Online tax software makes DIY tax filing easier than ever, but it’s not for everyone. Sometimes it just makes sense to seek help from a tax advisor (or even manage your taxes). However, it can be difficult to know what makes sense and when.
We partner with H&R Block to help you understand the online decision between tax professional and DYI. We love H&R Block because they have great online tax software. But you can also access tax experts to help you out when you need them – phone, email, chat, virtual tax preparation, and a nationwide network of locations. Check out H&R Block here to learn more >>
With this in mind, we divide scenarios when it is better to prepare taxes yourself and when you should seek the help of a professional.
Four times it makes sense to tinker your taxes yourself
You don’t have to be a tax professional to file your own taxes. With online tax software like H&R Block Online, you can easily calculate your tax burden (or any refund due) yourself.
Because tax software is so easy to use and inexpensive, it makes sense to use it when you can. These are some situations where filing taxes yourself makes a lot of sense.
All your income is reported on standard forms
The most common type of income is job-related income, which is reported on a W-2 form. Other income can be reported on a 1099-NEC form. Any tax software we review makes it easy to report this type of income to the IRS.
If you don’t have additional sources of income (rental income, business income, royalties, etc.), you can likely file taxes using the tax software that is appropriate for your situation. We recommend H&R Block as our top pick this year. Read our H&R block review.
You know the most common strategies for saving taxes
Most tax software programs use an interview-style user interface to help users claim legitimate deductions and credits. If you know why the software wants to know about charitable giving, retirement plans, student loan interest, and more, you are more likely to answer the questions correctly.
Individuals with deductions or credits should feel confident about filing their own taxes. But it’s easier to do your own tax preparation when you understand the tax fundamentals.
They keep accurate business or rental property records
You do not exclude non-standard income (such as rental income or business income) from home improvement tax preparation. But to get your taxes tinkered right, you need to keep excellent records all year round. It is important that you can verify your income and expenses for the IRS.
Online accounting software can help business owners keep their income and expense reports updated. If you’ve kept up with your bookkeeping all year round, you can likely file taxes yourself.
You have simple business expenses
As a self-employed person, I’ve never worried about the complexity of my business expenses. Other than a computer and a cell phone, my company had no net worth. I just paid for a couple of expenses each year and subtracted them over time. These expenses were easy to report through DIY control software.
When you’re ready to tinker your taxes yourself, check out H&R Block Online to get started. The user-friendly interface guides you through these general tax situations and helps you file your taxes.
However, when my husband became a general contractor, I quickly discovered that business expenses are very complex. Some expenses are deducted in the year they are incurred. Others must be written off over three, five, or longer schedules. And companies that employ others are faced with another level of complexity.
After our taxes included complex business expenses, we knew we wanted help from a professional.
You should consult a tax advisor six times
Of course, not everyone is able to file taxes themselves. These are a few times that you should probably consult a professional instead of trying to collect taxes yourself.
You bought or sold a business
Business buying and selling are typically not supported by most DIY tax solutions. Additionally, both buyers and sellers may have tax savings opportunities that they are unaware of. If you hire a tax advisor to help you with the transaction and tax preparation, you can save money later.
You have carried out complex real estate transactions
Buying or selling real estate does not prevent you from filing taxes yourself. However, if you are investing in opportunity zones or doing 1031 exchanges, you will need help from a CPA. These situations are complicated and it can save you money to involve a professional.
You have many complex factors
Most people who have organized records can get their tax return software ready in under an hour (possibly two if you are first filing them). However, people with many complex factors can spend hours referencing documents to ensure that they are entering the information correctly.
If you spend an entire weekend preparing your taxes, consider whether it is worth the time. You may have a situation complex enough to warrant professional help.
You want tailor-made advice on last minute tax removals
Accountants can help you take tax measures to reduce your tax burden. You may find ways to contribute to self-employed retirement accounts or get deductions that you didn’t know existed. With a single email from a tax professional, you can save hundreds of your tax bill.
Records may be missing
If you are new to self-employment or a new landlord, you may not be sure what information to use in order to file taxes. A professional can help you find the right documents so you can submit in a timely manner.
You owe taxes back
If you currently owe taxes back and you may owe more this year, reach out to a professional tax clearance specialist who can advise you on how to move forward. A professional can offer advice on which debts to prioritize and which filing strategies are best to avoid problems with the IRS.
Additionally, you should consider the time it will take to prepare and file your taxes. For some people, simply sharing your information with a tax professional to help manage your taxes is very valuable – especially if you are naturally organized.
And we love H&R Block for professional tax assistance. First, they offer virtual tax preparation. This is an amazing service for a tax professional to prepare your taxes without leaving your home! You just upload your documents and answer a few questions and your taxes will be handled for you.
However, if you need a little more help, H&R Block has a nationwide network of locations with tax experts who can help. Your average tax advisor has more than 10 years of experience. Take a look at H&R Block here and make an appointment >>>
Four times advice from a tax expert makes sense
While we have so far carried out an online comparison between tax professionals and do-it-yourselfers, tax advisors can also use hybrid options. These options (often referred to as Pro Assist or Expert Help) allow filers to contact registered agents or CPAs directly.
These experts don’t pay taxes, but they can answer your tax questions. H&R Block even has screen sharing options so users can ask questions right through the software. These are the four scenarios in which paying for expert assistance can make sense.
You have some specific questions
Would you like to know if you can deduct your cell phone bill for your business? A registered agent can help you find out. If you have some questions specific to your situation, try a pro-assist option to answer them.
Your situation is straightforward, but new to you
Sometimes new tax situations feel complex because they are new. If you’ve just bought your first rental property, you may want to be guided through the depreciation process by an expert so you can gain confidence in your tax filing. A pro-assist is a great way to ensure that you are filing your taxes correctly.
You need assistance reporting on investment income
Investment income is usually shown on standard investment forms such as the 1099-DIV or the 1099-B. That makes it pretty easy to report investment income using DIY tax software (especially if you choose a robust option like H&R Block Premium).
However, certain investors may have the option to reduce their tax burden by using loss carryforwards from previous years. These losses require a review of previous tax returns as well as current tax returns. In this case, it may be helpful to obtain assistance from a registered agent or CPA (even if it is during a short call).
Not sure where to report certain types of income
Did you earn royalties? What about cash from mowing the lawn? Or maybe you made a small fortune investing in cryptocurrency. If you’ve made the money but don’t know where to report it, an expert can help. After hiring an expert, you can always hire a professional if you are still confused.
Which is the best choice for you?
While we have outlined the most common aspects of the online debate between tax professionals and home improvement professionals, these situations may not apply to you.
Perhaps you’ve been preparing your own taxes for years and, despite the complexity, find it easy or rewarding. Perhaps it would only take 30 minutes to file your taxes, but you are concerned about an exam and want professional help.
The decision to do handicrafts yourself or to become a professional is ultimately yours. Don’t be afraid to file your own taxes, but don’t consider it a waste of money if you hire a professional either.
And if you are, H&R Block should be your choice. Because you can start with H&R Block in one format (e.g. DIY with H&R Block Online) and then switch to another if you get into a situation where you need more help. That’s great.
Check out H&R Block here and get started >>>