Should You Do Your Own Taxes?

Well, as if the state of the economy isn’t giving us enough pain, here’s a reminder for you: tax time is on its way! We know — we’re piling on. One issue each of us faces is whether to do our own taxes or have someone else do them. MSN Money notes that 62% of Americans have professionals do their tax returns and offers three questions to help us decide whether to do our own taxes or not:

1. Are you prepared to give your taxes your time?
2. Are you prepared to put up cash to hire a preparer?
3. Are you prepared to deal with the complexity of the federal code?

Certainly there are several good reasons you may want to hire someone to do your taxes. MSN Money adds to these with a list of eight situations when they believe you’d be foolish not to hire a tax preparer:

1. You have significant amounts of income and possible tax losses from a business.
2. You have investment gains and losses, especially from limited partnerships.
3. You have income from foreign countries.
4. You have investments in several investment rental properties with losses.
5. You have a tax-free exchange of property.
6. You have potential exposure to the alternative minimum tax.
7. You have made significant noncash charitable contributions, such as property, stocks or other assets.
8. You’ve had a change in marital status, such as a divorce or the death of your spouse.

The key to making the right decision for yourself is this: does a tax preparer add value? If they are simply putting numbers on forms, it’s likely not worth the cost. If, however, they educate you, help you avoid taxes and/or get deductions you wouldn’t have otherwise found, and help you plan appropriately for the next tax year, it’s likely worth it.

What’s your take? Do-it-yourself or hire out?

Should you do your own taxes? [MSN Money]

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