We’re nearing tax time and that means one thing – you must decide how you’ll complete your taxes. Will you go the DIY route or pay a CPA to do your taxes for you?
A common debate at tax time is TurboTax vs a CPA (Certified Public Accountant) – which is better and/or right for you? Check out this guide on the difference between the two and how to tell which option will suit you the most.
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When Would I Need a CPA?
Using a CPA to file your taxes is important when you’ve had major changes in your life, or you have a complicated tax situation.
What makes a tax situation complicated varies by person, though. For example, you may run your own business and be perfectly comfortable filing your own taxes using TurboTax. Your neighbor, however, may find it much too complicated and opt to hire a Certified Public Accountant.
Here are a few other situations when a CPA may be a good fit if you:
- Own multiple rental properties
- Bought or sold a business this year
- Got divorced or became a widow
- Bought or sold a large number of assets
A CPA can walk you through what you’d need to file your taxes given any complicated situations and can ensure that your taxes are file correctly, reducing the risk of an audit.
What is TurboTax?
TurboTax is tax software you can buy to do your taxes yourself. TurboTax is one of the most popular tax preparation software on the market today, although there are many other options too.
Anyone can use online tax software as long as they know what documentation they need and are capable of inputting the information into the program.
Once entered, TurboTax does the rest of the work for you. Even if you don’t know much about tax code, the program asks enough questions to get you through the process easily.
Is TurboTax Completely Free?
When comparing TurboTax vs a CPA, most people assume TurboTax is cheaper. But it’s not always.
Is there a free version?
Yes, but not everyone is eligible. Only taxpayers with a ‘simple tax return’ are eligible. Basically, this means if you have only W-2s or unemployment income and take the standard deduction is TurboTax free.
If you don’t qualify for a free program, the costs might be higher than you’d expect.
How Much is TurboTax?
TurboTax has several plans to choose from, each with a different cost:
- TurboTax Deluxe $60 Federal/$50 State – If you’re a homeowner or want to make sure you maximize your deductions, this is the program for you. It will walk you through all possible tax deductions and credits and even help you calculate your charitable deductions.
- TurboTax Premier $90 Federal/$50 State – If you’re an investor, this is the plan for you. TurboTax Premier walks you through all deductions and credits for real estate investors and stock market investors, plus get all the features included in the Deluxe plan.
- TurboTax Self-Employed $120 Federal/$50 State – If you own your own small business, are a freelancer, or consultant, this plan will help you have the most accurate tax return. You’ll learn how to maximize your business deductions and plan your income/taxes for next year.
File Your Taxes with Ease from Home Today with TurboTax!
How Hard is it to do your own Taxes?
Preparing your own taxes without tax preparation software is difficult unless you know what you’re doing. But, with tax software programs, like TurboTax, it can be easy. If you can read and follow the prompts throughout the program, you can file your own taxes.
If you’re unsure about certain income or whether or not something qualifies you for a deduction, you may want help, but even TurboTax provides assistance (typically included) from a live CPA.
Key Differences Between TurboTax and a CPA
You may wonder why anyone would use a CPA when TurboTax and other tax software programs offer step-by-step instructions to file your taxes.
There is one key difference – tax planning. TurboTax can ensure you are following all tax laws, but it doesn’t help as far as tax planning.
If you’re an investor, business owner, or have other complicated tax situations, you may benefit from the assistance a CPA could provide. Not only would he/she help you file your taxes, but they would also help you plan for future years, especially if you overpaid in taxes this year.
8 Easy Tips for Filing Taxes This Year
- Keep careful documentation of all income, expenses, and potential deductions
- If you run a business, keep your personal income and business income separate
- Thoroughly cover all available tax deductions and credits and if you’re unsure ask a professional
- Make sure you report all income, no matter how small
- Consider contributing to a pre-tax retirement account to lower your tax liability
- File your taxes on time
- If you can’t pay the full liability, work out a payment arrangement with the IRS right away
- Pay your estimated quarterly taxes if you’re self-employed
Remember: Keep track of your expenses and income on a spreadsheet or bookkeeping program such as FreshBooks.
Final Thoughts
When looking at TurboTax vs a CPA, it’s a big decision. But, if you use a CPA to handle your finances outside of your taxes, it’s a no-brainer. Consistency is key and who better to handle your taxes than the person who already handles your finances?
If you’re a DIY person, though, TurboTax is a great platform to use. It makes filing your taxes simple, almost as if you know what you’re doing.
Honestly, though, if you have the necessary documentation and are confident in the information you have, filing your own taxes isn’t as hard as it seems.
If you’re ever in doubt though, there’s always a professional CPA ready and willing to help.
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