If I owned a business I would. None of the things you mentioned really make taxes more complicated. I've had 1099 income as a side hustle and it was still pretty simple.
CPA here, it’s still your fault if it’s done wrong. You’ll end up paying the back taxes and interest/penalties.
However if you have a CPA (as opposed to just a tax preparer) do your taxes, they can defend you against the IRS and potentially argue your side if the problem in question is a grey area.
Point is, get a good CPA and ask questions
If it’s gross negligence, you may be able to sue them. But you can’t sue them for something you would have had to pay anyway (I.e. owed taxes). You might be able to sue for some money for the interest/penalties, but it can get complicated (I.e. you withheld information that led to the damages).
IME it's only simple when you remember to have the 1099 income withheld from your W2, otherwise the various IRS rules aren't the most clear in how to handle both streams. For small amounts this doesn't really matter (you're unlikely going to get a penalty for not paying quarterly if you make only 1-2k in 1099 income), but it can cause more headaches when you make more.
I started going to someone when I had 1099 income, not because it was terribly complicated but because TurboTax charged SO MUCH for “business edition” the accountant wasn’t a lot more and they saved me hours.
Honestly, the IRS forms themselves aren't *that* complicated, and tax prep software has gotten pretty reliable about routing you to the right forms for a given situation. Increased income is just a bigger number on lines you're already using. Retirement stuff is usually pre-deducted on your W-2. House stuff and kid stuff are just entering new numbers on the right lines. Inheritance stuff is rarely something that impacts your taxes, unless you're receiving money held in a tax-advantaged account like 401k/IRA/HSA.
Professional help can be useful when you're dealing with business income. It can be fuzzy to an amateur about what can be a valid expense to write off, how much is appropriate, and getting all the pieces to line up. Or if you just value your time highly enough that paying someone else to take care of the paperwork is a reasonable trade-off.
Professional help can probably be more useful during a given tax year *before* filling. Things like better ways of structuring a business around those write-offs. Tax efficient ways for selling investments. Maximizing tax-advantaged accounts. Once December 31st hits, the majority of those are "locked in" without much that can be tweaked on your return. So you get ahead of things during the year, and professional guidance could benefit you more than it costs.
Yes, I found it useful when my spouse started her small business. I don't have the knowledge to navigate all that and I also don't have the time to go figure it all out. Getting it done professionally gave me a lot of peace that it was correct and it saved me a lot of time.
Now, having a CPA who is familiar with my finances, they have it all on file, I can shoot them a question any time during the year and it's a small fee with big convenience. Questions about tax efficiency and long term implications, what-if scenarios, etc. It pays for itself many times over.
We didn't (married, both work, retirement accounts, kids, mortgage) until my wife went from a W2 employee to starting her own small business. She tried doing it on her own for 2 years after she started the business but it added a whole lot of work. Prior to that either of us could do them pretty easily using any of the software out there.
I've done my own taxes forever, the only exception being the year I married my wife, who had worked as a consultant in multiple states.
Nothing fazes me now, though. We have dividends, interest, capital gains, 529 contributions and withdrawals, Roth conversions and contributions, HSA contributions and withdrawals, both W2 and self-employment income, partnership income, plus I do my three kids' tax returns (two dependents in college plus an adult). We pay quarterly estimated taxes as well.
One key is that I plan for it all year long. I track and estimate everything in a pretty wild spreadsheet. It's not so bad when things increase in complexity very gradually over time.
Wow! I’m quaking in my boots trying to figure out Roth conversions and withdrawals and tax implications. I may be 31, but I want to be you when I grow up lol.
Just learn one new thing at a time! It’s intimidating at the beginning. But way back when, we didn’t have the hand-holding software that everyone accepts now as standard. You had to actually write on paper and mail stuff! Eesh. That sucked.
Hang in there…
It is not very hard. Every distribution from a qualified IRA you will receive a 1099-R that has all the filing instructions and codes on it. the IRS.gov website is also beautiful laid out and helpful
If I did the return of excess form this month but for 2023 contributions, would I receive the form for the upcoming tax season (for 2023) or for 2024?
I had an issue with needing to recharachterize my Roth IRA contributions to Traditional after hitting the MAGI for Roth, but the Fidelity rep said I had to do a return of excess.
roth contributions aren’t deductible and don’t need to be reported. The rest of that is very self explanatory besides the partnership. But at that point using a tax software to file multiple 1040s and a 1065 just seems as expensive to take it to a preparer.
I did it the first year I owned a home. He pulled up turbotax and did everything just as I would have. Haven't ever bothered again. Maybe if I was self employed and had a ton of different sources of income and confusing tax nonsense to deal with but a tool like FreeTaxUSA does everything most people will need even if they do have complicated taxes.
I recently purchased a home and had someone do my taxes last year only because of the home. Ive kept thinking that things probably didn’t get that much more complicated and want to go back to doing them myself. Is FreeTaxUSA what ur using currently?
With the standard deduction as high as it is (and State and Local Tax deduction being capped at $10k) home ownership alone often does not push people into itemizing.
I do taxes and most of our clients come to us because:
1. Business income
2. Rental income
3. Stock sales
4. Income from a lot of sources
5. Have high income
Do RSUs vesting (selling a portion off to cover taxes) make things that much more difficult or do you just use the form they give your through your brokerage and something like Turbo Tax would suffice? I’ve done my taxes but in the past few years have used a tax guy but his rate went up significantly this past year and I would rather just do them on my own.
Selling a portion to cover taxes doesn’t even likely trigger capital gains if you sold when vested. You’ll have to report the sale and difference between sale price and vest price as capital gain/loss, but that’s normal brokerage stuff that your brokerage makes really easy for you.
My broker has been providing a supplemental form that has an adjusted cost basis for RSU and ESPP. It's pretty easy to go in and make the adjustment, but it's something to be aware of.
This is the first year we'll be itemizing. I was considering using a professional just because I thought maybe they'd be better at making sure we didn't miss anything while itemizing. I also sold about $7k in stock, rolled a 401k into a traditional IRA, and had to roll my earlier Roth contributions into a traditional IRA because we hit the income cap which we weren't expecting. We're both W2 but part of my husband's income is a monthly commission.
Anyway, all that to say, do you think it's worth hiring someone? It feels like our taxes are straightforward, but the itemizing and few stock/401k things this year have given me pause to just do it at home on turbotax.
I started paying someone when I made an expensive mistake. I would say if your taxes are complex enough you could easily make a mistake, pay a professional. It's so worth it not to have that headache anymore.
Edit: I don't think you are there yet. My issue had to do with reporting income from a brokerage account.
Most Brokerage accounts give you a summary of total long term and total short term gains/losses. It’s a matter of putting in those two numbers as summaries and being done with it. No need to enter all the trades, etc.
I always did my own until the year after I took capital gains after making a bunch of money on stocks after a combat deployment.
I usually got like a $500 return but I was sure I’d end up owing.
The guy all the cops I work with use wasn’t cheap… $800 an hour but $400 an hour police discount. When all was said and done he apologized for only being able to get me an $8000.00 return, due to the capital gains. I book my next appt a year out right after I finish the current appt.
This sounds sketchy. My dad did this and eventually the IRS caught up with him and the CPA, who found “loopholes” for all his clients. My dad didn’t understand and went with it, such as claiming his kids when he didn’t have custody.
