Tuesday 7 October 2014

I did my own taxes...and it was great!

I am usually terrible at doing my taxes on time.   I always have the receipts sorted out and spreadsheet done well in advance however when it actually comes to seeing the accountant and submitting my taxes I tend to procrastinate for weeks or even months.  Last year I submitted my taxes 6 months late.

This year I swore I would be different.  But not only that...I also decided to do my taxes myself

Why did I do my own taxes?


There are a whole host of reasons I decided to do my own taxes this year including:

  1. I virtually do them for my accountant anyway!
    • The spreadsheet I give my accountant is so detailed it means he never has to look through any of my documentation and I generally only have a few questions that I need to ask him
  2. I value my time less than my accountant charges me
    • My accountant charges $120 per hour to do my taxes and given the work I normally do on them I generally only get charged for 2 hours of work (i.e. $240)
    • I wasn't exactly sure how long it would take me to do my taxes but I was pretty sure I would be ahead if I did them myself
    • As it turned out it took me 4 additional hours to do my taxes (i.e. the time taken to do what the accountant usually does) 
    • I value my personal time at less than $60 per hour so it was a great trade for me
  3. I hate taking time off to go to my accountant
    • I normally have to take a bit of time off work to go to my accountant who works in the suburbs (while I work in the city).  Work doesn't have a problem with this but half the reason I generally procrastinate for so long is that I find it such a waste of time to go out there
    • I thought about getting an accountant that was more convenient but this one knew my personal financial situation rather well and I didn't feel like having to explain it to someone new all over again

Would I do my own taxes again?


All in all doing my own taxes was a pretty positive experience.  I would actually recommend it for most people.  If nothing else it will get you closer to understanding your own financial situation.

I have seen others write (and I have written before) that you should probably hire an accountant if your tax affairs are particularly complex.  The term 'complex' covers a vast array of personal financial situations however I found it reasonably easy to do my own taxes and I have
  • A wage
  • Employee share plans
  • Deferred compensation
  • An investment property
  • Managed funds
  • Dividends
  • Capital gains (from share trades)
I don't have things like trusts and companies which would definitely make things more complicated.  However I have a reasonable degree of complexity in my personal financial tax return and I still found it easy.  Further the Australian Tax Office website is great if you get stuck on anything (which I did several times...hence taking 4 hours where the accountant only charged for 2...the Low Value Pool is a nightmare!).

I would probably do my own taxes in the foreseeable future.  Do you do your own taxes this year or did you decide to use an accountant?

You May Also Be Interested In


3 comments:

  1. As much as I'd love to the cost of making sure that it is done properly, especially as I start to invest in property (from memory you already have property) but I'd like to leave it to someone who's up with current legislation.

    I used to do my own taxes however have stopped doing this.. Good on you for doing your own though :)

    ReplyDelete
    Replies
    1. Hi Jef! That was my view too however after giving it to an accountant for 3 years and asked tons of questions about what I could and couldn't claim for my property I realised that I was paying for a security blanket that I didn't really need any more.

      The property deductions are really easy to work through on e-tax (other than the Low Value Pool) as I mentioned above but you may want to get a tax accountant for a for years to double check your work (which is what I did).

      Delete
  2. This is a question most people ask. And the answer is pretty straightforward: if there's only one source of income, and that a person feels what was computed is a just payment, then doing it by one's self is a good idea. If it's complicated and a person doesn't want to put up with all of the confusion or feels like he can't handle it on their own, getting professional help is a good recourse.

    Rebecca Cross @ Advanced Accounts

    ReplyDelete