When Should You Hire a Tax Pro?
According to the IRS, more than half of all tax returns are traditionally filed by a paid tax pro. However, this year, tax pros are reporting an 8% drop in business, as more people choose to do their taxes at home, using software like TurboTax or TaxAct. So, who should you hire to do your taxes: A pro, or your computer? Consider this tax intel we found in the Associated Press:
- First know this: At least 70% of taxpayers could be filing their returns for FREE! That’s because the IRS offers Free File software, which is available to anyone with an adjusted gross income below $57,000 a year. You can learn more about free filing online, at IRS.gov.
- Next, ask yourself this question: Have you had a major life change in the past year? If you got married, divorced, had a baby, retired, or lost your job last year, then your tax situation may be drastically different from what it was a year ago. It may be worth paying a specialist to help you understand how each of these changes will impact the amount you owe.
- You should also consider hiring a pro: If you moved last year. If you relocated to a new state, or worked outside the country, you’ll need to file multiple tax returns for each area you lived in.
- Another question to ask before filing your taxes: How many deductions will you be taking? Experts say if you’re only dealing with one or two simple deductions – like for medical expenses - then it’s not worth spending $200 to hire a tax pro. However, the more deductions you claim, the more potential you’ll have for making errors. Plus, some deductions – like the homebuyer credit – require extra paperwork that can’t be filed electronically. So, a pro can help make sure you have all the right documentation.
- Finally: Ask yourself if you have the TIME to prepare your return? If your return is so complicated that it’ll take you 20 hours to read all the new tax laws, and do all the math, then it may be worth it to hire a tax pro, because if $200 buys you more free time with your friends and family, experts say that’ll be money well spent.
