Tax Returns - Should You Prepare Your Own?
Should you complete your own tax return? Is completing your own tax return an essential component of tax planning? No and no.
Completing your own tax return is only for those who have the very simplest of returns.
For example, if you are an employee and tax has been deducted at source, and you have no entrepreneurial income, no rental income, no investment income, etc.
then you may as well complete your own tax return because there are no exciting deductions available to you and your return will be extremely simple and straight-forward.
In all other cases, with any business income, any rental income, any investment income, you must seek professional guidance.
Learn from the legal profession which has an interesting saying: "He who represents himself has a fool for a client.
" If I can borrow loosely from that wisdom: "He who completes his own complicated tax return is a fool.
" If you have a complicated return, then ask yourself some questions: · Was math my best subject in school? · Have I ever studied accounting or bookkeeping? · Have I ever taken courses in creative but legal and allowable deductions? · Have I updated my knowledge of legislation related to tax for this tax year? If you are noticing that you getting a rather repetitive no, no, no, no to the questions above then why are you doing your own returns.
You know nothing and you are wading into an arena in which professionals study tax for years to get into the profession and then update their knowledge every single year to keep current.
How can you hope to do as good a job as an accountant or a reputable tax preparation service can do? Stated another way, would I personally retain you to do my own tax return? If you replied 'no', then why would you retain you to do your tax return? I cannot possibly do my own tax planning.
My job is to maximize my income and minimize my expenses and serve my clients.
My tax planners job is to advice me how to legally and honourably lower my income tax.
I meet regularly with my tax planner and get his advice.
I follow his advice.
I do not have his wisdom; I use his wisdom.
And, I do not wish to attempt to gain his wisdom to do my own tax planning because it is not my interest.
I want to do what I love doing and I want to have a powerful tax planning professional and a dedicated tax return professional serving me.
Completing your own tax return is only for those who have the very simplest of returns.
For example, if you are an employee and tax has been deducted at source, and you have no entrepreneurial income, no rental income, no investment income, etc.
then you may as well complete your own tax return because there are no exciting deductions available to you and your return will be extremely simple and straight-forward.
In all other cases, with any business income, any rental income, any investment income, you must seek professional guidance.
Learn from the legal profession which has an interesting saying: "He who represents himself has a fool for a client.
" If I can borrow loosely from that wisdom: "He who completes his own complicated tax return is a fool.
" If you have a complicated return, then ask yourself some questions: · Was math my best subject in school? · Have I ever studied accounting or bookkeeping? · Have I ever taken courses in creative but legal and allowable deductions? · Have I updated my knowledge of legislation related to tax for this tax year? If you are noticing that you getting a rather repetitive no, no, no, no to the questions above then why are you doing your own returns.
You know nothing and you are wading into an arena in which professionals study tax for years to get into the profession and then update their knowledge every single year to keep current.
How can you hope to do as good a job as an accountant or a reputable tax preparation service can do? Stated another way, would I personally retain you to do my own tax return? If you replied 'no', then why would you retain you to do your tax return? I cannot possibly do my own tax planning.
My job is to maximize my income and minimize my expenses and serve my clients.
My tax planners job is to advice me how to legally and honourably lower my income tax.
I meet regularly with my tax planner and get his advice.
I follow his advice.
I do not have his wisdom; I use his wisdom.
And, I do not wish to attempt to gain his wisdom to do my own tax planning because it is not my interest.
I want to do what I love doing and I want to have a powerful tax planning professional and a dedicated tax return professional serving me.
