Tax Preparation Fees – do it yourself at income tax time or hire an expert ?  It’s that time of year again as these words get written. Springtime. And what goes along with Springtime? Taxes. All goofy TV commercials featuring goofy “tax geeks” aside, paying taxes is no laughing matter.

It can be a huge headache, and it can also be a costly headache.

Costly not just because of the payment of the taxes, but because of tax preparation fees associated with said payments.

The costs associated with not getting your tax paperwork and payments are very high.

If you get audited and found guilty of tax evasion, you’re looking at up to $250,000 in fines and up to five years behind iron bars.

Even if you aren’t found guilty of tax evasion, but are just guilty of doing your taxes wrong and not paying your so-called “fair share”, a few mistakes on a few lines of your documents can mean that you have to cough up thousands upon thousands of back-due tax dollars to your friends at the IRS.

What this all means for you is that you had better get your tax preparation paperwork done precisely right. But do you necessarily need to have a professional do your taxes for you? Let’s look further into this matter.

Tax Preparation Fees  | The Cost of Getting Your Taxes Done Right

According to the National Society of Accountants, for those Americans who need some extent of complex tax return forms completed, the following are the average costs associated with their services being rendered:

• $58 for Form 940 (federal unemployment)
• $212 for Form 1040 Schedule C (profit or loss from business)
• $415 for Form 1041 (fiduciary)
• $551 for Form 1065 (partnership)
• $584 for Form 990 (tax exempt)
• $665 for Form 1120S (S corporation)
• $692 for Form 1120 (corporation)
• $2,044 for Form 706 (estates)

As you can see, there can be considerable extra costs to paying your taxes beyond the payment of the taxes! This is why many people try doing their own taxes each year.

According to research conducted by Get Rich Slowly and MoneyRates, the following statistics apply to Americans when it comes to preparing their taxes:

• 62% are most likely to self-file tax return forms with the use of software
• 23% are most likely to pay someone else to do their taxes for them
• 10% are most likely to file their own returns without buying or using software
• 5% have access to someone who they personally know who is a tax professional and will help them out free of charge

The costs associated with getting your tax return docs in a row vary widely. If all you need is a simple 1040EZ then you can probably do them for free, but if you have investments, your own business, real estate assets, and so on and so forth, be prepared to pay one of those fees, depending on your situation, that you just read over above.

Your own costs for tax preparation services will differ based upon where you live regionally, too. For example, the most expensive place to get your taxes done by a professional is the Pacific Coast region, whereas the least expensive place for getting that service is the region comprising Alabama, Mississippi, Tennessee, and Kentucky.

Tax Preparation Fees  | Why Should You Ever Pay to Have Your Tax Forms Done for You ?

A lot of Americans are going to try to do their own tax returns simply because they believe that doing so saves them money. However, if you’re one of those people, ask yourself what you really know about tax returns and tax laws, most especially if you’re one of those who must file one of the more complex tax returns.

There’s a conspiracy theory that says that the government makes the tax laws as complicated as it possibly can get away with in order to trip people up so that they pay more than they should, or to scare them into paying too much.

This may be just a crazy idea, but there’s a reason for its existence. Look at the tax code and unless you are a professional accountant or an H&R Block pro, you’re likely to have your mind boggle.

This is why 23% of Americans are most likely to pay a professional to do their taxes for them. But there are those in the great majority, 62% of Americans, who plan to file their own taxes but use tax prep software.

There’s still a cost associated with that software (you have to purchase it, and it’s wise to update it every year), but those people figure that they’re still saving on their costs because buying TurboTax or something like that is cheaper than paying another human being for their labor.

Why shouldn’t you go in at least for that method of paying your taxes?

It all comes back to the factors of knowledge and time. Even if you buy excellent tax prep software, remember the old adage concerning computer generated models of “garbage in, garbage out”. While the software will help you, guide you, and prompt you, in the end you still need to make proper inputs or you’re just going to screw everything up.

If you make a substantial income compared to the average American and you screw up, you run a high risk of getting audited and finding out that you owe the IRS a considerable sum of money…money which you are likely to have already spent back when you didn’t realize that you owed it to your Uncle Sam.

Getting audited by the IRS can be a harrowing experience even if you can cough up the money that you owe.

Then again, you might pay the IRS too much money if you try to do your taxes yourself, with or without the help of computer software.

The IRS will happily accept your generous donation and never tell you about it.

After all, as far as that agency is concerned, you alone are responsible for getting your taxes done properly.

You alone, even if you use professional outside help, are responsible for paying the right amount that you owe, or for demonstrating unto the IRS that your Uncle Sam owes you some change.

So, without the proper knowledge concerning tax laws and regulations, you may get audited, or you may get fined, or you may give someone at the IRS a free performance bonus that you didn’t mean to give them.

Then there’s the matter of time…

Even you do have sufficient knowledge about taxes, do you really want to spend the time that it takes to do them yourself, whether by hand or with the help of computer software? Time is money just as knowledge is power.

Conclusion

The costs associated with failing to get your tax return docs drawn up right are potentially vastly greater than paying for outside help to ensure that they are done right.

If you have very simple tax returns to fill out, you can safely go ahead and try to save money by doing them on your own.

But, if you find that you have anything even somewhat complex to take care of tax-wise, you’re wise to consider buying tax software at the least. And don’t dismissively blow off the professional “tax geek” in the name of saving a few bucks. It might not be worth the price you pay.

Paying tax preparation fees may be worth it, unless your tax situation is simple and you can do it yourself.