01 Mar Tax Series Part 1: Why You Should NOT Do Your Own Taxes!

We have all heard the phrase on TV crime dramas: “He who represents himself in court has a fool for a client”. This concept applies equally to your taxes. Which leads me to my plumbing project. If you think there is no connection between my plumbing and your taxes, think again.

When my kids were younger, we wanted to modernize their bathroom without a complete remodel. The first priority was to swap out old faucets made of the kind of plastic that turns yellow. When my wife and I agreed, we then disagreed (married readers will understand). She expected me to call a plumber and I was expecting to do it myself. How difficult could it be? Initially, I prevailed and was committed to proving her wrong. We went to Home Depot and picked out the replacement faucets. I went back home and, armed with my tool chest, proceeded to scope out the project. It should be noted that I seldom used my own tools, and trepidations aside, it was too late to turn back. “I got this!” was my valiant refrain, that is, if I could find a wrench that would fit underneath the sink. After 30 minutes of futility and frustration, I tried disconnecting the faucets from the top, only to see, to my horror, the plastic break and water start gushing everywhere. Only then did I suffer the indignity of asking my wife to shut off the water main, after which I called a plumber. I was happy to pay to get it done right.

1. You all know I am a CPA, but I assure you this cautionary tale is not meant to be self-serving. It is simply intended to share the conclusions I came to:
2. What seems simple on the surface could have underneath several layers of complexity that are not visible to the untrained eye. You don’t know what you don’t know. Literally.
3. You should not approach a task unless you are prepared and confident, and have the right tools to do it properly.
   Don’t do your own plumbing, or hair, car repair, construction, and especially not your taxes!

The benefits, both tangible and intangible, to using a CPA more than outweigh their cost. It is important to distinguish between the mechanical process of filling out a tax return versus working with an objective advisor who can be part of the team and collaborate with your financial planner, attorney, insurance and mortgage professionals, and bankers, and integrate their advice to your financial strategies. The more financial complexity you have, the more important it is for you to do this.

Since this is Part I of a series, here is the outline of the next parts coming up:

Part 2 – Demystifying the Tax Benefits of IRA’s and ROTH IRA’s

Part 3 – What to do if You Owe Money to the IRS