There are 3 ways to prepare your taxes.
If you have other techniques please share! We’ll look at the pros and cons of each and perhaps answer what this has to do with Travel Planning. This topic has been on my mind for quite a while! Note: this article is for educational purposes only; none of the suggestions, etc. may be construed as tax advice.
1) IRS Paper Forms – Fill out forms and schedules by hand, assemble all of your supporting documentation, and send in to the IRS and State taxing authority(s). For wage earners or renters with minimal deductions and income from minimal sources
Pros
- No cost for tax preparation
- Good choice for very simple returns
Cons
- May miss deductions
- May not properly calculate capital gains rates
- No support for your own personalized situation
- No one to call for help should your return be audited or questioned by the IRS
2) Prepare on your own with Tax Software. Use popular software like H&R Block at Home, Turbo Tax, or Tax Slayer, etc. Follow interview driven question process and key in your data. Best for those with mortgages, deductions, self-employment income, real estate and capital gains income, and itemized deductions
Pros
- Easy to follow interviews
- Free to moderate cost
- All calculations done for you
- Schedule/Worksheet completion are all done via interviews
Cons
- No dedicated support contact – although most products do offer good support (just not personalized with someone who knows your situation)
- No support for IRS questions and audits although better products now include audit support.
- No understanding for your own personalized tax aspirations
3) Tax professional. They will ask relevant questions, collect your data/documentation, and fully prepare your return for you. Best for more complex situations. However, many people prefer a tax professional for peace of mind.
Pros
- Tax Preparer is up on the current tax laws and knows how to maximize your refund or minimize your tax bill.
- Representation with the IRS if you are subject to questions or an audit
- Singe point of contact for any tax related questions all year long
- Knows your personal situation and background should you use him or her again and again
- Can save you tons of time as they know how to efficiently navigate through the process and what questions to ask you to optimize your personal tax situation
Cons
- Potentially more expensive than the other methods (subject to your determination of value)
- You must select someone with whom you are comfortable
- You may not get someone who will be there to rapidly respond to your questions
Summary: Whether you choose to prepare your taxes on paper, with software, or via a Tax professional, you will get your returns completed; all three ways to prepare your taxes get you to a finished 1040. Which way is the best? That depends upon your preferences and your own situation.
Do you see any similarities with a travel planning professional? Hmm, let’s list a small list of similarities that come to mind:
- Travel Planners are up on the current travel environment including products, trends, promotions, etc.
- Representation with various travel product vendors to resolve potential issues
- Singe point of contact for any travel related questions all year long (you know there will be questions).
- Knows your personal situation and background should you use him or her again and again
- Can save you tons of time as they know how to efficiently navigate through the process and what questions to ask you to optimize your personal travel situation
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