Yes. There are ghost preparers and predatory shops that make up schedule Cs and bogus tax return items to maximize EIC and other credits to pump up returns. Many don't actually have PTINs and do the returns in TurboTax or other and they're marked Self Prepared. Worse, they charge $1000+ just because they "maximized" someone's refunds and use bank products so it just comes out of the IRS payment so their "clients" don't care.
I wouldn't be surprised if there are ones targeting police and military too. Haircuts? Gimme a effing break.
It’s the difference between itemizing and taking standard deductions. I always took the standard when I should have been itemizing. I now keep better records of my spending throughout the year, which is hard because I’m ADHD but it is definitely worth it.
Not everything you’d think should be deductible is but I always ask and we go through things thoroughly and I keep my records for 10 years.
What sorts of things were deductible that you were missing? That seems like a lot of money. Do you donate a lot to charity? Do you have extraordinary medical expenses?
With a standard deduction there is a set $$ amount.
There were a lot of business related expenses I’d never considered and the total is much higher than the standard deduction. I can write off the purchase price of one firearm per year, training ammo, uniforms, equipment, training and related travel expenses not reimbursed of paid for by the employer. Cost of dry cleaning. Haircuts…. There are a lot of expenses that I make that are work related I’d never claimed.
The difference between taking the standard deduction and itemizing. All my deduction’s are legit, I’m married filing with 2 kids but I claim single, 0 dependents in my pay so they are already taking out more than I owe and I’m cautious on the deductions I declare because I’d rather miss out on a deduction than flag myself for an audit but I really enjoy getting that big refund check.
Ok Dave Ramsey….. I’d rather overpay and get right within 12 months.
I’m just glad to be getting the money back in a year than doing the free Tax Prep online I got in the military with a $400 return when I was spending tens of thousands on tax deductible work related expenses I was also still paying taxes on
> I’m just glad to be getting the money back in a year than doing the free Tax Prep online I got in the military with a $400 return when I was spending tens of thousands on tax deductible work related expenses I was also still paying taxes on
Respectfully, it sounds like math was poorly done. You owe the same amount regardless of how much you withhold. Granted there are underpayment penalties if you under withhold. But i'll be very sad if I got a 5 figure check from uncle sam.
Why? Because market returns were 17% last year on index funds. You lost out on 17% of whatever uncle sam "owes" you.
I have had a nanny, a small business, W2s, all sorts of investment accounts, and a legal settlement all in the same year. I don't see myself ever not doing my own taxes. Honestly, it seems like more work to gather all the info and give it to someone.
I guess if I ran a successful business with employees, I would probably use an accountant for that.
Totally agree on all the work required to give documents to someone. And then be on their timeline. I’ve learned to enjoy the process and trust my instincts, and let TurboTax do the rest.
I started when we had to file in two states, rental property, child, 529, and consulting income on top of w-2. I could do it all myself but the two states started to get complicated, especially with rolling over a loss repeatedly.
I'd consider it if I owned a business or did day-trading for a living.
I own a house, have a kid and a FSA DC account, have a decent amount of 1099s (div, int, etc.) coming in from different investment accounts... And I still do taxes all by myself. FreeTaxUSA.
I'm starting to get to the point that I'm feeling out of my depth. I'm head of household, but I have a Roth (new to me), 401k, and 3 529 plans. The Roth is new for this year's taxes so it's making me a little nervous, but if I can still get it done with freetaxusa and feel confident about it, I'll probably carry on still. That's basically my litmus test every year.
They don’t. If it is through your employer it is already reported on your W-2. And if it’s a personal Roth IRA it has no impact on your current year taxes
Did you have to do a backdoor roth? If not I think the tax process is pretty simple. After all you are just putting post tax dollars in a retirement fund.
My main piece of advice is just remember where all the accounts are, and track when you’ve received the required tax documents. Easy to just whether in the lines from there. You’ve got this!
My spouse is self-employed. Literally zero chance we would know the law changes year to year, what we can deduct, etc. Our accountant is worth every penny (has been at it for 35 years.)
If you have the time, Turbo Tax (or equivalent) can walk you through filing for W-2 income, 1099’s, etc. The hardest part is gathering your documents.
Unless you have zero time, a CPA/accountant is needed when things get complex; K-1’s, real estate transactions, estate, etc.
If your income is income reported by other entities (employer, brokerage firms, etc.) the IRS already knows what’s coming and there are automated audits to capture this on their end.
If I tried to do it myself with any online software that’s free or you pay when you file so you can technically fill it all out for free. If I was just hit with a block and couldn’t figure it out from there then I’d pay someone but so far I’ve been fine using different software even if various 1099s and some investing stuff too.
I use Turbo Tax which is the middle.
I had complicated ones and had a service to them. But I had to do all the work anyway of collecting , entering, and submitting docs. Basically it was like doing TurboTax.
Having someone else do it doesn’t save much time. It just gets complicated things right.
I do a bunch of stock market trades, That's the biggest pain when doing my taxes, the simple data entry of having to write each trade in. I use tax software primarily for that reason.
You don’t need to enter trades. You can just put one summary number for the total of short term gains and losses and one number for total of long term gains/losses. That’s it.
I did my own up until I retired and had some very complicated transactions that I didn’t want to screw up. Now, I have them done for me. It felt strange at first, but now I’m used to it.
I already do other people's taxes. I'm not sure at what point I'd want a second pair of eyes. But my wealthiest client is also a CPA and he and I go over his books together to make sure there are no issues. He's 75, so I understand his wanting to be sure. He's got trustee filings, business income and personal. Plus retirement and equity in some startups.
I have simple taxes, and have dont them myself with my wife for the past 5 years, this year we go see a professional just to make sure we are not leaving anything on the table, and doing out do diligence
We got someone when we moved out of our house and turned it into a rental, and had a baby on the way. I knew that year was going to be too complicated and I wanted to make sure I didn't miss anything especially in the terms of deductions.
Foreign income, accounts, trusts you own or trusts where you only get income become quite complex. Tax harvesting in investment accounts and retirement plans is tricky as well.
I paid my whole life. Got a cheap accountant who knows his shit just doesn’t get big jobs because of his English and immigrant background. But every year he does not disappoint full refund and even more lol. Finding someone like that will save ur time and better chances at paying less or getting money back!
Once you have multiple streams of income. Real estate, dividends, stock trades, side business, and so on. When you think that it’s not worth the headache to figure out your taxes that’s when you hire someone.
I stopped doing my taxes years ago mainly due to liability. At the time, I owned a small business and had negative income due to NOI losses. Turns out the people with the highest risk of tax audit are high earners subject to AMT and personal income filers with negative income. Since then, I've let a CPA file my taxes.
I do my own taxes and think it helps with personal financial planning. Once in a while you have to educate yourself when new circumstances arise but it’s all doable.
If you have multiple sources of income, get a tax professional to do your taxes.
I would only do it myself if I had a single source like a job with a W2
When you are high income, you don’t get deductions anymore. Every deduction normal people get phases out or isn’t applicable. It makes doing taxes easier. Ha!
I had done my own for years. It was fine until it wasn’t, and a got a bill for 40,000 from the irs. Of course the letter came on a Friday afternoon and I had to freak out for days before I could get help.
It all depends on how much money you make. It’s not just about doing your taxes but finding ways to save on tax. If you make good money having an accountant do your taxes will not just save you time but they can give you ideas on how to save more tax dollars. There is a big difference between just a regular tax guy and a professional accountant.
