The thought of filing taxes on your own can be daunting. At the same time, hiring a professional accountant comes at a price: around $273 of your potential refund.
But, with the availability of low-cost online options – like TurboTax and TaxAct – you may still be wondering if hiring a tax professional makes the most sense for you. To help decide which way to go when filing your taxes, here are a few questions you should ask yourself.
Have you experienced any life changes this year?
Major life changes can definitely be a reason to seek out the help of a professional tax preparer as these events have the potential to complicate the tax filing process. Here are a few lifestyle shifts that may prompt you to hire an accountant:
- You had a baby. While it’s fairly easy to input the child tax credit on regular tax software, if you had a baby within the last year, you may want to seek out a professional to help you figure out possible medical deductions pertaining to your child’s birth. You may also be able to deduct childcare costs.
- You moved. Whether you moved across the street or across the country, if your relocation involved the purchase or sale of a home, you may want to get in touch with a tax professional to make sure you’ll benefit from possible tax breaks.
- You earned more money. If your income spiked significantly in the past year (especially if you made over $250,000), you may benefit from the help of a professional. Why? Taxes often get more complicated as your income rises, and a professional who understands the tax code can often help out.
Do I feel confident doing my own taxes?
You may be great with a budget and managing your money, but taxes are an entirely different beast. If you have a simple return with only your W-2 information to input, you may be ok filing on your own. But, if you started up a new business or have a side hustle in addition to your job, it may be worth the peace of mind to hire a professional.
Also, if you’re going through the free filing process and find that you’re second guessing yourself, it’s time to outsource your taxes. Keep in mind that working with a pro can help you find deductions you never knew existed — like the ability to deduct home office space used to run your side hustle or moving expenses incurred for a new job.
Am I ready to deal with the IRS?
If you are filing solo, even if you feel certain you did everything right, there is no guarantee that you won’t get audited by the IRS. The audit process can be time consuming, nerve-wracking, and costly. Also, if you’re the one preparing your taxes, you’re on the hook should an auditor come calling.
If a tax professional prepares your taxes, this person or firm will be required to defend your return to the IRS. Instead of you, your accountant will be the contact person required to answer questions posed by the IRS, even though you’ll ultimately be on the hook for any amount owed. For this reason alone, hiring an accountant may be worth it.
How much time do I have?
The average time it takes to complete a tax return, according to the Washington Post, is about 13 hours. If you’re already strapped for time, you may want to consider outsourcing this work. And, if you do want to prepare your taxes on your own, make sure you get organized early and set aside plenty of time to file before the April 17th deadline.
Make a decision and start planning
The earlier you plan for tax season, the better off you’ll be. Weigh the pros and cons now to help you decide whether to file alone or hire a professional. And, one final tip: make sure you sign up now for a Chime account. This way, you can get your tax refund deposited directly into your account. Better yet, you’ll get your refund in three weeks rather than waiting for two months.