With the release of Form W-2 Wage and Tax Statements this month, tax season has officially begun. It comes with a question: Should I do my own or hire a preparer?
Download Your W-2
As an employee or retiree of U-M, you can download your W-2 as long as you previously consented for online delivery. Downloading is a quick, simple process: Go to Wolverine Access > Employee Self Service > click on Announcements pop-up link > Self Service > Payroll and Compensation > View W-2/W-2c Forms.
If you haven’t consented for online delivery of your W-2, there’s still time. Use the process above to consent by Monday, Jan. 25.
If you don’t consent to electronic delivery, your W-2 will be mailed to the current address U-M has on file for you by Sunday, Jan. 31. For this reason and others, it’s a good idea to keep your address current. Update this information and more in Wolverine Access > Employee Self Service > Campus Personal Information.
DIY or Hire a Pro?
Once you have your W-2 in-hand, should your taxes be a DIY project or should you hire a pro?
The pros: It’s a money-saver. According to the U.S. Internal Revenue Service, the average cost to have a certified professional prepare a simple tax return is about $270. Add itemized deductions, a personal business or other factors, and the cost increases.
If your tax return is relatively simple, it takes an average of 7-16 hours to complete. How is “simple” defined? If you’re filing single, rent your residence and have only a few investments through your employer, purchasing basic software may work for you.
Once you start adding variables, however – you purchase your home, get married, have multiple investment accounts, inherit Aunt Mabel’s estate or have children – your financial web gets more intricate.
Remember, also, that DIY prep means you’re on your own if the IRS has questions or audits your return.
Why invest in a certified tax preparer? It’s their job to know the ins and outs of tax law, which is complex and changes frequently. Certified professionals also are experienced in dealing with complicated returns and audits.
Who’s a good candidate for hiring a professional? If you’re married with two incomes, own more than one home/property, operate one or more businesses, have multiple investments or have children, the adage “better to be safe than sorry” generally applies.
A big advantage you’ll get from a certified pro is security. Once your return has been filed by a certified preparer, most will assist you at no charge if your return is audited.
Last year was a tough one for many due to the worldwide COVID-19 pandemic. If you received unemployment payments, withdrew funds from a retirement account or took out a loan in 2020, all will affect your tax return. And if you didn’t receive a federal stimulus payment but were eligible, you can still get it by claiming it in your tax return.
Help From the IRS
The IRS offers two ways to file your return – at no charge – through IRS Free File. The program is offered in partnership with tax prep and filing industry leaders, and works much like purchased software filing programs. Certain conditions apply, so be sure to review the details.
According to the IRS, hard copy returns will be processed at a much slower rate than e-filed returns this year. Keep this in mind if you have big plans for a refund.
Find a Pro
Go to the IRS site for tips about selecting certified tax preparers and avoiding scammers.
Please note: Tax information is provided for general informational purposes only. The University of Michigan does not provide tax advice or endorse tax preparation software or services. Questions or concerns should be addressed to a qualified tax adviser.