Since it’s tax season, I’ve been asking my friends how they file their taxes. For the most part, the people I know are 3-5 years out of college, are either in graduate school or working (as is the spouse), and don’t have complicated tax situations. Few own condos or have a lot of investments, and those who work get W2s or 1099s as the situation dictates.
Since most have very basic tax situations, I expected everyone to use some sort of online service. It’s cheap, easy, and they’ll get you the refund owed (or calculate how much you owe). There’s not much room to take additional deductions, and when you’re taking the standard deduction (as most of us are), there’s not much room for an accountant to find any extra money.
My Friends Don’t Know How To File Taxes
I was stunned to find out that most were planning on finding an accountant to do their taxes for them or using their parent’s accountant. Maybe it was the stigma of taxes being complicated and time-consuming, or maybe that’s just how their parents did it, but for some reason, I barely found anyone who used TurboTax or another online service.
As I dug deeper into the reasoning, most had never even really considered doing their taxes thermselves. I got a bunch of blank stares, not all had reasons for using an accountant vs. doing it themselves, and they had no idea what the costs of doing it themselves would be. For the most part, my friends are in touch in reality, but this time I was really surprised that they didn’t bother to even investigate.
When your tax situation is simple, there isn’t a lot of room for an accountant to get you additional tax breaks you don’t know about. With TurboTax, they ask you about relevant questions about income, tax deductions (above and below the line), and how your family situation has changed. When life is simple, I am a huge proponent of doing it yourself.
You Learn A Lot By Filing Taxes Yourself
By filing your taxes yourself, you find out a bit more about the system and what you can do in the future to get a bigger refund, and what things you think you should do but don’t have any effect (I was surprised in my first year out of college that the amount I contributed to charity had no effect on my tax refund. I always assumed I would get a deduction for it, but charitable contributions can only be deducted if you itemize, which most people who recently graduated college don’t do).
I tried to convince my friends to do it themselves and got a few to actual try out TurboTax, which I use and am familiar with. Others had already committed, but were surprised that it was so cheap and easy to do.
My experience filing online the past 4 years has been very positive. Answer some questions, enter in my forms (and more recently, they can pull your investment forms straight from your brokerage account), and voila, my tax refund is sitting there in the corner of the screen.
Try Doing Your Own Taxes This Year
If you have never considered trying to do your taxes yourself, give it a shot. If you hate it, you can still hire an accountant. But if your tax situation is fairly simple, try doing it yourself. Whether you hire an accountant or not, you’ll still need the same information and to have all your forms, so you’re not really saving much time going with an accountant. The biggest difference will be cost!
Do you do your own taxes or pay someone to fill in the information for you? At what point did you start/stop filing your taxes yourself?