DIY vs Tax Professional: The How to Decide Guide

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DIY vs Tax Professional: The How to Decide Guide

by Jillian Gaietto on Mar 7, 2018

Tax

When tax season comes around, it can be difficult to determine if you are in need of a professional to prepare your tax return, especially with the way the tax filing process has changed significantly. To decide, ask yourself these five questions:

1. How much can you spend?

Depending on the complexity of your return, costs for a professional can add up quickly. According to surveys released by the National Society of Accountants and the IRS, estimates of the average fee for the cost of filing your return can be close to $270. Make sure to ask for a quote up front before committing to any services.

Those who want help but can't afford the professional fees could qualify for free assistance from the Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs through the IRS. These programs are limited by specific income requirements or are only available to senior citizens. You can locate your nearest program site through the IRS VITA/TCE and AARP Tax-Aide Site locator tools.

If you've elected to DIY your tax return, there are multiple options available to you as well. If you have an adjusted gross income below $66,000, you qualify to use the IRS' Free File software which can have your state return available at no cost as well. TurboTax offers Absolute Zero, a no-cost Form 1040EZ program, to those who fall under similar requirements.

Even if you don't qualify to file for free, there is user-friendly tax software available to purchase for less than $100.

2. How much time can you set aside?

They say time is money, so don't overlook the value of yours. According to estimates by the IRS, it will take you 16 hours to complete a Form 1040 (the form that they say 69% of us file). This timeline includes the hours it takes to compile and organize your information and documents, as well as any time designated for tax planning done for the subsequent year.

With a professional on your side, you still need to compile your documents, but you can follow more of a “set it and forget it” mindset once you've passed them along to your professional.

3. How complicated are your taxes?

Most people are capable of filing their taxes themselves, so there are instances where it makes more sense to use a tax software. For example, if you are single, rent your home, and have no investments aside from an employer 401(k) plan, then tax software would be the perfect fit for you.

But if you are filing for the first time, have recently changed your tax filing status, or if you have purchased or inherited property, you may benefit from having a professional to lean on for questions and concerns. Especially for those running their own business and are self-employed, having an expert familiar with the complex rules associated with the filing requirements and business deductions could possibly be an advantage.

A notable risk in completing a complicated return on your own through tax software would be the possibility to overlook potential tax write-offs due to the difficult tax code.

4. How comfortable are you with doing your own taxes?

Today's tax software walks you through the tax return process and doesn't require the in-depth knowledge of tax code and calculations that was needed in years past. It is designed to be user-friendly, so if you are tech savvy, using the software would depend on your confidence in the process.

Not everyone is in tune or comfortable with taking the reins on filing their taxes, especially with the worry of mistakes and missed tax savings opportunities. In this case, you need to consider keeping your mind at ease on by deciding to use a professional.

5. Will you be able to deal with the IRS?

If you are confident in completing your return yourself after answering the above four questions, make sure you are ready and willing to defend it against the IRS (should you need to). Your signature on the bottom of your return signifies that you are responsible for the information and the accuracy of the data on the return. Even if the IRS comes back to you years later regarding a discrepancy, you will be the one they come to for clarifications.

However, when you use a tax professional, they can become your point person. By completing one line on the Form 1040, you would direct any of the IRS' questions to your professional first. You can even go so far as to elect tax preparers with specific qualifications to be your power of attorney to represent you in front of the IRS.

So, DIY or Tax Pro?

Whether you file your taxes or take advantage of the many resources available to you when selecting a professional, everyone's tax forms are required to be submitted by Tuesday, April 17th, 2018.

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