Online tax software makes DIY tax filing easier than ever, but it’s not for everyone. Sometimes, it just makes sense to have a tax professional help you (or even handle) your taxes for you. But it can be hard to know what makes sense and when.
We’re partnering with H&R Block to help you make sense of the tax pro vs. DYI online decision. We love H&R Block because they have great online tax software. But they also let you access tax professionals to help you in the way you need it – phone, email, chat, virtual tax prep, and a network of locations nationwide. Check out H&R Block here to learn more >>
With that in mind, we break down scenarios where it’s better to prepare taxes on your own and when you should enlist the help of a professional.
Four Times It Makes Sense To DIY Your Taxes
You don’t need to be a tax expert to file your own taxes. Online tax software, like H&R Block Online, makes it easy to calculate your tax burden (or the refund you’re due) on your own.
Because tax software is so user-friendly and low cost, it makes sense to use it when you can. These are a few situations where filing taxes on your own makes a ton 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 may be reported on a 1099-NEC Form. Every tax software we’ve reviewed makes it easy to report this type of income to the IRS.
If you don’t have additional income sources (Rental income, business income, royalty income, etc.), you can likely file taxes using the appropriate tax software for your situation. We recommend H&R Block as our top overall pick this year. Read our H&R Block review.
You Know About The Most Common Tax Savings Strategies
Most tax software uses an “interview style” interface to help users claim legitimate deductions and credits. If you know why the software wants to know about charitable giving, retirement savings, or student loan interest, and more, you’re more likely to answer the questions correctly.
People who have deductions or credits should feel confident in filing their own taxes. But it’s easier to DIY your tax prep when you understand tax basics.
You Keep Accurate Business Or Rental Property Records
Non-standard income (such as rental income or business income) doesn’t exclude you from DIY tax prep. But to DIY your taxes correctly, you need to keep excellent records throughout the year. It’s important to be able to verify your income and your expenses for the IRS.
An online accounting software can help business owners stay on track with their income and expense reporting. If you’ve kept up with your bookkeeping throughout the year, you can probably file taxes on your own.
You Have Simple Business Expenses
As a self-employed person, I never worried about the complexity of my business expenses. Aside from a computer, and a cell phone, my business had no assets. I simply paid for a few expenses each year and deducted them as I went. These expenses were easy to report through DIY tax software.
If you’re ready to DIY your taxes, check out H&R Block Online to get started. Their easy-to-use interface will walk you through these common tax situations, and help you file your taxes.
However, when my husband became a general contractor, I quickly learned that business expenses have layers of complexity. Some expenses are deducted the year they are incurred. Others need to be depreciated over three, five, or longer schedules. And businesses that employ others face another layer of complexity.
Once our taxes involved complex business expenses, we knew that we wanted help from a professional.
Six Times You Should Consult A Tax Professional
Of course, not everyone is equipped to file taxes on their own. These are a few times when you should likely consult a professional rather than attempting to do taxes on your own.
You Bought Or Sold A Business
Buying and selling businesses are typically not supported by most DIY tax solutions. Plus, both buyers and sellers may have tax-savings opportunities that they don’t know about. Engaging a tax advisor to help you with the transaction and the tax prep can help you save money down the road.
You Engaged In Complex Real Estate Transactions
Buying or selling real estate doesn’t preclude you from filing taxes on your own. But if you’re investing in Opportunity Zones, or doing 1031 exchanges, you’ll want help from a CPA. These situations are complicated, and it can save money to involve a professional.
You Have Many Complex Factors
Most people who have organized records can complete tax filing software in under an hour (maybe two if it’s your first time filing). But those with many complex factors may spend several hours cross-referencing documents to ensure that they are entering the information correctly.
If you’re spending an entire weekend preparing your taxes, consider whether the time is worth it. You may have a situation that’s complex enough to warrant professional help.
You Want Tailored Advice On Last-minute Tax Moves
Tax advisors can help you make “buzzer-beater” tax moves to lower your tax burden. You may find opportunities to contribute to self-employed retirement accounts or claim deductions you didn’t know existed. A single email from a tax professional can help you save hundreds off your tax bill.
You May Have Missing Records
If you’re newly self-employed, or a new landlord, you may be unsure what information you need to file taxes. A professional can help you track down the right documents, so you can file on time.
You Owe Back Taxes
If you currently owe back taxes, and you may owe more this year, consult with a professional tax resolution specialist who can give you advice on how to move forward. A professional can give advice on which debt to prioritize, and the best filing strategies to get out of trouble with the IRS.
Furthermore, you should keep in mind the time it takes to prepare and file your taxes. For some people, there is a lot of value in simply providing your information to a tax pro to handle your taxes – especially if you’re naturally organized.
And we love H&R Block for professional tax help. First, they offer virtual tax prep, which is an amazing service to have a tax professional prepare your taxes without having to leave your home! You simply upload your documents and answer a few questions, and your taxes will be handled for you.
But if you need a little more help, H&R Block has a network of locations nationwide with tax experts that can help. Their average tax professional has over 10 years of experience. Check out H&R Block here and book an appointment >>>
Four Times Advice From A Tax Expert Makes Sense
While up till now we’ve been doing an either/or tax pro vs. DIY online comparison, tax filers can also take advantage of hybrid options. These options (often called Pro Assist or Expert help) allow filers to engage directly with enrolled agents or CPAs.
These experts won’t do your taxes, but they can answer your tax questions. H&R Block even has screen sharing options, so users can ask questions directly through the software. These are the four scenarios when paying for expert assistance may make sense.
You Have A Few Specific Questions
Want to know whether you can deduct your cell phone bill for your business? An enrolled agent can help you figure that out. If you’ve got a few questions that are specific to your situation, try a pro-assist option to answer them.
Your Situation Is Straightforward, But It’s New To You
Sometimes new tax situations feel complex because they are new. If you just bought your first rental property, you may want an expert to walk you through depreciation, so you can gain confidence in filing your taxes. A pro-assist is a great way to make sure you file your taxes correctly.
You Need Some Assistance With Reporting Investment Income
Investment income is typically reported on standard investment forms like the 1099-DIV or the 1099-B. That makes it fairly easy to report investment income using DIY tax software (especially if you choose a robust option like H&R Block Premium).
But certain investors may have opportunities to lower their tax burden with carryover capital losses from previous years. These losses require reviewing previous tax returns as well as the current return. In this case, getting some assistance from an enrolled agent or a CPA (even if this happens during a short call) can be useful.
You Aren’t Sure Where To Report Certain Types Of Income
Did you earn royalty income? What about cash from mowing lawns? Or perhaps you made a small fortune from cryptocurrency investing. If you made the money, but you don’t know where to report it, an expert can help you. After engaging an expert, you can always hire a professional if you’re still confused.
What Is The Best Choice For You?
While we’ve outlined the most common things to consider in the tax pro vs. DIY online debate, these situations may not apply to you.
Maybe you’ve been preparing your own taxes for years and you find it easy or rewarding despite the complexity. Perhaps your taxes would only take 30 minutes to file but you’re worried about an audit and want professional help.
The decision to DIY or go pro is ultimately up to you. Don’t be afraid to try to file your own taxes but also don’t consider it a waste of money if you enlist a professional.
And if that’s you, H&R Block should be your choice. Because H&R Block allows you to start in one format (say, DIY with H&R Block Online), and then switch to another if you run into a situation where you need more help. That’s awesome.