Should you be doing your own taxes or should you hire a tax professional to do the job on your behalf? It may sound like a simple question, but the debate over this topic has yet to be settled.

Which option is better? Well, it depends. There’s no one-size-fits-all answer to this question, because the circumstances of each individual vary.

If you’re unsure about which option you should choose, here’s a guide that will help you make a decision.

Do your own taxes

You can do your own taxes if:

You have a straight forward tax situation

If you don’t have any significant assets, investments, charitable contributions, or ownership in a business or partnership, it’s likely that you don’t have any deductions available. Moreover, your tax calculation will be pretty simple and straightforward.

You understand the taxation process

It’s important that you’re familiar with taxation laws and regulations to ensure that your calculations are correct. Also, you must have knowledge of using tax software, troubleshooting your queries using the IRS website, and understand how to fix errors, if any.

You have plenty of time and patience

Tax calculation is a time consuming process. Even the preparation work for a simple form 1040 can take more than 10 hours. It’s important that you set aside plenty of time to do your taxes if you want to ensure your calculations are accurate and in compliance with tax regulations.

Moreover, you need to pay careful consideration so each transaction is filed properly. You must also make sure that you don’t underestimate your tax liability, as it can lead to hefty fines and penalties.

Hire a professional

Consider hiring a professional to do your taxes if:

You have a complicated forward tax situation

If you have charitable contributions, investments, significant assets, or own a business, you’ll be dealing with a large number of financial transactions. The higher the number of transactions you have, the more difficult it will be; which will increase the chances of errors.

Moreover, if you take a DIY-approach and do your taxes by yourself, you might miss out on several tax breaks and deductions. Conversely a professional tax accountant will be able to identify opportunities to reduce your tax burden, potentially saving you hundreds and thousands of dollars in the long run.

You’ve had a major change in your life

If you’ve gone through a major life change, for instance, purchased a new house or started a new business, it’s going to impact your tax filing, and it’s important to have a professional take care of your taxes.

The change doesn’t necessarily have to do with your financial position. Even if you get married or have a baby, it’ll affect your tax filings. You can jointly file your tax returns and take advantage of various deductions to reduce your tax burden.

You make over $200,000 per annum

IRS statistics show that if your household income is over two hundred grand, there’s an increased likelihood of an IRS audit. This likelihood is further amplified if you make over a million dollars every year.

Therefore, if you make over $200k, it’s recommended that your taxation is performed by a professional to ensure that if the IRS comes knocking at your door, you have nothing to worry about.

You don’t have plenty of time and patience

As we mentioned previously, tax calculations can be extremely time-consuming and taxing—pun intended—process. Unless you have plenty of time available to learn about tax laws and do complex calculations, it’s better to hire a professional to take care of your tax returns.

Especially, if the filing deadline is close, you might rush through your filing and make mistakes, which will result in penalties and fines.

You’re dealing with prior tax issues

Using the services of a qualified tax expert can be extremely beneficial in situations when you’re dealing with prior tax problems. For instance, if you have to catch up on back taxes or respond to an IRS audit or notice, getting help from a professional can help you navigate through the intricacies of tax laws and ensure that you file your taxes correctly.

Final Words

As we stated in the beginning of this blog, there’s no one answer to this question. You can evaluate the aforementioned circumstances and decide whether you need to outsource your tax workings or want to take a DIY-route.

That being said, it’s always prudent to have a tax professional look into your tax workings to ensure that you’re in compliance with IRS laws. Moreover, it might help you to take advantage of tax deductions that are available to you but you’re unaware of.

If you’re looking for an experienced accounting firm to help you with your tax calculations, A&B Accounting and Business Solutions can help. We’ll make sure that you’re not paying more than your rightful share. Our professionals will help you to beat the deadlines and file your returns timely to avoid penalties.

Located in Deerfield Beach, FL, we provide an extensive range of financial services to our clients, including but not limited to, tax services, accounting services, and bookkeeping services, among several others.

We also offer premium accounting and business solutions to our clients. For more information, feel free to call us at 954-596-9966 or visit our website.