When to get professional tax help and when to do your own taxes
About 60 percent of taxpayers use a professional tax service while the other 40 percent do their own taxes, mostly using DIY software or programs. For some taxpayers, deciding how to file is easy – preparing their own return or getting help from a professional is as clear to them as being a cat or dog person. But for other taxpayers, the decision is not so straightforward and the best method might change year to year. Here are five ways to know when getting professional tax help might be better than the DIY route.
Complexity: do not try this at home
When a tax situation is more complex, the personal attention from a professional tax preparer could save taxpayers some time and trouble. Owning a business, having investments or rental property, or needing to file multiple state returns all signal a more complex return. While reputable DIY tax software and online tax-filing programs offer products designed to handle these situations, the personal attention from a professional could not just give the taxpayer extra peace of mind that their return is accurate, but could also help the taxpayer with tax planning to minimize tax obligations and maximize tax benefits in the future.
Changes: lather-rinse-repeat not going to work anymore
Life changes can also affect a tax situation without a taxpayer even realizing it. Graduating, getting married or divorced, having a child, moving, getting a new job or losing a job could all impact the taxpayer’s return and their refund.
If a taxpayer experiences a life change, it might be a good year to file with a tax professional. Using a tax professional to file their return will allow them to learn about the tax benefits they may or may not qualify for anymore and other tax strategies to minimize their tax liability and maximize their refund. Then, next year, if they haven’t had any more life changes and they feel more comfortable in their tax situation, they could opt to go back to doing their own taxes.
Convenience: life’s too short
One in three taxpayers like or even love doing their taxes. But taxpayers who fall in with the majority who don’t like it and the quarter of the population that hates doing their taxes might consider washing their hands of it and leaving it in the hands of a tax professional.
Similarly, taxpayers who don’t have time to prepare their own returns could also consider using a professional tax preparer. The average taxpayer spends 13 hours on their taxes, so a tax professional can save them a lot of time.
Calibration: amend now or forever hold your peace
Even the seasoned DIYer might consider using a tax professional every third year. The reason? The IRS allows taxpayers to file or amend tax returns from the previous three years to claim a missed refund. Once that three-year window closes, the taxpayer can’t claim a missed refund even if they discover a mistake.
The IRS can also audit returns from the previous three years and the previous six years if they find a serious error. Checking in with a tax professional periodically can help DIYers identify and correct errors.
Compliance: catching up is hard to do
According to the IRS, 43 percent of taxpayers have to interact with the IRS outside of filing a tax return. If that is responding to an audit or notice, catching up on back taxes or making a payment agreement, a taxpayer should consider getting a qualified tax expert to help them. Credentialed tax professionals such as enrolled agents can help taxpayers understand the issue, organize the documents needed to respond and represent the taxpayer before the IRS.
With so many options to file – online, with downloadable software, via a mobile app, in an office or even a combination of those options – taxpayers can be confident that they’ll find the way that works for them.
By Annelise Wiens
As the newsroom editor, Annelise Wiens is interested in more than just tax and industry news, but the stories of H&R Block's 80,000 associates, their communities and H&R Block's world headquarters in Kansas City, Missouri. Wiens joined H&R Block in 2014 from a public relations agency, where she worked with clients in the financial services industry. Before that, she worked as a communicator for a senior member of the United States House of Representatives. She graduated from Biola University in La Mirada, CA with a bachelor's degree in history.