DM 61 - Do Your Own Taxes or Let Somebody Else Do Them
Should you be doing your own taxes or should you be paying somebody else to do them?
It’s Jon from Financial MD, welcome to today’s Didactic Minute.
This is a question I get a ton from our physician financial planning clients and so I assume other physicians are asking the same question. Now whether you’re a med student, resident, fellow, attending, retired – anywhere in that range of your career – this is something you’ve got to do. The only two things that are certain in life are death and taxes, so we’re going to talk about taxes today.
Now, should you be paying somebody to do it is our question and I’ve seen it on both ends of the spectrum. I’ve seen attendings with complicated financial situations trying to do it themselves – and I really think they should have somebody else do it. I’ve seen med students pay someone a higher amount than I thought probably reasonable to do their taxes – and they probably could have done it on their own just as well. And everything in between. So, here’s my thoughts.
There’s a lot of avenues to do it. You can do it yourself right to the IRS or the paper form. You can use TurboTax. You can pay a CPA. But the bottom line is you have to evaluate how complicated is your situation – that’s the first thing. So, if you’re a med student with no income and gathering student loans, renting – whatever the case might be – that’s an easy one; that’s something you can do on your own with TurboTax. TurboTax is going to ask all the right questions to make sure you have all of the major situations covered. Getting into residency and fellowship? Yeah, probably would still do it on your own, honestly. You can certainly pay someone to do it if you’re not paying them an exorbitant amount, but I would say that your situation for the most part is not going to be complicated enough that would justify paying a CPA or a tax preparer to do it. Now as you get into an attending and your situation starts to get more complicated especially as you buy a house, you’ve got that mortgage payment interest to think about, you’ve got other investments – all those things to think about that make your situation a little more complicated – then I think, yeah, it definitely makes sense. Now there’s not going to be a right answer there but it’s kind of like insurance where you’re paying for something to get that peace of mind that, you know, somebody else is looking at it to make sure you’re doing it right, to make sure it’s done correctly and that it’s getting filed properly and they’re thinking through everything and you know you’re getting the refund you should be getting. Now, TurboTax would probably say – well, we make sure you do, we ask all the right questions, our software is brilliant. Maybe…but me personally, I just feel better knowing there’s another person who does a thousand of these a year, who’s been doing it for years. How much should you pay? I’d say 300 to 400 bucks, I would plan on, anyway, for a person. And again, H&R Block would probably argue with me and say – oh, we could do it for 50 or 85. Maybe…but most things in life you do get what you pay for as well.
So, I hope that helps. Please comment below if you’ve got more questions or I missed something. I’ll pick up on the conversation there. Make sure you check out the podcast – The Financial MD Show – on Apple and Spotify. We’re going to have more conversations and discussions there about it. We’ll get a little more in-depth if you want to just learn more about taxes and income and those kinds of things. Otherwise, check out all our links. Follow us wherever you like to – if this is on TikTok or YouTube or Instagram or wherever.
This is Jon from Financial MD. We’ll see you next time.
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