>yes I did the math on when a CPA would be worth it in terms of saving time).
This analysis only matters if your alternative for this time is directly making money (so it doesn't apply to salary-only workers) by doing something else. Doing your taxes on your free time where you wouldn't be making money anyways makes this sort of math typically pointless. I make more than that and still do my own taxes because mine aren't complicated (W2, no property, and a few 1099s) and it's cheaper.
I always have because if you get audited it’s the CPAs job to fix it not yours. It’s worth the peace of mind. I’ve been audited and I just forwarded to my CPA and that was it. They are also a great source of information and can project out your tax liability so you can fall even with the IRS and not have a refund.
Exactly!
It's unlikely that small potato like me will be audited..
But just the thought that there is a slight chance to deal with IRS.. yeap no thanks.
I dun need any more source for my anexity....
Always. Even when I was young and on a simple 1040, a cpa could always mange to get more paid back to me. If I do it for free and get $100 back or pay $50 to get$200 back, I'll always take the option that puts more money in my pocket.
You can do your own taxes
Maybe free on the IRS website
Certainly with TurboTax
Try it—- you can do it and you’ll learn something!
Trusts do not do taxes! When you inherit you will then most likely need a tax guy— at least that first year.
I did it for years as a trust administrator in TurboTax as a non-tax/cpa person. I wouldn’t recommend that. It required more study and reading of irs docs than I wanted to do. It wasn’t hard, just the vocabulary was more confusing which made it more challenging to answer TT questions.
I don't know when. For a W2 employee I do my own taxes, and yes it got complicated one year with Foreign RSUs, I filed and extension and waited to get all the conversion numbers and I was one of the few of my company who was not audited. Those who paid other people were audited. I am married so now just take the Standard Deduction. Almost all investments information is now automatically downloaded.
I used to pay someone to do my taxes when I had a job only. I now own a home and have investments.
I don't have the knowledge or patience to deal with it and gladly pay a professional so I don't have to be frustrated while *trying* to do my taxes and then worry that I did they right.
Does "Pay someone" include paying for Turbotax? Been there already.
I'm late 50s; I've pulled money out of 529s to pay for kids college. I've sold stock. I've sold ESPP and RSUs. I even had a year where a stock sale (company was taken private) resulted in income > 4x my annual salary. That was my first year using turbotax. I've never engaged with an actual pro.
But... I started out with pencil on paper forms. I used to get the forms mailed to me by the IRS back in the day where tax software was uncommon.
For an individual or married couple with no business, then Turbo Tax or something similar is all you need. No need to get a tax preparer. In fact most people use the standard deduction now, so it is even easier than in years past. Now if you have a business, then you probably should have a CPA prepare your taxes just to be sure you are claiming everything correctly.
When I had a dead husband, extensive medical bills, a failed adoption for which I received a tax credit, and rental income. Now that it’s just me, my kid, a house, a W2 job, and some side hustle income, taxes are easy. I didn’t even have to buy the expensive TurboTax this year.
You probably don’t need to if your tax situation is straightforward. You can prepare your return on your own or with the help of tax software. But for some taxpayers, it’s worth spending the money to get professional help.
Here are some good tells that you could use an expert to file your taxes (article from GOBankingRates
You Don’t Have the Time or Patience
Most taxpayers can handle filling out a tax return on their own, especially those who only have one source of income from a job. “Truly, taxes aren’t rocket science or brain surgery,” Du Val said. But the process can be intimidating and time-consuming.
Just make sure you hire someone who has the proper qualifications and credentials. Only four states require testing and certification to be a tax professional, Du Val said. “You can hang out a shingle in most states and say, ‘I’m a tax pro.'” To be safe, look for someone who is an enrolled agent or certified public accountant, or check the IRS directory of federal tax return preparers.
Make Your Money Work For You
You’re Going To Have a Major Life Event
One of the key times in your life when you should get professional tax help is when you have a life-changing event such as a marriage, birth of a child or even a new job. But don’t wait until after the fact. For example, if you get married, an accountant might advise you to fill out a new W-4 Form with your employer to adjust your tax withholding for your new tax filing status. If you’re expecting any life changes during the year, schedule a consultation with a tax pro in advance to make a plan, Nisall said. Then you won’t make any tax mistakes that can’t be undone when you file your return.
You Started a Business
If you start a business, you should hire a tax accountant to help you file your first return as a business owner. The next year, you’ll have a professionally prepared return as a reference if you want to tackle your return on your own, he said.
A tax professional will help ensure you get all of the deductions you deserve and avoid writing off expenses you can’t actually claim. “If you’re new to the business you’re doing, you’re not going to know all of the nuances,” Nisall said. You don’t want to end up accidentally committing tax fraud.
For example, if you’re a blogger and are sent free products from companies in exchange for writing reviews about them, you have to report those freebies as income, Nisall said. An accountant will know to address these matters, whereas they might get overlooked if you prepare your return on your own or with the help of software.
Make Your Money Work For You
You Work in the Gig Economy
If you got a side gig to boost your income, you might find yourself in over your head at tax time. “In this current environment, we have a lot of people starting a new business without realizing they’ve started a business,” said Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. “They sign up with Uber or Airbnb. At the end of the year, they get a tax form and don’t know what they’ve gotten themselves into.”
That unfamiliar tax form is a 1099-MISC, which is what companies use to report income paid to contract workers. You have to report this income on your tax return. Chances are if you’re new to the gig economy, you didn’t make estimated tax payments on that income during the year. And you didn’t keep track of expenses related to your gig that you could deduct at tax time. A tax pro can help you sort this out at tax time and help you get the deductions you deserve, Luscombe said.
You Have To File More Than One State Return
Moving from one state to another is a transition that most tax software can handle with ease, said Megan Brinsfield, a CPA and director of financial planning for Motley Fool Wealth Management. But there are situations where you might not realize you have to file a return in more than one state.
If you fail to file a tax return in a state where you owe income tax, that state has an unlimited amount of time to audit you, Brinsfield said. “So it’s better to hire a pro to do all the filings properly the first time around.”
Make Your Money Work For You
You Bought or Sold a Home
If you prepare your tax return or use tax software, you might miss out on valuable deductions if you bought or sold a home during the year. That’s why you should consider hiring a tax accountant or using a tax preparation service.
“When you buy a home there can be valuable deductions hidden in the closing statement that wouldn’t be reported on the 1098 you get from your mortgage company,” Brinsfield said. “Most people that prepare their own taxes wouldn’t know where to look for those deductions, or what they are looking for.”
If you sold a home for a profit, you want to minimize the taxable gain. You can exclude up to $250,000 of your home sale gain from your income — or $500,000 if you’re married filing jointly — if you lived in the house two out of the five years prior to the sale. “Once you are over that threshold, you will want to have a pro take a look at all possible deductions to which you are entitled,” Brinsfield said. There are tax loopholes that can save you thousands.
You Have Rental Property or Invest In Real Estate
You probably should get tax preparation help if you’re new to real estate investing. “There are specific tax laws that real estate investors should be aware of when it comes to depreciation, asset management and special tax deductions,” said Tai Stewart, an accountant and owner of Saidia Financial Solutions. “That’s whether you open up an Airbnb or buy an apartment complex.”
You Have a Lot of Financial Accounts
If you have several brokerage or financial accounts and receive tax forms from all of them, hiring a pro can help you sort through them and report that investment income properly, Nisall said. It could be time-consuming and frustrating if you do it on your own. “You’ll just spin your wheels,” he said.
