If you go to an enrolled agent -- tax specialists who have earned a special blessing from the IRS -- you're likely to pay $200 to $500. Hire a certified public accountant, which is the next step up, and you're talking $400 to $1,500, depending on the firm, the complexity of your return and your level of organization.
When is it worth spending the extra money? The answer is a personal one. For me, there were multiple tipping points: I have freelance and royalty income and must prepare a Schedule C (Form 1040), Profit or Loss from Business. I am among the millions of filers who consistently flirt with the truly awful alternative minimum tax, which I fail to fully understand even after 20 years of writing about federal income taxes. And, most important, I wanted advice.
As good as the software programs may be, they can't tell you the best way to trigger capital losses (come on, we all have them by now) to reduce the tax consequences of future gains (I'm an optimist). Nor can the software explain the tax implications of home offices or how changing tax rules might affect the amount you have to pay if you sold your residence. Upper-middle-income families with children in college might also want advice about what it takes to qualify for one or more of the lucrative education tax breaks.
And then there's the lazy factor. Hiring out saves me time, so I justify the expense just like I justify spending money on a gardener. I'm pretty sure that I'll earn more spending the hours doing my job than I'd save by doing theirs.
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kathykristof24@gmail.com
Kathy Kristof is a personal-finance author and syndicated columnist.
