- Having to take time off to go and see the accountant
- Having them take longer to do the taxes than I would myself
I have therefore decided to do my own taxes from this point forward
The more I thought about it, the more I realised that people like me should really be doing their own taxes.
You should do your own taxes if...
...You completely understand your own financial situation
If you completely understand your own financial situation or are looking to really take control of your financial situation then you should really consider doing your own taxes. Unless you have companies embedded within trusts and a lot of complicated structures set up it is quite easy to do your taxes yourself.
In Australia the Australian Tax Office makes it quite easy to do this. They give you a program which helps you work your way through your taxes and the guides on their websites are reasonably simple and easy to understand. I don't know what other countries' systems are like but if it is anything like Australia you really should be able to work it out.
If you really have no idea
, have your accountant walk you through every line of your tax return...and then fire them the following year (once you understand it).
, have your accountant walk you through every line of your tax return...and then fire them the following year (once you understand it).
For me, seeing the accountant was more of a safety blanket. I would go into my meeting with summaries all typed up and my paperwork filed according to tax sections. All the accountant needed to do was to tick it off. In 2 years of seeing them I only allocated one line item incorrectly (with respect to my investment property).
...You value your time at less than the accountant is charging you
I recently wrote about valuing your time and outsourcing tasks where your time is worth more than the cost of outsourcing. Ask your accountant how much they charge per hour. If you value your time at less than the accountant is charging you then you should consider doing your taxes yourself.
My accountant charged $110 per hour. I value my time at something less than this (I don't have a firm figure in mind but it is somewhere around the $50 / hour mark). I am able to do my taxes and actually enjoy doing them and it doesn't really make sense for me to pay someone more than I would pay myself in the same situation.
...It is more convenient to do your taxes yourself
Although outsourcing your taxes may seem more convenient if you stop and think about it, it may not be that convenient for you. I had to take a day off to visit my accountant and then had to wait for them to post out my tax return, I then had to sign and return it (in the mail) then wait for them to file it before they were actually filed. I then had to go in and pick up the physical copies of my paperwork.
Honestly it is far more convenient for me to take a Saturday off and do everything in the comfort of my home.
Doing your taxes yourself is not for everyone
Not everyone can and should be doing their taxes themselves. For example if you have complex structures in place (companies, trusts etc) and you don't completely understand the tax law around them then you probably shouldn't be 'having a stab'.
However if you don't have complex structures in place but you don't yet have the requisite knowledge then you really should consider increasing your level of understanding. Even if you use an accountant this year, see exactly what they claim and don't claim and ask a million questions so that next year you are ready to do your own taxes.
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I've always done my own taxes however this year will probably outsource it.. While it may cost me more than what I am paying myself, I want to make sure I am building a relationship with an accountant that know how to report and is effective as what they do..
ReplyDeleteFor me there is nothing better than outsourcing to an expert, I know how complex tax laws are having worked for the tax office :)
I agree with the outsourcing to save time argument however accountants typically charge more than $100 per hour which is certainly more than I pay myself.
DeleteI actually found that the ATO's website and guides are reasonably comprehensive (although it does take time to understand).
If you have one source of income all year, perhaps doing the taxes yourself could be easy. Now, if you have multiple sources of income, qualify for certain tax breaks, and there are complicated purchases, then that's the time you'd get the services of a professional. That, or you can look for ways to manage all of them through a program in your computer. But if it really gets too hard for anyone, perhaps getting an accountant should be the way to go, right? Thanks for your suggestions!
ReplyDeleteSergio Boyd @ Patrice Mills CPA, Inc.
Hi Sergio. I actually took the approach you suggested. When I had one source of income I did my own tax returns. When my tax returns started to get more complex I moved to using an accountant.
DeleteHowever I (personally) found that I preferred to understand exactly what my accountant was doing and what I could claim and what I couldn't. Once I understood what was happening then the accountant merely became a checking mechanism which is why I'm moving back to doing my own taxes.
I agree that accountants are great for people who don't understand the ins and outs of their own tax situation however I am advocating that people should really be all over their own tax situation.
I know this can't always be the case but for the great majority of people an accountant is really not a lot more than a check
Agree Sergio, I've done my own taxes for the past couple of years but feel it's now time to go to an expert after my investments have started to become a bit more complex :)
ReplyDeleteHi Jef. Unless you have some really complex structuring doing your own taxes is something I think you should do yourself. I think it is valuable being completely on top of what you're doing and how your tax position affects your investment return.
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