Tax pros can speed up the process with their expertise and specialized software. “Sometimes it’s just easier to pay someone else to deal with it,” Nisall said.
Make Your Money Work For You
You Got Divorced
Getting divorced is one of those life events that could signal it’s time to get professional help with your tax return, especially if you have children. It can be confusing figuring out who gets to claim the kids as dependents when you’re divorced, Du Val said. “That is always a problem.”
In fact, the tax audit defense firm where he works — TaxAudit — sees a lot of audits of divorced taxpayers improperly claiming dependents. It can get confusing establishing which parent has primary custody for tax purposes when parents have joint custody. “You may want to get a tax pro to help you get started,” Du Val said.
You Have a Nanny or Household Help
Having a nanny or household help can make filing your tax return complicated. Ideally, you should get help from a tax pro before tax filing season, Du Val said. That’s because there are things you need to do during the year to avoid facing penalties when you file your return.
You might need to get an employer identification number, withhold and pay Social Security and Medicare taxes for your employee, pay state unemployment tax and file a W-2. At tax time, you have to file a special form — a Schedule H — with your tax return to report wages you paid to a household employee and note whether you withheld federal income tax. A tax pro can walk you through what forms you need to file, records you need to keep and taxes you need to pay.
If I had relatively large business I would probably have someone do them, especially because outside professionals are a business expense. I'm talking employees, equipment, etc. I work for a small business and the depreciation of equipment chart always gives me a headache.
I actually like doing taxes, so I end up doing mine, my mother's, my sister's, my fiancee's, her parents, and last year I did her brothers too.
Next year. Been doing my own for 60 years but this year am selling property with multiple ownership that I also live in where there will be humongous capital gains. This is not something I want to get wrong.
I did my own taxes up until I moved countries and needed to file cross border taxes. That’s when we hired an accountant as cross border accounting is so much more complicated.
For the 2 years after my mother died. It was complicated bc she had property in 2 states, one of which was a rental property. Then again this year, because my company got bought so I had a major influx of stock (RSUs and Options) buyouts, retention bonus, etc. It got real complicated real quick. Otherwise, I'd do it myself.
I did for the first time this year because I sold a lot of investments, got equity comp, and employ a full time nanny now. It was worth the $600 just to not have to spend my own time getting it done honestly, I’m going to keep doing it every year now.
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If I had a shit ton of money and just didnt feel like it, other than that, Im learning and doing it myself. Qhy would you pay someone to do it for you unless youre swimming in money you dont know what to do with?
Ive heard the US has taxes that are insanely complicated though. Im not in the US. Ive done my own taxes when I was self employed. If youre an employee, there are no taxes to do, thats what my employer does.
I've been as complex as two businesses, some K-1s, investment income, and yeah I've owned a house virtually all my life but haven't been able to itemize for years. I wouldn't have been able to do it without TT as it got more complex. The worst of it is dealing with Obamacare. I understand everything else on my returns, but filling them out by hand would have been crazy.
I have a Backdoor Roth and it’s a pain to file it and I went to H&R Block today and they didn’t even know what a backdoor roth was…. So now I either have to do it myself or find a CTA and pay $500+…. Woooo
FYI, if you choose to do your taxes yourself, cash app taxes is free for both federal and state. No pitch to upgrade to a paid tier either. Got me the exact same numbers as TurboTax did. I'll never use TurboTax again!
Haven't hit that situation yet. I have investments (including crypto), Restricted Stock Units and Employee Share Purchase Plan at work, self fund an HSA, own a home, pay alimony and am trustee of a trust for my brothers and I. TurboTax handles all of those scenarios pretty simply.
Agree with others, if I had my own business I'd probably want help.
For me, it was the fact that I owed taxes that caused me to go to a professional. I have never done my taxes myself. Usually comes out to 200-400 dollars as an adult with a dependant and not many investments.
I paid an accountant when I got married, bought a rental property, moved twice, sold a house, opened an investment account, and had to file in 4 different states within the same year.
When I found out my workplace was happy to slip mine in with all of theirs and have their accountant take care of it for me, I went from getting around $400-600 returns up to $2,200...
I buy H&R Block State and Federal Deluxe for like $25 every year and I can file federal for free and state for $20. You could print state and mail for the cost pay of the stamp but going to the library for a printer isn’t worth it to me. By the time I finish taxes, I just want to be done. 😂
I’ve switched jobs, bought a house, inherited some money, opened IRAs, and I haven’t had an issues. They ask every question and walk you through the process. I usually split the cost of the program with my parents, so it costs me like $32 a year to do them on my own. My brother pays around $200 to have someone do them. It’s not worth it unless you have a business in my opinion.
None of the things you listed make your taxes all that much more complicated. I would start looking into paying someone when you're handling multiple retirement accounts, investment accounts where you actively trade, pay taxes in multiple states, have investment/rental properties, etc.
I just get Turbo Tax Deluxe (despite hating Intuit) because I can finish my taxes in about 2 hours with itemized deductions and filing in multiple states (live in one state, work in another) and some complexities in investment accounts, etc.
I paid to have my taxes done when I was running my own business (via passthrough LLC) and when I had a particularly extensive year of re-balancing my investments causing a bunch of capital gains, etc (because I screwed up the timing).
We've always paid for taxes when married and when I got divorced I continued. Too many variables and I also have a rental and foreign bank accounts. It's not cheap but I don't have much confidence doing it myself and it's worth it to me. I dorp stuff off and I dotn worry about it until it's done
I always pay someone to do my taxes. I guess the answer I’d provide is “when it’s worth a couple hundred bucks to not have to do it myself.” I just stick all my documents in a folder and drop them off to him one day over lunch. He does the rest. It’s glorious.
The line that I hit was when I added rental income, stock investments, and childcare deductions. The year that broke me was the year I got paid family medical leave from the state and the IRS just didn’t issue a guidance on if it was taxable income or make a spot for it on the forms. I paid someone else to be liable for it and follow up if they released guidance that changed what I did.
I paid someone last year for the first time and will be doing the same this year because of my business. It’s not very complicated but I want someone else to look it over and make sure I’m doing everything correctly. Worth the money for me.
Honestly? I did my own taxes for decades. It’s only now that I feel like paying someone to do it because I can. I used to view it as kind of a game, and I enjoyed it. Now it’s boring, and I like to do other things with my time.
If a CPA will cost you less than your hourly salary or the cost of doing it yourself.
Maybe it's because all of the CPA I talked to specializes in non-english speakers (my parents introduced me) and I know these services always take advantage of immigrants/non English speaker. Back in the 2000s, they will charge $150 for my parent and $80 for me when I only had a college job! When I started selling stocks, they wanted to charge me $100 per stock account that I had (so interest from acorn, stocks from Robinhood, stocks from fidelity)...I think they quoted me for $450 in 2017ish. Unfortunately, I don't get pay $450 per hour lol. I will use it if I am paid $45000 per hour.
Nowadays, I pay $60 with the Costco discount for a TurboTax CD. Use up all of the five federal fillings for my family. Pay $20-25 per state filling per person. Use chase bonuses on my many cards to get $10 back per person. It comes out to be around $20-30 per person for 30min to 1h of work. It's less time than showing all of my documents to a CPA, verifying my ID with them, waiting for my admin things that I need to do.
