Feb 26

Feb 26 DIY Taxes vs. Hiring a Tax Professional: When to Do It Yourself and When to Seek Help

Filing taxes can be a daunting task, and with so many DIY tax software options available, many individuals and business owners wonder if they should tackle their taxes on their own or hire a professional. The truth is, while some situations make DIY filing a reasonable choice, others can quickly become overwhelming and costly if mistakes are made.

At Simply Balanced Accountants, we want to help you make an informed decision. Here’s a breakdown of when it makes sense to file your taxes yourself and when hiring a professional can save you time, stress, and money.

When You Can DIY Your Taxes

DIY tax software like TurboTax, H&R Block, or FreeTaxUSA has made filing relatively straightforward for many individuals. If your tax situation is simple and you feel confident navigating the process, DIY filing might be a good option. Here are some signs that doing it yourself is a viable choice:

You Have a Basic Tax Return

If you only have a W-2 from your employer, take the standard deduction, and donâ€™t have investments, rental income, or self-employment income, DIY software can likely handle your return efficiently.

Your Income Sources Are Simple

For those with only one or two sources of income (such as wages from an employer and interest from a bank account), DIY tax software can quickly guide you through the process.

You Qualify for Free Filing

If you make under a certain income threshold (typically under $79,000 for IRS Free File programs), you may qualify for free tax filing options. This can be a great way to save money if your tax situation is straightforward.

You Have No Major Life Changes

If your financial situation hasn’t changed significantly from the previous years, no marriage, divorce, new home purchase, or new businesses, then filing on your own may be manageable.

You’re Comfortable with Numbers and Tax Software

If you have a knack for numbers, understand basic tax concepts, and are comfortable using tax software, you might feel confident filing on your own.

When to Hire a Tax Professional

Even if you feel confident in handling your own taxes, certain situations call for professional expertise. Here are key signs that you should seek help from a tax professional like Simply Balanced Accountants:

You Own a Business or Are Self-Employed

If you’re a sole proprietor, freelancer, or small business owner, your tax situation is much more complex. A tax professional can help with:

Deducting business expenses correctly.
Handling self-employment tax.
Setting up an S-Corp or LLC for tax savings.
Managing estimated tax payments to avoid penalties.

You Have Multiple Income Streams

If you earn income from investments, rental properties, stock sales, cryptocurrency, or other side hustles, taxes can quickly become complicated. A professional can ensure you comply with reporting requirements and maximize deductions.

You’ve Had a Major Life Change

Life events like marriage, divorce, the birth of a child, or the purchase of a home can impact your tax situation significantly. A tax professional can help you understand the best filing status, new deductions, and credits.

You Owe Back Taxes or Have IRS Issues

If you owe the IRS money, have received a tax notice, or need to negotiate a payment plan, professional guidance is crucial. Tax professionals understand IRS processes and can help you navigate audits, penalties, and payment arrangements.

You Want to Maximize Your Deductions and Credits

Tax laws change every year, and you might be leaving money on the table without realizing it. A professional can ensure you take advantage of all available deductions and credits, such as:

Child Tax Credit
Energy Efficiency Credits
Retirement Contributions Deductions
Business Expense Deductions

You Need Advanced Tax Planning

If you’re looking to reduce your tax liability, a professional can help with strategies like:

Contributing to the right retirement accounts.
Structuring your business for optimal tax savings.
Planning charitable donations for maximum impact.

The Cost of DIY vs. Professional Help

Many people choose DIY filing to save money, but sometimes hiring a professional is actually the more cost-effective choice.

DIY Software Costs: Typically range from $0 to $200, depending on complexity. However, mistakes or missed deductions can cost you much more in lost refunds or IRS penalties.

Tax Professional Fees: Can range from $250 to $1,000+, depending on your tax situation. While this may seem expensive, a good accountant can help you: