DIY Taxes or Hire a Pro? How to Make the Right Choice for Your Situation

For many taxpayers, tax season comes with the inevitable question: Should you handle your taxes on your own or work with a professional? In a recent IRS study, more than 50% of taxpayers rely on professionals to file their returns. While that statistic highlights the trust many people place in expert assistance, it doesn’t mean it’s the best path for everyone. Your decision should depend on your financial complexity, time availability and long-term goals.

This guide will help you understand the key differences between DIY taxes and hiring a professional. From identifying situations where professional help might be necessary to evaluating costs and future tax planning needs, we’ll equip you with the tools to make the right choice for your unique circumstances.

What’s Your Tax Situation? 

The complexity of your finances plays a major role in deciding whether to tackle your taxes yourself or seek professional guidance. If your tax situation is straightforward—such as having a single W-2 income—DIY taxes might be all you need. Tools like IRS Free File or reliable tax software can easily guide you through the process.

However, for more complex scenarios, the expertise of a tax professional becomes invaluable. Consider these examples where professional tax filing help is often essential:

• Self-employment: Managing deductible expenses, like home office or equipment costs, and calculating quarterly estimated taxes can be intricate. A tax pro ensures compliance while maximizing deductions.
• Rental properties: Professionals can help you accurately handle depreciation, repair cost deductions and rental income reporting, all with nuanced rules.
• Multiple income streams or investments: Filing becomes more challenging with dividends, capital gains or passive income. A tax professional ensures that all income is accounted for correctly and that you benefit from applicable credits or offsets.
• Recent life change: Major events like marriage, divorce, having a child or buying/selling a home can significantly alter your tax situation. Professionals can adjust your filing to accurately reflect updated deductions, credits or income changes.

While tax software offers helpful tools, it lacks the insight and personal oversight that a professional provides. Expert guidance helps avoid mistakes, claim eligible deductions and stay on top of tax compliance in nuanced situations.

Familiarity with Tax Laws and Forms

Tax law is constantly evolving, and keeping up with changes can significantly impact filing accuracy. If you’re comfortable understanding forms like the 1040 or Schedule C, DIY filing may suit you. On the other hand, more complex filings often benefit from the expertise of a trusted tax professional who stays updated on tax code changes and can apply them strategically.

Take, for instance, new laws affecting deductions for remote work expenses or expanded child tax credits. A professional ensures you maximize your benefits while avoiding errors that could trigger an audit. If you’re filing taxes across multiple states or managing complex credits, hiring a tax pro can help you stay compliant without the headache.

Time Commitment vs. Cost

Time is another critical factor. According to the IRS, the average taxpayer spends about 13 hours preparing taxes—time that could be used elsewhere. For straightforward returns, filing independently might be worth the effort, especially with affordable or free tax filing tools. However, prolonged effort on complex returns could cost you more in opportunity costs than hiring help.

For instance:

• DIY Taxes: Using tax software might cost between $50 and $120.
• Hiring a professional: A simple return could cost around $250. For more complex filings, costs could climb but often save money in the long run by minimizing errors and optimizing refunds.

Accuracy and Avoiding Missed Deductions

Accuracy is essential when filing taxes, not just to ensure compliance but also to unlock potential savings. Tax professionals often uncover deductions and credits that DIY software might miss. For example: 

• Charitable contributions beyond cash: If you’ve donated items like clothing or furniture, professionals help calculate fair market value and ensure accurate reporting using forms like Form 8283 for noncash contributions.

• Education credits for tuition & student loan interest: Tax advisors ensure you claim every eligible credit, like the American Opportunity Credit or Lifetime Learning Credit, and accurately deduct interest paid on student loans, maximizing education-related benefits.

• Home office deductions for freelancers or small-business owners: Professionals confirm eligibility for deductions on workspace-related expenses, such as utilities, supplies or rent, ensuring compliance with IRS guidelines on exclusive and regular use requirements.
  

• Estate tax deductions: Specialists can pinpoint deductions related to administrative costs, debts or charitable bequests within an estate, which can significantly reduce the taxable estate value.
• Capital loss tax deduction: Experts help offset capital gains with losses or utilize the $3,000 annual deduction cap to reduce taxable income, even carrying losses forward to future tax years when applicable.