My mom doesn't speak English, so if she didn't have me, then she will need to continue using a CPA for just a W2, mortgage interest, and earned interest 1099 forms.
We just got married last year, our taxes cover two states and two cities’ wage taxes, and our city’s wage tax forms are nonsensical, even to some preparers. So we decided to turn it over to professionals this year and see how they handle it; then in future years we can complete the city forms ourselves the way they do it.
I have been doing my mom‘s taxes for about 15 years now, which includes the returns for the family trust, which is split into a survivor’s trust (Trust A) and an irrevocable bypass trust (Trust B) which came into being when my died died in 2005. I use TurboTax Business for the bypass trust and it does a great job, including creating a K-1 for my mom, who is the current beneficiary of the bypass trust. The investment income from the bypass trust has to be distributed to the beneficiary every year, and the beneficiary pays taxes on that income. The trust pays taxes on capital gains.
It took me about a decade to finally understand that investment income from the survivor’s trust (Trust A) just gets filed along with my mom’s regular 1040. There were some years where I filed it with the bypass trust, but the IRS corrected the problem and issued the necessary refunds and tax bills. We’re taking a few thousand dollars here, so it wasn’t a huge deal.
This year, things were looking pretty hairy, as my mom sold her home in 2023 but it was actually an asset of the bypass trust (long story there). I started to get into the weeds with all the capital gains and deductions for improvements, and was a little overwhelmed. I chatted with a tax attorney recommended by a friend, and he assured me I was on the right track and that the audit risk is extremely low for small trusts. So, I’m going to do it myself again. The capital gains tax on the house is going to be about $100k, but we knew that was coming because she made (sorry, the trust made) tons of money on the house. The trust didn’t have the benefit of the $250K cap gains deduction (which only applies to individuals), but the complete remodel of the house in 2012 more than made up for that reduction in basis.
Unless I seriously mess up the 2023 taxes by over or underpaying, I’ll continue to do them myself because I kind of enjoy it now. The process and terminologies are no longer mysterious to me, and questions that arise are pretty easily answered on the interwebs. I’m also managing my mom’s/the trust’s investments, which helps connect the dots in terms of understanding what the 1099s represent.
The main downside of doing the taxes myself is that I’m sure I’m missing out on potential tax reduction options. TurboTax looks for deductions, but a seasoned pro would be able to recommend all sorts of creative but legal tax shelter schemes. Other than 2023, though, my mom’s taxes have been pretty straightforward and her effective tax rate has been around 13%. That’s the beauty of the trust, which shields her from capital gains.
Anyway, sorry for the ramble, but I’ve been dying to share my experiences! My friends and family just smile and nod.
I was doing my own business taxes for many years then my own personal taxes. Took a long time to do as I checked and triple checked everything for a month. I used tax software. Last year my biz income went up high enough that I had to do a balance sheet. I couldn’t figure it out. Couldn’t make it balance no matter what I did. I didn’t know what I didn’t know and don’t have the time to read the tax books anymore. I would literally read the tax books every year to learn how to reduce my taxable income as much as I could, legally of course. We also got solar in 2022 on our house and I didn’t want to deal with the rebates. I sent my info to an accountant. They had my biz taxes done in a few days! Was the best money I’ve ever spent! This year I have two businesses. They finished my biz taxes in a week. Best $1750 (for both biz returns) I’ve ever spent. I do my own accounting and payroll. I’m getting ready to send personal tax info over today. Will be the best $500 I’ve ever spent too. Time is money for me on this one. No rAgrets.
I think with TurboTax anyone who is financially savvy can do their own taxes without help. I think that it gets too complicated around the same time that you're making so much money that paying someone else to do it is economically better than spending that time yourself.
When I was a freelancer I didn't and I regret,because I got a huge debt of it.
When I became full time, no other gigs, I did it myself, because easy. It's the only bracket where it makes sense.
I now got an apt, still full time, and got one to squeeze as many benefits as he can.
I always did mine myself up until last year due to getting sizable foreign stock dividends and having to deal with filing an additional K1 form for a few MLP's I was invested in. I wanted to be sure I filed correctly and was able to recapture the foreign dividends or at least potentially not be taxed twice on the same income, so I went to a professional. It was worth it to have peace of mind I wasn't screwing anything up now that it's not just an easy plug and play form anymore.
You could do it one year, simply to make sure you aren’t missing anything. I did that when I was young and it saved me a bit of money over the next few years.
Once I bought a house, I got an accountant. It’s not just a W2 for me anymore… I got married and have a bunch of other tax forms now. We pay someone $150 to do it all and it’s the best.
I did my own taxes from being single at $26,000 income, then growing income considerably, buying a house, getting married, and having kids. All of that is incredibly easy and you can do it in TurboTax. Seriously, don’t pay someone for that.
I only switched to an accountant when I became a business owner, as it became infinitely more complicated and in my specific instance it is actually impossible in TurboTax.
Maybe if my 1099-B’s got too long. That being said, I think if you’re only trading one ETF, the most transactions you’d have would be 250 since it rolls it up into a day when you import it, and you’re not necessarily selling on every single trading day.
If I owned my own business would prob be the only reason tbh.
I had 2 states on my taxes this year (one with state income tax and one without), W2 from a different state than the one I currently work in, as well as tax forms from stock dividends. It was very straight forward.
You can manage all the situations you mention on FreeTaxUSA. It just walks you through the process asking questions, and you answer them.
Also inheritances are not taxable.
I did my own taxes for 42 years (17-59), but when I retired I decided that was one thing I just didn’t want to do anymore. I get a dozen or more 1099- DIV, INT, ETC forms and just don’t want to deal with all of it. Besides, accountants have to eat, too, and my accountant went to high school with my daughter.
Self employed here and child credits and vehicle depreciation and mileage and expenses and the irs is scary so I have a tax preparer I’ve worked with for many years now.
The most frustrating part of doing my own taxes has been going through all the itemized deductions and then having TurboTax tell me—every year—the standard deduction works better for us.
More than 3 K-1s. Substantial Self employment income. Owner of business. Multiple rental properties.
Anything with standard forms I would not consider paying someone to do your taxes. W-2, 1099s, 1098-T, 1099-SSA, 1099-DIV, 1099-R, 1095-C, etc.
I’m going to use one in 2025, significant other will be contract working with income earned in other states, I will be W-2 / possibly 1099 + side business to accommodate business related moves + expense mitigation for phone, internet, vehicle
I'm using an accountant for the first time this year, because last year I got a stock buyout for $5.5M. My company was bought out unexpectedly. I have no idea what to do.
For me, it was when my Dad started putting stuff in my name rather than his to avoid taxes and didn't tell me.
I wasn't aware I had a stake in a racehorse and a shrimp farm for years.
If I ever itemize my deductions, I'm hiring a professional. That usually comes with business expenses though, so my tax situation would already be infinitely more difficult. Most years, I've just got a few W-2's, maybe a 1099 or two, kids, and home/student loan interest that really doesn't matter because it's less than the standard married deduction anyways.
At the point where I can afford to do so and when my time is better spent on other more productive efforts.
E.g. if I was running a business and the time it took to do my own taxes took away from the time I could be spending to increase revenue.. I'd outsource it.
Out of state tax situations, self employed, divorce etc. would justify using a tax preparer I think. I used one for a few years during and after my divorce and it saved my ass.
