Doing Your Own Taxes: Is It A Smart Idea?

By Sok Verdery

Having your taxes prepared by an accountant or tax preparation company can be a costly service that can add-up to a considerable yearly expense. The alternative to this is preparing your own taxes and while this may seem like an intimidating and even risky task, there are ways that you can make doing your own taxes easy. Given the recent state of the economy finding ways to save money are always welcome, and filing your own taxes can help ease this financial burden. Here are your options for preparing your own taxes, and tips for making it easy and correct!

Advantages of Doing Your Own Taxes

There is a growing trend of people preparing their own taxes. There are a number of reasons that make doing your own taxes a good idea, but the motivation for most is likely the need to cut back expenses in this difficult economy. In fact in 2009 the number of people in the Unites States that prepared their own taxes was up 17% according to the IRS. In addition to saving money, preparing your own taxes also has the benefits of

— Allowing you to do them at your own pace rather than in one sitting.

— Giving you a greater understanding of your financial situation.

— Allowing you to see exactly how much tax you are really paying each year.

— Gives you a better understanding of how to maximize your tax credits to get the greatest return.

Your Options for Cheap (or Free) Tax Preparation

The cheapest way to prepare your taxes is to do it yourself. This may seem intimidating given the complexity of tax forms and rules, but there are a number of resources available that can take the confusion out of preparing your own taxes. One of the best resources is the Forms and Publications page of the IRS website. Here you can find all the guides and forms you will need to tackle your taxes on your own. The IRS also offers a free online filing system call Free File that even offers assistance for those you require it at a fairly inexpensive rate.

While tax preparing companies such as H&R Block and Jackson Hewitt have seen declines in business of 6% to 12% respectively for 2009, there have been increases in the sales of online tax preparation options and software packages. If going it alone seems too intimidating and you would like some assistance, but do not want to pay the price for someone to do it for you, one of these online filing options may be the right choice for you. H&R Block has several options for Do-it-yourself Taxes, and Jackson Hewitt even offers a coupon to use their online service.

What You’ll Need

Before beginning your taxes, no matter what method you have chosen to use, it is always important to make sure that you have all the necessary documentation before beginning. Make sure that you have your income statement, receipts for any deductions, and all other relevant financial paper work. If you have never done your taxes yourself, you will also need to make sure that you have all the forms required to complete your return or a software package that is up-to-date, and of course a calculator.

Deciding to do your taxes on your own may seem like an intimidating task. It can save you a lot of money, and given that the process doesn’t change much from year to year, once you have done it, the process will become simpler.

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