While tax software reduces basic errors, human oversight is required for nuanced tax situations. A professional’s detailed review can help avoid costly mistakes, such as misfiled taxes that lead to penalties or missed deduction opportunities.

Remember, if you leave it off, it stays off. The IRS will only correct an omission if you leave income off—not if you leave tax benefits off.  

Future Tax Planning Needs

Tax filing is just one part of the equation. Long-term tax planning can position you for better financial health. Professionals can provide tailored strategies for major life events like:

• Starting a business and structuring taxes efficiently: From choosing the right business entity (LLC, S corp, etc.) to claiming startup costs, professionals help you minimize liabilities and stay compliant with tax regulations as your business grows.
• Adjusting withholdings to reduce penalties or optimize refunds: Accurate withholding adjustments can help you avoid overpaying taxes, which locks up funds, or underpaying, which could lead to penalties during tax season.
• Preparing for retirement to minimize tax burdens: Tax advisors create strategies like timing withdrawals from 401(k)s or IRAs to avoid higher tax brackets, manage required minimum distributions and plan for Social Security benefits taxation.
  
  

Tools for DIY Tax Filing

If you’re confident filing your taxes independently, there are excellent resources available:

• IRS Free File: A no-cost option for simple filers meeting certain income thresholds.
• Tax software: Platforms like TurboTax or H&R Block are user-friendly, with options for additional guidance at a cost.

While these tools work well for uncomplicated returns, they can have limitations. For example, free plans often lack support for itemized deductions or self-employment tax reporting, leaving essential areas of your taxes unaddressed.

How to Choose the Right Tax Professional

If you decide hiring a professional is the right route, choosing the right one is crucial. A trusted preparer handles your most sensitive financial information, so accuracy, confidentiality and ethical practices are nonnegotiable. Remember, even with professional help, you are ultimately responsible for your tax return.

Here are some tips to help you find a reputable tax preparer:

• Verify credentials: Ensure the preparer holds recognized qualifications, such as Certified Public Accountants (CPAs), Enrolled Agents (EAs) or a valid Preparer Tax Identification Number (PTIN). These credentials signify expertise and accountability.
• Understand the fee structure: Steer clear of preparers who base their fees on a percentage of your refund or promise unusually high refunds. Ethical professionals charge based on the complexity of your return, not unrealistic outcomes.
• Look for relevant experience: Select a preparer who specializes in your specific needs, whether it’s small business taxes, rental income or multistate filings. Their expertise ensures you receive accurate, tailored support.
• Use trusted tools: Resources like the IRS's Tax Preparer Directory can help you find qualified and reputable professionals in your area.
• Watch for red flags: Be cautious of preparers making bold promises, such as guaranteed refunds or advice that veers from honest and lawful filing practices. Such promises can indicate unethical or fraudulent intentions.

Taking the time to evaluate your options ensures that you partner with a professional who prioritizes your best interests and navigates your tax obligations with precision and integrity.

Summary Chart:  DIY Taxes or Hire a Pro

Next Steps to Filing with Confidence

Your decision to file taxes yourself or hire a professional depends on your unique financial situation and long-term objectives. More straightforward cases might benefit from affordable DIY solutions, but for complex scenarios, professional expertise can save you time, stress and money.

Curious which approach is right for you? Contact an LTax expert today to receive personalized advice tailored to your needs. Whether you’re looking for tax filing help, strategic planning or ongoing compliance, our professionals guide you every step of the way. Get started now and ensure you maximize your tax outcomes while minimizing the hassle.

Get started today and file confidently with LTax—your trusted partner in tax filing preparation and planning. 
 

LEGAL OR TAX: The information herein is not legal, such as trust or estate planning, advice, or tax advice. Any such information is provided for illustrative purposes only and must not be relied upon without the benefit of the advice of your lawyer and/or tax professional. Lido specifically disclaims any liability from any reliance on such information. Lido is not a legal service provider or tax professional and does not offer legal or tax advice. Should you desire to obtain tax or legal services or advice, you must enter into your own, ​independent engagement agreement with a licensed attorney or tax professional.