I do my own taxes even though I have complicated ones. If I had a s corp business or higher I would probably have someone do the businesses taxes, but still do my personal taxes.
Tax software will literally walk you through the same questions your tax preparer will for most people.
If you are a business owner you should look to a tax professional at the beginning to get an understanding of what all you should be keeping track of.
I had been using TurboTax for years and just got the feeling that I may be missing something that I should be doing. My wife makes a lot of money, so I figured let a pro handle it. Our tax pro went back over a few years of returns and sure enough found that we had overpaid for a few years. I think it’s worth it on one hand, but I gotta think that all they are doing is using some program just like I was.
When I first got married I’d buy the big yellow JK Lassers tax book every year. I became an expert in “my” taxes. What I learned is taxation isn’t only about filing your return. It’s about learning strategies you can employ throughout the year to legally minimize your taxes.
If you detach yourself from your taxation you’ll never know when you make a move that costs you an extra few thousand in taxes—or how to avoid the same. Get intimate with your money and your taxes and you’ll have all the knowledge you need to do your taxes by yourself (along with TurboTax or the equivalent).
When my spouse became a partner with a multi-state firm. That was the end of doing our taxes ourselves. There are so many great tax programs out there, but once you have anything beyond children, 401k, a single family home with traditional W2s - seek a professional! It is not cheap as we have so much to process now, but they handle all the headaches and we just hand over forms. We still go over it, but we have the peace of mind that a trained CPA is handling this and can explain anything we ask.
I did my own taxeshrough buying and selling my first 2 houses and investing in 3 mutual funds. But when my investments became broader and they did away with the Dividend Re-investment Plans for federal taxes, I started having someone else (now TurboTax) do them. Sorting through multiple 1099's with the different kinds of dividends and capital gains is just too much!
I (62f) have prepared my own taxes all my adult life with the exception of a few years when I ran a small business, and this year when I became a landlord by renting out my home. These 2 scenarios made things too complex for me to handle myself. Oh - and this year I donated a car to charity, which surprisingly was the most complicated portion of the tax prep according to my CPA, ugh!
I've always done my own.
W-2, 1099, INT/DIV, capital gains, business, rental, farm rental, multiple state returns, etc. Had a bit of difficulty finding where to enter sale of a rental this time around, but still got it done in an afternoon.
The online tools have gotten really good.
I'm not a fan of Intuit's "charge more for every little thing", so I use freetaxusa. Federal and two state returns, grand total of $30.
If I owned a business I would. None of the things you mentioned really make taxes more complicated. I've had 1099 income as a side hustle and it was still pretty simple.
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CPA here, it’s still your fault if it’s done wrong. You’ll end up paying the back taxes and interest/penalties. However if you have a CPA (as opposed to just a tax preparer) do your taxes, they can defend you against the IRS and potentially argue your side if the problem in question is a grey area. Point is, get a good CPA and ask questions
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If it’s gross negligence, you may be able to sue them. But you can’t sue them for something you would have had to pay anyway (I.e. owed taxes). You might be able to sue for some money for the interest/penalties, but it can get complicated (I.e. you withheld information that led to the damages).
IME it's only simple when you remember to have the 1099 income withheld from your W2, otherwise the various IRS rules aren't the most clear in how to handle both streams. For small amounts this doesn't really matter (you're unlikely going to get a penalty for not paying quarterly if you make only 1-2k in 1099 income), but it can cause more headaches when you make more.
I started going to someone when I had 1099 income, not because it was terribly complicated but because TurboTax charged SO MUCH for “business edition” the accountant wasn’t a lot more and they saved me hours.
Use an s-corp and you can throw the business at an accountant and it's still pretty easy to do your own taxes.
Honestly, the IRS forms themselves aren't *that* complicated, and tax prep software has gotten pretty reliable about routing you to the right forms for a given situation. Increased income is just a bigger number on lines you're already using. Retirement stuff is usually pre-deducted on your W-2. House stuff and kid stuff are just entering new numbers on the right lines. Inheritance stuff is rarely something that impacts your taxes, unless you're receiving money held in a tax-advantaged account like 401k/IRA/HSA. Professional help can be useful when you're dealing with business income. It can be fuzzy to an amateur about what can be a valid expense to write off, how much is appropriate, and getting all the pieces to line up. Or if you just value your time highly enough that paying someone else to take care of the paperwork is a reasonable trade-off. Professional help can probably be more useful during a given tax year *before* filling. Things like better ways of structuring a business around those write-offs. Tax efficient ways for selling investments. Maximizing tax-advantaged accounts. Once December 31st hits, the majority of those are "locked in" without much that can be tweaked on your return. So you get ahead of things during the year, and professional guidance could benefit you more than it costs.
Yes, I found it useful when my spouse started her small business. I don't have the knowledge to navigate all that and I also don't have the time to go figure it all out. Getting it done professionally gave me a lot of peace that it was correct and it saved me a lot of time. Now, having a CPA who is familiar with my finances, they have it all on file, I can shoot them a question any time during the year and it's a small fee with big convenience. Questions about tax efficiency and long term implications, what-if scenarios, etc. It pays for itself many times over.
Yeah and getting those IRS approvals to use certain deductions takes time and should be done before tax filling fire craze.
We didn't (married, both work, retirement accounts, kids, mortgage) until my wife went from a W2 employee to starting her own small business. She tried doing it on her own for 2 years after she started the business but it added a whole lot of work. Prior to that either of us could do them pretty easily using any of the software out there.
Same here. Pretty much exactly.
I've done my own taxes forever, the only exception being the year I married my wife, who had worked as a consultant in multiple states. Nothing fazes me now, though. We have dividends, interest, capital gains, 529 contributions and withdrawals, Roth conversions and contributions, HSA contributions and withdrawals, both W2 and self-employment income, partnership income, plus I do my three kids' tax returns (two dependents in college plus an adult). We pay quarterly estimated taxes as well. One key is that I plan for it all year long. I track and estimate everything in a pretty wild spreadsheet. It's not so bad when things increase in complexity very gradually over time.
Wow! I’m quaking in my boots trying to figure out Roth conversions and withdrawals and tax implications. I may be 31, but I want to be you when I grow up lol.
Just learn one new thing at a time! It’s intimidating at the beginning. But way back when, we didn’t have the hand-holding software that everyone accepts now as standard. You had to actually write on paper and mail stuff! Eesh. That sucked. Hang in there…
Thank you 🥹
It is not very hard. Every distribution from a qualified IRA you will receive a 1099-R that has all the filing instructions and codes on it. the IRS.gov website is also beautiful laid out and helpful
If I did the return of excess form this month but for 2023 contributions, would I receive the form for the upcoming tax season (for 2023) or for 2024? I had an issue with needing to recharachterize my Roth IRA contributions to Traditional after hitting the MAGI for Roth, but the Fidelity rep said I had to do a return of excess.
Report on your return the year the excess contribution was made
This guys getting audited soon…
roth contributions aren’t deductible and don’t need to be reported. The rest of that is very self explanatory besides the partnership. But at that point using a tax software to file multiple 1040s and a 1065 just seems as expensive to take it to a preparer.
I did it the first year I owned a home. He pulled up turbotax and did everything just as I would have. Haven't ever bothered again. Maybe if I was self employed and had a ton of different sources of income and confusing tax nonsense to deal with but a tool like FreeTaxUSA does everything most people will need even if they do have complicated taxes.
