Tuesday, 7 October 2014

I did my own taxes...and it was great!

I am usually terrible at doing my taxes on time.   I always have the receipts sorted out and spreadsheet done well in advance however when it actually comes to seeing the accountant and submitting my taxes I tend to procrastinate for weeks or even months.  Last year I submitted my taxes 6 months late.

This year I swore I would be different.  But not only that...I also decided to do my taxes myself

Why did I do my own taxes?

There are a whole host of reasons I decided to do my own taxes this year including:

  1. I virtually do them for my accountant anyway!
    • The spreadsheet I give my accountant is so detailed it means he never has to look through any of my documentation and I generally only have a few questions that I need to ask him
  2. I value my time less than my accountant charges me
    • My accountant charges $120 per hour to do my taxes and given the work I normally do on them I generally only get charged for 2 hours of work (i.e. $240)
    • I wasn't exactly sure how long it would take me to do my taxes but I was pretty sure I would be ahead if I did them myself
    • As it turned out it took me 4 additional hours to do my taxes (i.e. the time taken to do what the accountant usually does) 
    • I value my personal time at less than $60 per hour so it was a great trade for me
  3. I hate taking time off to go to my accountant
    • I normally have to take a bit of time off work to go to my accountant who works in the suburbs (while I work in the city).  Work doesn't have a problem with this but half the reason I generally procrastinate for so long is that I find it such a waste of time to go out there
    • I thought about getting an accountant that was more convenient but this one knew my personal financial situation rather well and I didn't feel like having to explain it to someone new all over again

Would I do my own taxes again?

All in all doing my own taxes was a pretty positive experience.  I would actually recommend it for most people.  If nothing else it will get you closer to understanding your own financial situation.

I have seen others write (and I have written before) that you should probably hire an accountant if your tax affairs are particularly complex.  The term 'complex' covers a vast array of personal financial situations however I found it reasonably easy to do my own taxes and I have
  • A wage
  • Employee share plans
  • Deferred compensation
  • An investment property
  • Managed funds
  • Dividends
  • Capital gains (from share trades)
I don't have things like trusts and companies which would definitely make things more complicated.  However I have a reasonable degree of complexity in my personal financial tax return and I still found it easy.  Further the Australian Tax Office website is great if you get stuck on anything (which I did several times...hence taking 4 hours where the accountant only charged for 2...the Low Value Pool is a nightmare!).

I would probably do my own taxes in the foreseeable future.  Do you do your own taxes this year or did you decide to use an accountant?

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  1. As much as I'd love to the cost of making sure that it is done properly, especially as I start to invest in property (from memory you already have property) but I'd like to leave it to someone who's up with current legislation.

    I used to do my own taxes however have stopped doing this.. Good on you for doing your own though :)

    1. Hi Jef! That was my view too however after giving it to an accountant for 3 years and asked tons of questions about what I could and couldn't claim for my property I realised that I was paying for a security blanket that I didn't really need any more.

      The property deductions are really easy to work through on e-tax (other than the Low Value Pool) as I mentioned above but you may want to get a tax accountant for a for years to double check your work (which is what I did).

  2. This is a question most people ask. And the answer is pretty straightforward: if there's only one source of income, and that a person feels what was computed is a just payment, then doing it by one's self is a good idea. If it's complicated and a person doesn't want to put up with all of the confusion or feels like he can't handle it on their own, getting professional help is a good recourse.

    Rebecca Cross @ Advanced Accounts