One Simple Strategy to Save Costs While Having a Professional File Your Taxes

by Kevin on March 22, 2012

Why do you keep putting off filing your tax return?

Do you not want the refund you are due? Or are you surprised to find you owe the government a ton of cash?

I’m all for filing your own taxes. There are too many good software options that cover 90% of the potential situations you will run into. If you have a basic tax situation (for example, if you qualify for a 1040EZ) or have only a somewhat complicated tax situation, good tax software can take care of you. Options like TurboTax, TaxAct, TaxSlayer, and so on all use the same basic concepts. They’ll get your tax return correctly while providing you audit insurance or audit protection (make sure the company provides this).

For those with moderate to severely complicated taxes — you run a small business, you do freelance work, you’ve had lots of changes to your personal situation — then consulting a tax professional is a good idea. They’ll make sure your return is accurate first, then maximize your refund second.

Why We Hate to Use Tax Pros

But let’s be honest. No one wants to pack up all of their financial documents and drop them off at your accountant or CPA. Your receipts are a mess and you are probably missing a few documents. It’s embarrassing and is like throwing in the towel. “Listen, Mr. CPA. I’m admitting I can’t handle being an adult. Could you do this for me?”

Cha-ching, there goes a few hundred bucks.

That cost is the biggest reason most people avoid using a tax professional to do their taxes. If I can try to do it myself it will probably┬ábe accurate, but at least I’m saving a couple hundred dollars that I would have paid to a CPA. It’s easy to ignore having an inaccurate return until you get a letter from the IRS.

One Strategy to Save on Professional Tax Help

There’s a simple solution that will keep you from spending $200 or $500 or whatever your accountant likes to charge for tax prep work every year.

Just use professional tax help every 2-3 years.

Honestly, you could even take it as far as letting a professional handle your taxes the first year, then you take note of everything they deducted, claimed, and didn’t claim. Ask good questions, thank them, and do your own taxes for the foreseeable future.

But if you don’t want to take it that far you can get a tax check up every few years. The key here is not to go longer than 3 years because after a 3 year window, any tax refund you are due is no longer claimable. (That’s why billions of dollars in unclaimed refunds are about to be kept by the government this year.)

There is some risk to this strategy. You’re trading risk for saving hundreds of dollars. If you let a pro do you taxes in year 1 and year 4, and you handle years 2 and 3, you will save money but leave yourself open to audits if you do your taxes incorrectly. This shouldn’t be a serious problem unless you have a serious life change that attracts the attention of the IRS or if you use awful software (or try it old fashioned with a pen and do some awful math). If you stick with good software you will save the money and still get a majority of the refund up front. The CPA can then recheck your returns from the previous years and squeeze out extra refunds for you for random, nitty gritty tax details you didn’t think of.

Does this sound crazy to you, or would you try this next year?


Cherleen @ yesiamcheap March 24, 2012 at 2:49 pm

My best friend is an accountant, which maybe one of my advantages against other people here. She helps me with my taxes and teaches me what to do and what not to do. Best of all, she does not charge me any cent at all!

Jamie March 26, 2012 at 6:57 pm

I use a professional accountant because we have a small business and I don’t keep up with the ever changing tax codes and laws. However, to keep costs to a minimum, I use Qucikbooks and keep myself very organized throughout the year. So when it comes time to file taxes, it requires a minimal amount of time for our accountant to review, fix or bring anythign to our attention and file.

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