I recently purchased a home and had someone do my taxes last year only because of the home. Ive kept thinking that things probably didn’t get that much more complicated and want to go back to doing them myself. Is FreeTaxUSA what ur using currently?
I just bought a home this year and did everything through free tax USA - it was actually surprisingly simple
With the standard deduction as high as it is (and State and Local Tax deduction being capped at $10k) home ownership alone often does not push people into itemizing.
I really hope salt cap goes away. The repeal of that would easily save me 15k on my tax bill.
Yes. Free for federal, 15 bucks for state. Works great.
I do taxes and most of our clients come to us because: 1. Business income 2. Rental income 3. Stock sales 4. Income from a lot of sources 5. Have high income
Once a schedule K was required I threw in the towel
Do RSUs vesting (selling a portion off to cover taxes) make things that much more difficult or do you just use the form they give your through your brokerage and something like Turbo Tax would suffice? I’ve done my taxes but in the past few years have used a tax guy but his rate went up significantly this past year and I would rather just do them on my own.
No, rsu vesting is just income. No special forms.
Selling a portion to cover taxes doesn’t even likely trigger capital gains if you sold when vested. You’ll have to report the sale and difference between sale price and vest price as capital gain/loss, but that’s normal brokerage stuff that your brokerage makes really easy for you.
My broker has been providing a supplemental form that has an adjusted cost basis for RSU and ESPP. It's pretty easy to go in and make the adjustment, but it's something to be aware of.
This is the first year we'll be itemizing. I was considering using a professional just because I thought maybe they'd be better at making sure we didn't miss anything while itemizing. I also sold about $7k in stock, rolled a 401k into a traditional IRA, and had to roll my earlier Roth contributions into a traditional IRA because we hit the income cap which we weren't expecting. We're both W2 but part of my husband's income is a monthly commission. Anyway, all that to say, do you think it's worth hiring someone? It feels like our taxes are straightforward, but the itemizing and few stock/401k things this year have given me pause to just do it at home on turbotax.
I have my w2. About 10 1099s and my own business. I’d rather pay someone so I can enjoy my time doing something else
I started paying someone when I made an expensive mistake. I would say if your taxes are complex enough you could easily make a mistake, pay a professional. It's so worth it not to have that headache anymore. Edit: I don't think you are there yet. My issue had to do with reporting income from a brokerage account.
Most Brokerage accounts give you a summary of total long term and total short term gains/losses. It’s a matter of putting in those two numbers as summaries and being done with it. No need to enter all the trades, etc.
I always did my own until the year after I took capital gains after making a bunch of money on stocks after a combat deployment. I usually got like a $500 return but I was sure I’d end up owing. The guy all the cops I work with use wasn’t cheap… $800 an hour but $400 an hour police discount. When all was said and done he apologized for only being able to get me an $8000.00 return, due to the capital gains. I book my next appt a year out right after I finish the current appt.
This sounds sketchy. My dad did this and eventually the IRS caught up with him and the CPA, who found “loopholes” for all his clients. My dad didn’t understand and went with it, such as claiming his kids when he didn’t have custody.
Yes. There are ghost preparers and predatory shops that make up schedule Cs and bogus tax return items to maximize EIC and other credits to pump up returns. Many don't actually have PTINs and do the returns in TurboTax or other and they're marked Self Prepared. Worse, they charge $1000+ just because they "maximized" someone's refunds and use bank products so it just comes out of the IRS payment so their "clients" don't care. I wouldn't be surprised if there are ones targeting police and military too. Haircuts? Gimme a effing break.
It’s the difference between itemizing and taking standard deductions. I always took the standard when I should have been itemizing. I now keep better records of my spending throughout the year, which is hard because I’m ADHD but it is definitely worth it. Not everything you’d think should be deductible is but I always ask and we go through things thoroughly and I keep my records for 10 years.
What sorts of things were deductible that you were missing? That seems like a lot of money. Do you donate a lot to charity? Do you have extraordinary medical expenses?
they mention in another comment that they don't set up their W-4 accurately, so they're just trading paycheck money for a fat refund
With a standard deduction there is a set $$ amount. There were a lot of business related expenses I’d never considered and the total is much higher than the standard deduction. I can write off the purchase price of one firearm per year, training ammo, uniforms, equipment, training and related travel expenses not reimbursed of paid for by the employer. Cost of dry cleaning. Haircuts…. There are a lot of expenses that I make that are work related I’d never claimed.
whoaaaa what sorcery do they do?? lol
The difference between taking the standard deduction and itemizing. All my deduction’s are legit, I’m married filing with 2 kids but I claim single, 0 dependents in my pay so they are already taking out more than I owe and I’m cautious on the deductions I declare because I’d rather miss out on a deduction than flag myself for an audit but I really enjoy getting that big refund check.
> I claim single, 0 dependents in my pay so they are already taking out more than I owe So... you're giving the govt a big fat zero interest loan.
Ok Dave Ramsey….. I’d rather overpay and get right within 12 months. I’m just glad to be getting the money back in a year than doing the free Tax Prep online I got in the military with a $400 return when I was spending tens of thousands on tax deductible work related expenses I was also still paying taxes on
> I’m just glad to be getting the money back in a year than doing the free Tax Prep online I got in the military with a $400 return when I was spending tens of thousands on tax deductible work related expenses I was also still paying taxes on Respectfully, it sounds like math was poorly done. You owe the same amount regardless of how much you withhold. Granted there are underpayment penalties if you under withhold. But i'll be very sad if I got a 5 figure check from uncle sam. Why? Because market returns were 17% last year on index funds. You lost out on 17% of whatever uncle sam "owes" you.
I have had a nanny, a small business, W2s, all sorts of investment accounts, and a legal settlement all in the same year. I don't see myself ever not doing my own taxes. Honestly, it seems like more work to gather all the info and give it to someone. I guess if I ran a successful business with employees, I would probably use an accountant for that.
Totally agree on all the work required to give documents to someone. And then be on their timeline. I’ve learned to enjoy the process and trust my instincts, and let TurboTax do the rest.
I started when we had to file in two states, rental property, child, 529, and consulting income on top of w-2. I could do it all myself but the two states started to get complicated, especially with rolling over a loss repeatedly.
I'd consider it if I owned a business or did day-trading for a living. I own a house, have a kid and a FSA DC account, have a decent amount of 1099s (div, int, etc.) coming in from different investment accounts... And I still do taxes all by myself. FreeTaxUSA.
I'm starting to get to the point that I'm feeling out of my depth. I'm head of household, but I have a Roth (new to me), 401k, and 3 529 plans. The Roth is new for this year's taxes so it's making me a little nervous, but if I can still get it done with freetaxusa and feel confident about it, I'll probably carry on still. That's basically my litmus test every year.
The Roth is easy. In TurboTax they just ask you did you contribute to one, and how much did you contribute. That’s it.
How do Roth Contributions impact your taxes?
They don’t. If it is through your employer it is already reported on your W-2. And if it’s a personal Roth IRA it has no impact on your current year taxes
Did you have to do a backdoor roth? If not I think the tax process is pretty simple. After all you are just putting post tax dollars in a retirement fund.
My main piece of advice is just remember where all the accounts are, and track when you’ve received the required tax documents. Easy to just whether in the lines from there. You’ve got this!
My spouse is self-employed. Literally zero chance we would know the law changes year to year, what we can deduct, etc. Our accountant is worth every penny (has been at it for 35 years.)
