This post is part of the TaxAct #DIYtaxes blog tour which empowers you to take ownership of your finances by doing your own taxes. TaxAct.com provides the tools and guidance to help you confidentially file your taxes.
I’ve been doing my own taxes for over 10 years. I didn’t do them when I first graduated college in 1999 because I didn’t know how. Further, DIY tax software wasn’t as easy to use as it is now. But after paying some accountant over $500 to do my taxes one too many years, I finally took the plunge and was surprised how simple doing your own taxes was after gathering all my documents.
The only downside to doing your own taxes is the potential for more mistakes compared to a CPA (although CPAs make mistakes too). Some of the most common mistakes include: forgetting to deduct certain expenses, inputting the wrong figures, and forgetting to input the cost basis for your stock sale. One time, I got a surprise $250,000 tax bill because the IRS thought I had made ~$1M from stock sales that year! In reality, I just forgot to input the cost basis of each purchase. After I sent them my cost basis in the mail, all was good and I didn’t have to pay a penalty or extra taxes. Phew!