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Should You Do Your Own Taxes Or Hire A Professional?

Updated: Feb 21

If you’re the handy, do-it-yourself type, you probably prefer to prepare your own taxes every year. You might even enjoy it. But considering the recent sweeping changes to our tax code, you might be wondering if now is the time to consult a professional.

One of the biggest decisions taxpayers face each year is how to file their returns. Last year, 86%, nearly 132 million, of returns were filed with tax software. But most of those computer-prepared and e-filed returns — almost 79 million — were completed by tax professionals.


For those who have fairly simple financial situations, preparing your own tax return is usually no problem. But how do you know if your situation counts as simple?


If all you must do is input the info from your W-2 and maybe a couple of 1099 forms from your bank or broker, sticking with basic tax software is fine.

However, if you’re at all uncertain or uncomfortable handling a certain aspect of your taxes, it might be a good idea to work with a professional.


When to Hire a Professional


1. Your marital status changed.

If you recently got married, you might need help determining which tax filing status to use. There are certain situations where it could make sense for a married couple to file separately, even if there are some potentially negative tax consequences.


2. You experienced another major life change.

Other life milestones such as graduating from college, having a child, moving, getting a new job or losing a job could all impact your tax return and potential refund. A tax professional can help you learn about any new benefits or strategies to minimize your tax liability.


3. You started a business.

If you started a business last year, which in the eyes of the Internal Revenue Service includes everything from launching a startup to mowing lawns on weekends, you should probably consider hiring a professional to prepare your tax return. A qualified tax preparer will not only know about certain deductions that you may or may not have heard of before, but he or she will also know how to take them correctly on your tax return to reduce your chances of an IRS audit.


4. You bought rental real estate or an investment property.

If you bought a rental property during the year, it’s probably best for you to hire a professional tax preparer. Not only are there similar tax concerns related to purchasing real estate and starting a business ― namely, reporting tax items accurately and maximizing deductions ― but with rental property, there is also the issue of depreciation.


5. You sold investments or traded cryptocurrency.

Usually when you want to invest, you go to a brokerage such as Vanguard or Fidelity, or use an investment app such as Acorns or Robinhood, and buy some stock. Then, at the end of the year, both you and the IRS will receive a 1099 form showing all of the dividends you earned and any sales you made. This is the information you use to prepare your tax return.


But what if you sold assets and nobody is legally required to send you a tidy document detailing exactly what you should report to the IRS?


6. You're dealing with a tax problem.

Working with a qualified tax expert can come in handy even when it’s not tax season. Whether you’re responding to an IRS audit or notice, catching up on back taxes or making a payment agreement, an accountant can help you navigate a potentially confusing and time-consuming situation.


7. You just don't have the time.

It’s estimated that the average taxpayer spends 13 hours on tax preparation, which includes gathering receipts, reviewing the rules and actually filling out tax forms.

For some, this might seem like a simple weekend project. For others, not so much.


Sometimes it makes more financial sense to pay someone else to do a job when your time is better spent elsewhere. And if it means one less mind-numbing task off your plate, even better.







Bond, C. (2022, January 13). 8 signs it's finally time to hire a pro to do your taxes. HuffPost. Retrieved February 18, 2022, from https://www.huffpost.com/entry/prepare-taxes-diy-hire-accountant-cpa_l_5c7473d3e4b03a10c230c515


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