Whether you are a small business owner or an individual, tax season likely induces a certain amount of stress, if not outright panic, as the income tax return deadline approaches. Tax laws, instructions, and forms can seem like they're written in another language, and sorting through it all challenges even the best of us.
Because of this, many Americans are more than willing to pay tax professionals to handle their returns for them, and an overwhelming majority of filers choose to file electronically, either through tax preparers or with the assistance of tax preparation software.
For any particular individual, the degree to which they are involved in the hard work of preparing their own taxes can vary, with some taking on the entire burden from start to finish, others utilizing software that guides them, and others collecting their paperwork and handing it over to the professionals.
The amount of time it takes to file taxes on your own can vary, depending on how complex your income streams are, how well you kept records throughout the last year, and your chosen method of filing. In this article, we break down how long you might expect each part of the process to take and the total time and cover the pros and cons of different filing methods.
Tax Filing Total Time Burden
The time it takes to file your federal income tax return falls into three primary categories:
- Record keeping: This includes tasks that might be completed throughout the year as you record sources of income, payments made that may qualify for tax - such as donations to nonprofits or the purchase of energy-efficient windows - and so on. If you are a small business owner, record keeping might be significantly more involved and require a detailed record of all sales and expenses.
- Tax planning: This includes time spent analyzing your financial situation, understanding tax laws, and optimizing expenditures, savings, and investments to minimize your tax burden. It also includes determining which credits you may qualify for, such as the additional child tax credit (ACTC) or the earned income tax credit (EITC). As with record keeping, this is a task that is often completed throughout the year.
- Form completion and submission: The final part of tending to your taxes involves completing and submitting the tax forms. This part goes smoothest when you have kept good records and have all of your necessary documents in one place.
The Internal Revenue Service (IRS) offers estimates of taxpayer burden in terms of time to complete forms and the average expense incurred. The following is the data for Form 1040, Estimated Average Taxpayer Burden for Individuals by Activity, published for the tax year 2019.
|Average Time (Hours)
|Type of Taxpayer
|Percentage of Returns
|Form Completion and Submission
|Average Cost (Dollars)
Keep in mind that the numbers provided are averages. Your actual time will depend on many factors, including the complexity of your return, the number of forms you need to fill out, your methods of record keeping, and your level of tax knowledge.
Choosing Between Tax Filing Methods
There are several options when it comes to how you go about filing your taxes. You can do it yourself, through a professional, or with the assistance of professional software. Each method comes with pros and cons, as described in the following sections.
Filing Taxes Yourself: Pros and Cons
To file taxes yourself, you will need to gather all of the necessary paperwork, download the tax forms from the IRS website, fill them out in their entirety, and submit them yourself. You don't need to submit a paper tax return, however. You can choose to e-file through the IRS website, as well. E-filing through the IRS website is free for everyone, and those with qualifying income below a certain threshold can even receive free tax help.
- This method saves money because you don't need to pay a tax preparer or spend money on tax preparation software.
- This method also keeps you in the driver's seat and provides you with complete control over your finances.
- You are on your own schedule when you file your taxes (although the same filing deadline applies), meaning you can work on your taxes all at once or over several days and don't need to coordinate schedules with a tax professional.
- It almost certainly takes more time on your part to complete your tax filing on your own.
- Interpreting tax instructions and documentation can be challenging, and filing your own return requires a great deal of comfort with personal finance.
- You carry all the error risk yourself, whereas accountants often offer guarantees against potential audits.
- You may also miss certain tax credits if you're not aware of them, which could end up costing you more in the end, even though you didn't have to pay to have your return prepared.
Filing Taxes Through a Professional: Pros and Cons
A tax professional is someone trained and well-versed in all things taxes. They can use their expertise to quickly and efficiently file your form while making sure you take advantage of any potential tax breaks.
- In some cases, you can deduct fees paid to a tax professional from your taxes.
- You can end up saving money going this route if the tax preparer finds credits or deductions that you were unaware of.
- The time you will spend on your taxes is greatly reduced.
- This method can often take the stress out of doing your taxes by knowing that someone else is handling it on your behalf.
- Many tax professionals offer guarantees in the event of an audit.
- Depending on the complexity of your taxes, hiring a professional can become very expensive, as they often charge additional fees for each form or schedule they fill out.
- If you wait too long to schedule an appointment, it may be difficult to get one before taxes are due.
- Not all people are honest, and some tax preparers may be out to scam you, so make sure you always check references.
- Along those same lines, preparers can vary in their levels of expertise, so do your research to make sure you don't end up with someone who meets the minimum requirements by squeaking through a perfunctory training program.
Filing Taxes Through Professional Software: Pros and Cons
The final option is to utilize tax preparation software to file your taxes. The most popular of these is TurboTax, which guides you through the tax process step by step in a way that tends to be more straightforward than filling out the forms yourself. The software also allows you to e-file your returns easily.
- This software is often significantly more affordable than hiring a person to help you file.
- Using tax preparation software often reduces the time it takes to file your taxes because the process is more streamlined.
- The programs are designed to be user-friendly and guide you through what information to enter in a manner that tends to be more straightforward than the instructions on IRS forms.
- Tax software often includes some degree of protection from auditing.
- The software isn't free, so it can be more expensive than doing taxes yourself.
- The software may not work well for you if your tax situation is more complex than most.
- It requires more time and effort on your part than hiring a tax professional.
The method you choose is up to you and can even change from year to year.
How Long Will My Federal Tax Refund Take?
After you file, you may find yourself wondering how long it will be before you get a refund, assuming one is due. The time it takes to receive a refund can depend on how and when you filed, which return you used, and whether you requested a direct deposit into a bank account or a paper check in the mail.
According to the IRS website, 9 in 10 tax refunds are issued within 21 days. If you file electronically, your refund may be issued in as little as a week. If you file by mail, it can take much longer due to transit time and the time it takes to process your paper form.
Refunds issued by direct deposit will reach you faster than refunds issued by paper check, which must make it through the mail.
How Can I Check the Status of My Tax Return With the IRS?
Checking the status of your return has been made straightforward by the IRS. Visit the "Where's My Refund" website, irs.gov/refunds, click on "Check My Refund Status," enter your Social Security number or individual taxpayer identification number (ITIN), your filing status, and your refund amount for an update. You can also download the IRS2Go app on your mobile device and use it to check your status.
Manage Your Tax Forms and Accounting With Skynova
Taxes are always easiest if you maintain good records throughout the year and keep all of your documents organized. Consider using a product like Skynova's accounting software to help, and check out our other software products, including invoices and templates.