Not every year unfolds the same. That’s why we recommended reassessing your situation each year before deciding whether to hire a professional tax preparer or to crunch those numbers yourself.
Sometimes things stay simple with no life-changing events, major income fluctuations or business ventures. Yet in other years, it seems like your whole world has changed, thus complicating your tax situation.
By doing your taxes yourself, you can likely save some cash. Especially by taking advantage of your TurboTax member discount. But, the savings may not be in your best interest if your tax situation requires someone with in-depth knowledge of tax laws, regulations and processes.
Not sure which choice is right for you. Here are some guidelines you can use to help you choose:
You can likely take the DIY approach to your taxes if:
- Your taxes are simple because you’re a single filer, you held the same job all year and your 401k is your only investment.
- You have very few deductions or exemptions. Items that may be deducted or exempted from your taxes include mortgage interest, dependents, charitable gifts, business expenses, property taxes or investments expenses. Just keep in mind that — due to the recent tax overhaul — there may some differences in the rules for these deductions when you file your taxes next spring.
- You haven’t had any major life changes such as getting married, getting divorced, having a child, losing a spouse, buying a home or selling a home.
- You have several interruption-free hours to spare, so you can concentrate on getting the job done without error.
- You feel comfortable with the process, technology and numbers required, along with the possible repercussions of making an error.
You’ll want to hire a professional to prepare your taxes if:
- Your taxes are more complex because you own your own business, work as a freelancer, inherited property, have numerous deductions, claiming a property loss from a natural disaster or you’ve had several major life changes.
- You have questions about how your actions this year could be impacted by the tax overhaul.
- You make more than $200,000 a year. While anyone could get tapped for an IRS audit at any time, Kiplinger reports that those making higher incomes have a higher rate of being selected.
- You don’t have a lot of uninterrupted time to devote toward completing your return.
- You aren’t comfortable with the technology, entering the numbers, remembering your deductions and trusting that you’ll fully understand the regulations.
When it’s all said and done, the choice to hire a professional or to do it yourself is highly personal, and there are a lot of factors at play — including many that we didn’t cover here. If you’re still in doubt, seek advice on your personal situation from a professional you trust.