If tax season (now extended until July 15, 2020) fills you with a sense of dread and keeps you reaching for the Tums, you’re not alone. Filing taxes can be a stressful, confusing task, which is exactly why there are so many certified tax professionals eager to help overwhelmed taxpayers each April.
Should you fork over the money to have an expert handle your tax return, or should you do your own taxes? Don’t make such an important decision impulsively. Use these tips and guidelines to determine whether you should take the fate of your taxes in your own hands this year.
Situations When It Makes Sense to Do Your Own Taxes
If your tax obligations are relatively simple and your income is clear-cut, it could make sense to file your own taxes. Most experts recommend that you only do your own taxes if you meet these four qualifications:
- You have the time and patience to spend up to seven hours gathering forms and preparing your tax return
- Your tax situation is straightforward (i.e: no dependents, complex investments, or significant assets)
- If you own a business or are self-employed, you feel comfortable navigating business-related tax forms and software
- You’re confident taking control over your taxes and don’t mind fixing errors or looking up questions on the IRS website
The IRS even offers a free filing portal for taxpayers with incomes under $69,000. This portal lists 10 qualified tax preparers who offer free federal filing services. If you’d still like to file your own taxes but you make more than $69,000 a year, you may need the assistance of an online tax software such as TurboTax or H&R Block.
Tax Softwares Compared
Even if you’re not a tax aficionado, you’ve probably heard of TurboTax. This platform offers deluxe, premium, and self-employed online filing, with federal return fees ranging from $60 to $120. For double that price, you can buy TurboTax Live and gain instant access to tax experts who review your tax return for accuracy before submission.
H&R Block is TurboTax’s biggest competitor, and it’s also less expensive. H&R Block offers a free edition that allows you to file both your federal tax return and state tax return at no cost, regardless of your income. If you need to itemize, or if you’re a homeowner, freelancer, or business owner, you may not be able to utilize H&R Block’s free edition.
If you don’t make your income on a W-2 basis, 1040.com may be a better tax software option. This online tax service charges one low flat fee of $25, which means you won’t be penalized for reporting self-employment income, business income, estate or trust income, or foreign earned income.
When You Should Get an Expert
The rise in user-friendly, sophisticated tax software has certainly made it easier to file your own taxes, but there are some situations that call for the help of an expert. Consider hiring a tax preparer to file your taxes if you fall into any of these categories:
- You don’t have the time or patience for attention-to-detail with your taxes
- Your tax situation is complicated, including dependents, investments, charitable contributions, or a business
- You’re planning to itemize your deductions
- You experienced a major life change last year
Tax professionals are tax lawyers, CPAs, and enrolled IRS agents who understand the precise complexities of taxes and are certified to handle any tax situation. Depending on the state of your finances, it may very well be worth the $150 or $200 to take the burden of filing taxes off your shoulders.