13 Apr Is a tax preparer worth the cost?
Q. I’ve always done my own taxes, but I’m always a little nervous I’ve made mistakes. How can I figure if it makes sense to hire a tax preparer? What cost should I expect?
A. The answer to this question is completely dependent upon the complexity of your tax situation.
If you itemize deductions on your return, do extensive stock trading or are self-employed, doing your own tax return could be an expensive mistake, said Steven Gallo, a certified public accountant with U.S. Financial Services in Fairfield.
“Missing some minor deductions can easily cost you more than the services of a professional tax preparer would,” Gallo said. “If you are having fears of making a mistake, chances are you should be using a tax preparer, even if the only benefit you receive is peace of mind.”
Michael Gibney, a certified financial planner with Highland Financial in Riverdale, said one consideration is whether or not the tax preparer will save you money.
“If I pay a tax preparer $500, will he/she be savvy enough to justify this cost? That is, will he/she make a recommendation that will save me $500 or get me back a refund $500 greater than if I were to prepare my own taxes?” he said.
Tax laws change every year, and you have to assume the person you are hiring knows the latest laws, Gibney said.
“Granted, TurboTax has gotten much better over the years, but the one-on-one relationship can be very valuable,” he said.
Gibney said you should interview several tax preparers before making any decision.
“When you approach a tax preparer bring your past two years returns and ask them what, if anything they would have done differently,” he said. “If there are significant differences, you should feel comfortable hiring them as long as cost is reasonable. If not, then make your decision based on how much time you spend preparing your own taxes and whether this is worth your time.”
So exactly what cost is reasonable? That depends entirely on how complicated your tax return is.
“If you and your spouse are salaried employees who receive a W-2, and you do not own property, or a business, or have complicated stock options, etc., then you should expect to pay anywhere between $250 and $500,” Gibney said. “If your taxes are more complicated, the cost increases based on the complications.”
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This story was first posted in April 2015.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.