Author's Note: What is the ideal tax situation for you?
In the 14 years that I've been paying income taxes, I've only used an accountant once. In my early earning years, I was a lock-in for the 1040EZ. No dependents, no mortgage, no reason to make things complicated. I did my taxes online and never looked back. Then life intervened. I went freelance, which meant self-employment taxes and business deductions. Then I added another side business, which meant another Schedule C and even more expenses to track. When we bought our house, suddenly it made sense to itemize. When we couldn't sell that house, we decided to rent it.
Now we had two mortgages, rental income, two businesses, three kids, and an overflowing envelope of receipts. Nervous that we were inviting an audit by doing our taxes ourselves, we hired an accountant. He was expensive and didn't really do anything differently than the online services, but he did catch one mistake: we had neglected to pay local income tax for the past five years. Oops!
- IRS. "2014 Filing Season Statistics." Nov. 21, 2014 (Dec. 12, 2014) http://www.irs.gov/uac/Newsroom/Nov-21-2014
- IRS. "Instructions for the 1040." 2013 (Dec. 12, 2014) http://www.irs.gov/pub/irs-pdf/i1040.pdf
- IRS. "Topic 352 – Which Form – 1040, 1040A or 1040EZ?" (Dec. 12, 2014) http://www.irs.gov/taxtopics/tc352.html
- Saunders, Laura. "What Tax Preparers Really Charge." The Wall Street Journal. Jan. 24, 2013 (Dec. 12, 2014) http://blogs.wsj.com/totalreturn/2013/01/24/what-tax-preparers-really-charge/