves the professional with at least 2 out of every 7 to do.

Like most things in personal finance, the answer to this reader question really depends on a set of personal circumstances.

A CPA could do his or her personal taxes with off-the-shelf software and a retail tax preparation store could employ the smartest tax wizard on the planet. So it’s impossible to pick one of these avenues as the very best for every situation.

Why Tax Software is Cheapest

One thing to note is that they each are working a different price-point. Software is typically the cheapest. This doesn’t mean they aren’t the best.

Tax software has become extremely sophisticated. So don’t look to a professional to outsmart the software. They are probably just using a professional version themselves.


Tax software is cheap because all software is cheap. It’s a digital product. Easy to store and replicate.

What a professional like a CPA can do is to help you navigate the difficult tax questions like business structure, tax planning moves, etc. that pop up throughout the year.

Software has a harder time with this. You can’t have lunch with and discuss your small business with software.

CPAs are usually the most expensive option, but you’re paying for someone to help you with a difficult tax situation or simply to give you that extra assurance.

Right down the middle is the retail preparation outlet, who tries to serve the client who wants a bit of help, but doesn’t want to pay for the premium practitioner.

See this video I made with some other tax professionals about getting started with your taxes:

Take Time to Understand Your Taxes

I can’t stress this enough: there is no substitute for your own personal knowledge of your tax information. Unless your situation is extremely simple, no one but you could possibly know the complete ins and outs of your financial situation.

You should really strive to understand your own taxes, even if from a high level. Start with last year’s return. Look at the different sections (income, deductions, itemized deductions and exemptions, credits, and tax payments) and understand learn how they work together.

If you use a CPA, have them thoroughly review the return with you so that you understand what they did. A tax preparer of any kind (software, retail, professional) should really just be for assurance, not so that you can turn a blind eye to what is going on.

Want to use the CPA that I use to get my taxes done? Check out Larry G. Taylor, CPA.

Last Edited: March 22, 2016 @ 10:45 pmThe content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. Curtman40 says:

    More than likely I will go to one of the big tax chains to get my taxes done because I don’t want the headache of trying to solve the tax issues on my own.

  2. I have a CPA do mine every year since I have very complicated taxes. I am pretty knowledgeable on taxes and I could do them myself, but I’m sure it would take me hours and hours to do so and I’m not sure I’d get them right.

    Using a CPA is the right choice for me now.

    That said, when I retire I might start doing them myself.

  3. I am super-lucky in that my father-in-law works for H&R block part-time each year. He has done our taxes for the past 10+years.

    I would recommend H&R block if you are looking for something quick and cheap. I suspect that you can get higher quality, and perhaps a larger refund, if you went with a CPA though.

  4. I have been filing my taxed using Turbo Tax for several years now. My tax return is fairly complicated. I spend about 10 hours spread over 2-3 weeks entering and reviewing all the information for accuracy before I submit it.
    This way I understand every part of my tax return.

    If I have a question, I call IRS on the phone (if the question is related to federal taxes), or my state tax office (if the question is related to state taxes). They are pretty good at answering your questions.

    If you learn to do your personal taxes using a tax software, you could save a lot of money over the years rather than going to a CPA or an accountant.

  5. it’s given a Pleasure info here to get all the details at one place, if you learn to do your personal taxes using a test software, we could save a lot of money. enjoying while reading this Blog

  6. Retail tax offices often employ CPAs and enrolled agents, so don’t automatically rule them out. What’s important is that the person doing your taxes is willing to explain exactly what they did so that you understand. If they aren’t willing to explain, they may be doing something either that they don’t understand, or incorrectly, or deliberately wrong.

    I have corrected previous year taxes that had been prepared by every chain, many mom and pop offices, free tax prep by AARP, CPAs, and taxpayers using either software or paper. The vast majority were done incorrectly due to ignorance or lack of proper information gathering. But sometimes they were maliciously done incorrectly to inflate refunds.

    So, find someone you truly trust!