- Tax Day 2019 is Monday, April 15.
- The IRS will begin accepting tax returns on January 28; you can file as soon as you receive your W-2 form from your employer.
- The IRS has opened up its free tax filing portal, which lists companies where taxpayers who earned less than $US66,000 in 2018 can file their federal return for free online.
- But depending on your tax situation, you may want to consult a professional.
Everyone has to pay taxes.
As to whether you should prepare your own or work with a tax pro or accountant, however, there’s no one-size-fits-all answer.
Since most people’s financial situations change every year, it’s a question worth asking annually.
The flowchart below can help you make a quick decision, but keep reading for more detailed guidelines.
Americans have two basic options when it comes to filing their taxes:
1. Preparing yourself, with tax software or through the IRS website. The IRS does not charge to file taxes, and while you can print out and mail in your paperwork or request the paper forms in the mail, the IRS encourages online filing and directs taxpayers with incomes under $US66,000 to free filing portal, which lists a dozen qualified tax preparers that offer free federal filing services (though there’s typically an additional charge for state filing). For people with incomes north of $US66,000, the site provides free fillable forms.
2. Hiring a tax preparer to file for you. The only professionals qualified to help you are tax lawyers, CPAs, and enrolled IRS agents. You can search for appropriately credentialed preparers at taxprepareregistry.com.
Preparers generally start at around $US100 and vary depending on where you live and how complex your taxes are, and accountants might very well charge at least twice that, with similar variations in price according to location and complexity. According to a survey conducted by the National Society Of Accountants, federal and state tax preparation with itemized deductions costs an average of $US261.
Note that if you itemize your deductions, you may be able to deduct the cost of your tax preparation from next year’s taxes.
So, should you prepare taxes yourself or hire someone to help? For most people, it’s not just about the price. Ultimately, it comes down to what you’re most comfortable with.
Do your own taxes if:
You have a straightforward tax situation without dependents, investments, or significant assets or charitable contributions, and you don’t own a business. Those basic, free versions of tax preparation software mentioned above were created for people like you, who have few deductions and factors to take into consideration.
You have the time and patience to deal with it.Taxes probably aren’t the kind of thing you should do with Netflix on in the background. Expect to set aside some time to give it your undivided attention – the IRS estimates the average person spends up to 11 hours doing all of the preparation work for the basic form 1040.
You feel comfortable hitting submit and want that control over your money. Taxes are a big deal. If you feel comfortable navigating the software, looking up questions on the (surprisingly accessible) IRS site, and the idea of having to fix any errors doesn’t terrify you, then you’ll probably feel more comfortable doing your own taxes.
Hire a professional if:
You earn over $US200,000 a year.Kiplinger reports that IRS statistics show an increased likelihood of IRS audits once your household income passes $US200,000, and even more so if you earn over $US1 million annually. If the IRS is going to come knocking, you’ll want to make sure everything is buttoned up as tightly as possible – and for most people, working with a professional is probably the best way to do this.
You’ve had a major life change in the last year.Did you get married? Buy a house? Have a baby? These all impact your tax filing, and, at least the first time you document them on your taxes, you might want someone to show you how best to do it.
You have a complicated tax situation with dependents, investments, or significant assets or charitable contributions, or you own a business. Nearly every financial transaction comes with some kind of tax consequence, and the more transactions you have, the more things you need to take into consideration. People who own businesses, freelance, or are self-employed in particular might want the help of a professional to iron out their atypical tax situations – deductions for home offices, business meals and travel, and vehicles are also audit red flags.
You’re planning to itemize your deductions.Under the new tax law, which instituted a larger standard deduction ($US12,000 for single filers), it’s likely fewer tax filers will be itemizing deductions this year. But if you have major medical costs, a mortgage, or make large charitable donations (among other factors) you might save more money itemizing your deductions than taking the standard deduction.
You don’t have the time and patience to deal with it. If you feel that the significant time you’d need to devote to doing your taxes would be better spent elsewhere, you might want to outsource. It’s probably more prudent than rushing through your filing and making a mistake.
You don’t trust yourself to cover all of your bases. If the idea of entering numbers and talking about dependents and deductions makes you break out in a cold sweat, you might want to leave the preparation to a professional.
- Read more of our Tax Day 2019 coverage:
- Tax Day is April 15. Here’s what you can expect when filing under the new tax law
- The IRS will be able to pay out refunds during the partial government shutdown
- 11 tax deductions every independent contractor should know about
- You may be able to cut down your tax bill with a little-known credit if you saved for retirement this year
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