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Would it be worth my money to pay someone else to do my taxes?

I usually draw an analogy between auto maintenance and financial matters. Car owners can do a lot of their own maintenance. They can check and refill fluids, check and adjust tire pressure, and change light bulbs. Owners with more advanced mechanical skills and appropriate tools can change fluids, overhaul transmissions, and replace various engine gaskets. However even the most advanced shadetree mechanic soon will run into problems requiring special tools or rarely used techniques, and at that point the amateur mechanic should turn to a commercial mechanic for help, and for a really difficult problem, the shadetree mechanic should turn the problem over to a commercial mechanic. The trick is to know your limits.

I believe if you have a simple tax return you can do your own tax returns, perhaps with some help from the folks at the Tax Strategies discussion board or from either of two IRS-sponsored programs: Volunteer Income Tax Assitance (VITA) and Tax Counseling for the Elderly (TCE). You have a simple return if you have a few W-2s and maybe a few 1099s, deductions related to your primary residence, and you stick with Schedules A, B, and D.

I think you can prepare you federal income tax returns by hand if you stick with the basic tax forms and Scheduled A and B. I think Schedule D marks the threshold where you have to use tax preparation software.

If you use software to prepare you federal income tax returns, then you should also use software to prepare your state income tax returns. The incremental cost of the state tax add-ons is small, and you've already entered most of the information you need for your state returns when you prepared your federal returns. Additionally, based on my experience filing state tax returns in Ohio, New Mexico, and Virginia, state income tax returns are not as straightforward as federal tax returns, and the aggravation I avoid with the software is well worth the cost of the software.

If you have a complex tax return then the fees you'll pay a tax professional to prepare your tax return are worth the aggravation you'll avoid and the better return you'll file. I think Schedules C and F, the Alternative Minimum Tax, and sale of rental real estate all mark the threshold to complex tax returns.

If you think you may want to find a tax advisor, it's better to find one sooner, rather than later. Good tax advisors will have their calendars filled by the end of the year, and they offer services far beyond simple return preparation services. This TMF article describes a strategy for finding a good tax advisor:

Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) are IRS-sponsored programs. According to the IRS web site: "Volunteers consist of IRS employees and individuals from the community who volunteer their time and services to provide free tax preparation assistance to individuals who may find it difficult to pay for tax preparation services. The volunteers who provide this valuable service receive training provided by IRS employees and other tax professionals." In theory, VITA and TCE services are limited to invididuals with incomes under $35,000, but in my personal experience VITA volunteers have always been willing and able to help me as long as I respect their time. You can get more information about both programs from these links:,,id=108104,00.html,,id=107626,00.html

Unfortunately I'm not aware of a single web site that will produce locations of VITA and TCE offices. Some elected representatives and some state, county, and local governments will have this information on their web sites. You can search for your community name and VITA or TCE. Finally you can get information about local sites by calling toll-free 1-800-TAX-1040 (1-800-829-1040).

David Jacobs
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