DIY Taxes vs. Hiring a Tax Professional: Which Is Right for You?
Tax season can be a stressful time, and one of the biggest decisions you’ll face is whether to file your taxes yourself or hire a professional. Both options have their advantages, depending on your financial situation, comfort level with tax laws, and willingness to invest time or money. Let’s break down the pros and cons of each approach so you can make the best choice for your needs.
DIY Taxes: Cost-Effective and Convenient
Many people opt to file their own taxes using software like TurboTax, H&R Block, or FreeTaxUSA. Here’s why it might be the right choice for you:
Advantages of Doing Your Own Taxes
- Lower Cost – Tax software typically costs between $0 and $100, significantly less than hiring a tax professional. If you have a simple return (e.g., W-2 income, standard deduction, no complex investments), this can be a budget-friendly option.
- Full Control – You have complete visibility into your financial situation and can file at your own pace without depending on someone else’s schedule.
- Quick and Efficient – Many tax software programs streamline the process with automated calculations, error checks, and direct e-filing.
- Learning Opportunity – Filing on your own gives you a deeper understanding of your tax situation, which can help you make smarter financial decisions throughout the year.
Potential Downsides of DIY Taxes
- Mistakes Can Be Costly – If you misreport income or miss a deduction, you might owe more or trigger an IRS audit.
- Time-Consuming – Even with software, gathering documents and ensuring accuracy can take several hours.
- Limited Guidance – While software provides some help, it doesn’t replace the expertise of a tax professional, especially for complex situations.
Hiring a Tax Professional: Expert Help and Peace of Mind
For those with more complicated tax situations, working with a CPA or enrolled agent can be a smart investment.
Advantages of Hiring a Tax Professional
- Expert Knowledge – Professionals stay up to date on tax laws and can find deductions or credits you might overlook.
- Time-Saving – Instead of spending hours sorting receipts and navigating forms, you hand over your documents and let an expert handle the heavy lifting.
- Audit Support – If the IRS has questions about your return, a tax professional can represent you and help resolve issues.
- Personalized Advice – A tax pro can offer strategic guidance on tax planning, retirement contributions, and business deductions, which is invaluable if you’re self-employed or have investments.
Potential Downsides of Hiring a Tax Professional
- Higher Cost – Depending on your tax situation, hiring a CPA can range from $200 to $1,000 or more.
- Less Control – While professionals aim for accuracy, you’ll need to trust them with your financial details and ensure they understand your unique situation.
- Scheduling Constraints – Many tax preparers get booked up as deadlines approach, so you’ll need to plan ahead.
Which Option Is Right for You?
- Choose DIY if: Your tax situation is simple, you’re comfortable using tax software, and you want to save money.
- Choose a Professional if: You have a complex return, own a business, have significant investments, or need expert tax planning advice.
Ultimately, the best choice depends on your financial complexity and personal comfort level. If you’re unsure, consider starting with tax software and consulting a professional for a review. Whatever route you choose, being proactive about tax planning can save you both money and stress in the long run.
*Prepared By Jonathan Neher
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Avenues to Wealth Financial Advisors and Cambridge are not affiliated.
