I did my own taxes for six years after I got married. And I mean my own taxes.
I didn’t use any software or anything. I even filled out the tax forms by hand — before the IRS started offering fillable forms.
But after a while, things started getting out of hand. It took me days to finish my taxes. By the time I read all the rules, filled out forms, and double-checked everything, I was exhausted.
My taxes were just too complicated for me to do myself, so I finally hired a tax accountant. Today, I still use someone else to prepare and file my tax return, and it’s one of the best decisions I ever made.
Before you decide whether you should do your taxes yourself or hire someone to help, here are three signs you might need a tax accountant.
1. Your taxes are complex
Let’s be honest: most of us are perfectly capable of doing our own taxes. There are plenty of tax prep programs that can help if you want a little guidance. I know folks who have been using TurboTax for years, and they are perfectly happy with the results.
However, many of these people don’t have complicated taxes. Perhaps they have some side hustle income and retirement investments, but they don’t have business partnerships and an LLC. They haven’t sold investments for capital gains or losses during the year.
But if your taxes are becoming increasingly complex, it makes sense to hire a tax accountant. For example, if your taxes include a major financial change, a new business venture, or a divorce, that can get complicated.
The more forms you have to file, and the more complicated your situation, the more it makes sense to hire someone else. Tax accountants can provide that personal guidance that you might not get from tax software.
What really makes a difference, however, is how much time it can save you. Even if you use an app, it can take forever to fill out a complicated tax return. If you keep good records throughout the year, it’s easy to gather everything you need, then dump it on your tax accountant to take care of.
I spend about two hours organizing my information and preparing my profit and loss statement. Then my accountant does the rest. This saves me hours upon hours of time.
2. You want help with future tax planning
Not only can tax accountants help you prepare your taxes and save you time and energy, they can also help you plan ahead.
If you want help with future tax planning, a good accountant can help you make the right moves throughout the year. Rather than scrambling at the end of the year, your tax accountant can put you on track to be successful year-round.
When you get help with future tax planning, you’re prepared for some of the pitfalls. Plus, you can look ahead and plan your deductions and credits. This allows you to reduce your tax liability more effectively, plus manage your cash flow more efficiently.
Tax accountants can also help with long-term tax planning, like retirement. When it comes to issues you want to prepare for 10 to 20 years down the road, a good accountant can help you put the right systems into place now.
Online tax software can’t help you with tailored future tax planning. If you want help in that area, you need to consult a professional who can understand your situation and make suggestions.
3. You’re not a tax expert
Yes, you’re capable of preparing your own tax return. However, it’s not easy to always keep up with all the tax law changes. On top of that, there’s something to be said for experience and expertise.
Experienced tax accountants can quickly fill out your tax return, as well as find deductions and credits you might have missed. The enterprise software used by tax accountants also offers an edge. Your accountant can make unasked suggestions, taking the initiative to help you make the best choices.
You’re smart enough to do your taxes, but it’s not what you do for a living — you’re not a tax expert. Someone who does taxes for a living can provide insight and help that you might not get anywhere else.
When to do your own taxes — and when to use software
There’s nothing wrong with doing your taxes yourself. Back when I had a straightforward situation, it was easy to do my own taxes. If you can finish in a few hours, and if you have only a few forms and schedules to fill out, it might not make sense to pay a tax accountant. Plus, if you meet certain income requirements, you can qualify for free tax filing.
If you have a regular job, and you save for retirement, you can probably do your taxes on your own or with software. Even if you itemize, it can make sense to do your own taxes, as long as you don’t have any complicated situations.
But if you start your own business, buy and sell investments regularly, or get into situations where every answer is raising more questions — it’s time to consider hiring someone.