If you have a traditional office job and receive a W-2 with no
other complicating circumstances, preparing your tax return isn’t
hard — just a pain. You’ll populate a number of boxes in some
tax software, review it for accuracy and send it off to the IRS.
All told, it’s not necessarily time-intensive. It’s just
something else for your to-do list.
On the other hand, imagine having a W-2 from one job, receiving
a collection of 1099s in the mail and then tracking a laundry list
of write-offs related to your business or freelancing. For the
uninitiated, this is daunting.
How do you know when you need a professional’s help with
taxes? Understandably, you don’t want to make any mistakes if you
decide to do your own taxes.
Quite often, the question of “Should I do my own taxes using
tax software or hire a professional?” comes down to how
comfortable you feel doing your taxes yourself.
These days, the
best tax software programs do an excellent job of guiding you
through preparing your tax return, often eliminating the need for a
tax professional. And if you start down this path but find yourself
needing extra assistance, some also provide access to professionals
for a fee.
Last year’s tax season was the first with the new
Tax Cuts and Jobs Act rules in effect. After learning how you
fared under the changes, you may have a bit more certainty about
your tax circumstances this year. Even so, maybe last year’s
changes proved too much for you to handle on your own. Perhaps
you’d still like to hire a professional to ensure the job is done
While this represents another expense, it might result in a
bigger refund in the end. By hiring a tax professional, you might
find yourself with a bigger refund as a result of better handling
your tax deductions and credits.
4 Times You Should DIY Your Tax Return
To understand when it makes sense to DIY your tax return vs.
hire a tax professional, consider some common scenarios described
1. You Only Have One Job
Have you ever heard the phase, “Keep it simple, stupid”, or
K.I.S.S.? Basically, it means you shouldn’t add unneeded
complexity to a situation. When you prepare your taxes and you only
have one job with a single W-2 and no other income, seeking help
from a tax professional may violate the K.I.S.S. ethos.
This situation probably doesn’t require a seasoned pro. It can
usually be left to the likes of free tax software to prepare your
form and submit it.
2. You Didn’t Experience a Life-Changing Event
If you didn’t have a major life change in 2019 (think wedding,
divorce, birth of a child, etc.), you can likely roll forward most
of the previous year’s information and elections. But make sure
to update any new sources of income or deductible expenses.
In years you do encounter significant life events, if they’re
pretty straightforward, tax software still may be able to handle
your needs. However, when several events stack up in the same year,
things can get confusing. Seeking the help of a tax pro might be in
your best interest.
3. You’re Claiming the Standard Deduction
Tax reform did a useful thing for many: It made itemizing your
deductions more difficult.
It essentially doubled the standard deduction, making it less
worthwhile to itemize your deductions. So it’s less likely
you’ll need to know about what does or doesn’t qualify as a
deduction. Free tax software might handle your needs just fine.
While you don’t need to track your expenses to claim the
standard deduction, you will still want to track and tally your
deductions because these might prove useful on your state income
tax return where applicable.
If you understand and can easily insert these expenses into your
state income tax return, tax software will handle your needs just
4. You Didn’t Buy a Home
Before tax reform, buying a house was often the gateway into
itemizing your deductions. Numerous expenses qualified for
deduction including mortgage interest, real estate taxes and
These are still deductible, but the higher standard deduction,
along with new caps on state and local taxes and the qualifying
amount of interest associated with mortgage principal that you can
deduct have hampered the cost-effectiveness of owning a home.
Fortunately, the new limit on qualified mortgage interest
associated with principal only applies to mortgages originated on
or after Dec. 14, 2017.
In the event you did nothing with real estate and did not buy a
house, you won’t need to track such expenses. In that case, free
tax software can be a better choice.
4 Times It Makes Sense to Hire a Tax Pro
Here are some common scenarios where you may benefit from hiring
a tax pro.
1. You Had Multiple Sources of Income
The Tax Cuts and Jobs Act brought significant changes for those
who work multiple jobs, freelance, have side hustles or own their
Those savvy enough to earn extra income and consider it as part
of a trade or business will likely qualify for a 20% qualified
business income (QBI) deduction on that income. However, the QBI
rules are complicated, so it might make sense to hire a
If you operate any of these activities as a sole proprietorship,
you might miss numerous benefits by doing your own taxes. And when
these activities scale enough, it could amount to significant tax
liability — and potential missed
deductions and credits.
While you might think a minor side hustle is not worth speaking
with a tax professional about, it might still be a good idea. While
software can serve as a great tool for uncomplicated tax
situations, a CPA can help you find tax breaks by learning more
about your unique circumstances.
2. You Own and Rent Out Property
Rental properties are a popular tool for building wealth because
they can produce capital gains as the property appreciates in
value, along with income from renters
occupying the property. The numerous deductions associated with
the property can go a long way toward shielding that precious
A tax professional can help you manage the expenses related to
maintaining your unit(s) and navigate the tricky depreciation,
capitalization and expensing rules.
The time may come to sell this property, and handling the
disposition will prove especially tricky for the inexperienced.
Don’t risk misstating your gains and potentially costing yourself
thousands in taxes.
3. You Itemize Your Deductions
If you’re not claiming the standard deduction, you may have
incurred a significant level of expenses during the year. Because
some expenses exist in a gray area and there are numerous
deductions to know, soliciting the help of a tax professional might
prove a smart investment on your part.
Hiring a tax pro could result in claiming more tax deductions
and, therefore, reduce your overall tax liability. In a sense, if
you hire a tax pro who can uncover more expenses than you otherwise
could yourself, the additional savings on your tax bill might end
up paying for the tax advice. Not only would more money stay in
your pocket (as opposed to going into Uncle Sam’s), but you’d
also spend less time preparing your return.
4. You Experienced a Major Life Change
Life has many turns — suppose that in 2019, you made a
cross-country move, had a change in family status or welcomed a new
child. As a result, you want to make sure to prepare accordingly
from a tax perspective.
The number of events that can affect your filing status and
claims are endless. Navigating these changes isn’t always
straightforward, especially when your mind may not be up for the
task. A professional will make any tax benefits work to your
advantage, as well as use other strategies to minimize your tax
Specifically regarding divorce: Married taxpayers who file
jointly are both responsible for all taxes owed on their joint
return. In other words, should Spouse A work as a lawyer earning
$300,000 per year, and Spouse B work as a school teacher bringing
home $30,000 per year, both spouses share equal liability in paying
for the taxes owed on their joint tax return.
In divorce, when these taxpayers file separately, they will only
need to claim their earned income and should not include any
potential child support or alimony paid/received.
Should I Do My Own Taxes or Hire a Pro?
When you weigh whether to hire a tax pro or prepare your own
taxes using tax software, the choice ultimately comes down to the
complexity of your tax situation, your comfort level, the effort
you’re willing to invest and the cost.
Finding your unique balance between these elements should guide
your decision and lead you to the lowest tax liability.
Riley Adams is a CPA who is originally from New Orleans and
works as a senior financial analyst at Google in the San Francisco
Bay Area. He also runs the personal finance website Young and the Invested,
which is dedicated to helping young professionals explore financial
independence and entrepreneurship.
This was originally published on
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