With the tax deadline only a couple weeks away, you’re likely feeling rushed to get your taxes done on time. However, there’s a fine line between hurrying through the filing process and making mistakes, and taking too long and missing the tax deadline.
Fortunately, endless resources available on the internet today make it easier than ever to file your own taxes quickly. But it’s not always a breeze – there are specific reasons you might want to hire a tax professional instead of going the DIY route.
Use this comparison below to determine the best way to cost-effectively have your taxes prepared correctly – and in plenty of time for the tax filing deadline.
When you should DIY taxes
There are several factors to consider when you file your own taxes; it’s important to evaluate the entire situation so you don’t put yourself in a financial bind.
Here are the most common instances when it’s preferred to DIY taxes:
- Your tax return is simple or unchanged: If your financial situation hasn’t become more complicated over the past year, you can easily file your taxes for free. This includes anyone with a W2 from one job who’s claiming the standard deduction.
- You can easily understand numbers and want a hands-on approach: You should DIY taxes if you feel confident about the numbers and can understand the basic ins-and-outs of how taxes work.
- You find online tax software easy to navigate: Online tax software isn’t too complicated, but it can trip some people up. If you feel like you can easily navigate this issue, then you go for it.
- You don’t trust your tax professional: Perhaps you were unhappy with your previous tax professional and want to tackle filing yourself. This could be a good option so you can familiarize yourself with what’s correct and what’s not.
How to file taxes online for free
When preparing your own taxes, there are many e-filing resources endorsed by the IRS that will allow you to submit your return accurately and free of charge.
You can file your taxes directly through the IRS website using one of their approved tax filing software partners.
Please know that in order to use this free version, you’ll have to meet the adjusted gross income requirement of earning less than $62,000 annually (for 2016). You can not use this option if you’re a business or other entity, as it’s only available to individuals, families, and couples.
If your adjusted gross income is more than the $62,000 annual limit, you can use the Free File Fillable Forms option to fill in electronic paper versions of your tax return, then print and mail them via snail mail.
2. Intuit’s TurboTax
This tax filing program is a very popular DIY choice since it easily integrates with bookkeeping software like QuickBooks and Mint. You can quickly and easily export your income and expense transactions made throughout the year into the TurboTax software.
This makes the tax filing process simple and accurate. Whether or not it’s free, or if you’ll pay a small fee, depends on the specific service you choose when you’re ready to finalize and file your return.
3. H&R Block Online
H&R Block offers a free tax filing version for first-time tax filers and individuals who have a very simplistic tax situation. The software is available online or can be directly downloaded to your home computer.
You also get access to free, unlimited tax experts and a 100 percent accuracy guarantee on all tax returns. As an alternative option, you can sit down with an H&R tax professional in person at one of their 12,000 locations nationwide.
When to hire a tax pro
As a former accountant, I truly understand the value in hiring a CPA to file your taxes – but it’s really only necessary for certain situations.
Here are the most common instances when it’s better to hire a professional to file your taxes:
- Your time or knowledge is limited: One of the main benefits to hiring a professional is that they can ultimately save you time and money. Having a limited knowledge of how taxes work can mean hours and hours of research that you just can’t afford to spend.
- You don’t want to miss out on any deductions or tax law updates: A tax professional’s entire job is to stay updated on the goings-on of the IRS and other tax law changes. You don’t want to miss out on any available credits or deductions because you didn’t know you qualified for them.
- Your tax return is complicated or had a lot of changes: If you can’t get a good handle on your finances, or are unsure of where exactly to start, it may be best to hire a professional to help. You can always learn from this year and try your hand at DIY taxes next season.
- You have multiple income streams or investments: Owning a small business, having multiple incomes streams, or other investments can be good causes for needing professional help. A CPA can help you fill out the right forms and explain how different ventures affect your bottom line.
If you feel like you’re better off working with a tax professional, it can be a bit more costly than the free DIY tax filing route. However, the benefits you gain is the expertise they bring to the table and how much time they can save you.
When looking for a good tax pro or CPA, look for someone who specializes in your situation, whether that’s real estate investments, small business, or other specifications.
Generally speaking, you’ll be charged by the hour (much like a lawyer) and the going rate ranges from $100-$350 an hour.
You can save yourself a bit of money by doing the prep work first, such as organizing receipts, preparing and printing any reports, and balancing your books. That way you can DIY some but still have the benefits of a professional to help.
In the end, what really matters is that you feel confident in your decision to either DIY or hire a tax professional. You certainly don’t want to get in trouble with the IRS, but you can always find an expert to help as needed. Make the decision based on your level of confidence and comfortability with tackling the situation.