How long does it take you to do your taxes?
The IRS says it will take you longer to do your taxes using tax software than to do them by hand.
Confused? Well, it is the IRS.
In this year's instructions for filing your 1040, the IRS provides a chart showing the estimated average time spent and cost of preparing a return, depending on whether you do it yourself or pay someone to prepare it (see page 79 of the PDF file).
Earlier this week, the Wall Street Journal ran an interesting article about this (subscription only) battle over that single page of the 80-plus page document. According to the Journal, the American Institute of Certified Public Accountants wrote a letter to the IRS using terms including "misleading" and "problematic" to describe the estimated return-preparation costs.
The National Association of Accountants posted a letter to IRS commissioner Mark Everson on Nov. 29, calling the estimated "patently wrong." In the letter, the NSA questions how the IRS came up with these estimates in the first place.
It's not tough to understand why these groups are asking questions. First off, in nearly every case the IRS says it will take you longer to prepare your taxes using tax software than to prepare them by hand.
According to the IRS, it would take an individual, on average, 16 hours to do his taxes by hand and nearly 22 to do them using software. The estimates show an individual filing a 1040, schedules A and D and other forms spending 10 more hours using software than he would doing his taxes by hand. Though it would take that person much less time to have a tax preparer take care of his taxes, it would cost $313, on average.
The NSA's response to this?
"This would lead one to conclude that someone with a pencil and a piece of paper who sees a particular form once per year will spend less time than if they retained a paid professional who is not only familiar with the form but has likely prepared the same form thousands of times," NSA Executive Vice President John Ams writes in his letter.
The chart also states that it will take business filers less time to prepare returns on their own, by hand, than to take them to a paid professional. These estimates include time spent record-keeping, tax planning and completing forms.
Stemming from this, here are two questions for people in this area:
01. How long do you spend doing your taxes, and what method do you use?
02. If you're a tax preparer, how much - on average - do you charge?