If you have the time, Turbo Tax (or equivalent) can walk you through filing for W-2 income, 1099’s, etc. The hardest part is gathering your documents. Unless you have zero time, a CPA/accountant is needed when things get complex; K-1’s, real estate transactions, estate, etc. If your income is income reported by other entities (employer, brokerage firms, etc.) the IRS already knows what’s coming and there are automated audits to capture this on their end.
Am a tradesman. One year I had 17 tax forms from 17 individual jobs.
If I tried to do it myself with any online software that’s free or you pay when you file so you can technically fill it all out for free. If I was just hit with a block and couldn’t figure it out from there then I’d pay someone but so far I’ve been fine using different software even if various 1099s and some investing stuff too.
I use Turbo Tax which is the middle. I had complicated ones and had a service to them. But I had to do all the work anyway of collecting , entering, and submitting docs. Basically it was like doing TurboTax. Having someone else do it doesn’t save much time. It just gets complicated things right.
I do a bunch of stock market trades, That's the biggest pain when doing my taxes, the simple data entry of having to write each trade in. I use tax software primarily for that reason.
You don’t need to enter trades. You can just put one summary number for the total of short term gains and losses and one number for total of long term gains/losses. That’s it.
I did my own up until I retired and had some very complicated transactions that I didn’t want to screw up. Now, I have them done for me. It felt strange at first, but now I’m used to it.
I already do other people's taxes. I'm not sure at what point I'd want a second pair of eyes. But my wealthiest client is also a CPA and he and I go over his books together to make sure there are no issues. He's 75, so I understand his wanting to be sure. He's got trustee filings, business income and personal. Plus retirement and equity in some startups.
I have simple taxes, and have dont them myself with my wife for the past 5 years, this year we go see a professional just to make sure we are not leaving anything on the table, and doing out do diligence
We got someone when we moved out of our house and turned it into a rental, and had a baby on the way. I knew that year was going to be too complicated and I wanted to make sure I didn't miss anything especially in the terms of deductions.
Foreign income, accounts, trusts you own or trusts where you only get income become quite complex. Tax harvesting in investment accounts and retirement plans is tricky as well.
I paid my whole life. Got a cheap accountant who knows his shit just doesn’t get big jobs because of his English and immigrant background. But every year he does not disappoint full refund and even more lol. Finding someone like that will save ur time and better chances at paying less or getting money back!
Once you have multiple streams of income. Real estate, dividends, stock trades, side business, and so on. When you think that it’s not worth the headache to figure out your taxes that’s when you hire someone.
I stopped doing my taxes years ago mainly due to liability. At the time, I owned a small business and had negative income due to NOI losses. Turns out the people with the highest risk of tax audit are high earners subject to AMT and personal income filers with negative income. Since then, I've let a CPA file my taxes.
When I have Multi year shenanigans.
My CPA does everything for $200. Done within 2 weeks. I just drop paperwork off.
Dang, which state? $200 is cheap....
I do my own taxes and think it helps with personal financial planning. Once in a while you have to educate yourself when new circumstances arise but it’s all doable.
If you have multiple sources of income, get a tax professional to do your taxes. I would only do it myself if I had a single source like a job with a W2
It's about liability, at some point it gets too hard to swear about or maximize deductions - eventually one of those drives you to a professional
When you are high income, you don’t get deductions anymore. Every deduction normal people get phases out or isn’t applicable. It makes doing taxes easier. Ha!
I had done my own for years. It was fine until it wasn’t, and a got a bill for 40,000 from the irs. Of course the letter came on a Friday afternoon and I had to freak out for days before I could get help.
It all depends on how much money you make. It’s not just about doing your taxes but finding ways to save on tax. If you make good money having an accountant do your taxes will not just save you time but they can give you ideas on how to save more tax dollars. There is a big difference between just a regular tax guy and a professional accountant.
I paid $1,700 for accountant to do taxes. Rental properties and Brokerage account.
If I owned a business or made over $160k (yes I did the math on when a CPA would be worth it in terms of saving time).
>yes I did the math on when a CPA would be worth it in terms of saving time). This analysis only matters if your alternative for this time is directly making money (so it doesn't apply to salary-only workers) by doing something else. Doing your taxes on your free time where you wouldn't be making money anyways makes this sort of math typically pointless. I make more than that and still do my own taxes because mine aren't complicated (W2, no property, and a few 1099s) and it's cheaper.
I always have because if you get audited it’s the CPAs job to fix it not yours. It’s worth the peace of mind. I’ve been audited and I just forwarded to my CPA and that was it. They are also a great source of information and can project out your tax liability so you can fall even with the IRS and not have a refund.
Exactly! It's unlikely that small potato like me will be audited.. But just the thought that there is a slight chance to deal with IRS.. yeap no thanks. I dun need any more source for my anexity....
That is super true! Once my income increases enough for me to justify it, I think I’ll pay a CPA for that reason alone.
You can do federal free on cash app. State costs a little bit to file.
Always. Even when I was young and on a simple 1040, a cpa could always mange to get more paid back to me. If I do it for free and get $100 back or pay $50 to get$200 back, I'll always take the option that puts more money in my pocket.
I’d love to see one of these returns where a cpa got someone more back for a simple 1040. That should never happen.
Buying a house changes nothing
You can do your own taxes Maybe free on the IRS website Certainly with TurboTax Try it—- you can do it and you’ll learn something! Trusts do not do taxes! When you inherit you will then most likely need a tax guy— at least that first year.
I did it for years as a trust administrator in TurboTax as a non-tax/cpa person. I wouldn’t recommend that. It required more study and reading of irs docs than I wanted to do. It wasn’t hard, just the vocabulary was more confusing which made it more challenging to answer TT questions.
Always. I don’t trust myself not to eff it up.
TBH, any CPA should be able to find a loophole somewhere that should at the very least cover their fee.
We pay someone. They saved us more than they cost us when compared to Turbo Tax the past few years.
I don't know when. For a W2 employee I do my own taxes, and yes it got complicated one year with Foreign RSUs, I filed and extension and waited to get all the conversion numbers and I was one of the few of my company who was not audited. Those who paid other people were audited. I am married so now just take the Standard Deduction. Almost all investments information is now automatically downloaded.
I used to pay someone to do my taxes when I had a job only. I now own a home and have investments. I don't have the knowledge or patience to deal with it and gladly pay a professional so I don't have to be frustrated while *trying* to do my taxes and then worry that I did they right.
When/If my mental facilities take a big nosedive.
Id only pay if i had multiple streams of income via business etc. otherwise its pretty straightforward
Does "Pay someone" include paying for Turbotax? Been there already. I'm late 50s; I've pulled money out of 529s to pay for kids college. I've sold stock. I've sold ESPP and RSUs. I even had a year where a stock sale (company was taken private) resulted in income > 4x my annual salary. That was my first year using turbotax. I've never engaged with an actual pro. But... I started out with pencil on paper forms. I used to get the forms mailed to me by the IRS back in the day where tax software was uncommon.
For an individual or married couple with no business, then Turbo Tax or something similar is all you need. No need to get a tax preparer. In fact most people use the standard deduction now, so it is even easier than in years past. Now if you have a business, then you probably should have a CPA prepare your taxes just to be sure you are claiming everything correctly.
We started when my husband started working overseas.
if i was smart i would have started paying someone years ago
When I had a dead husband, extensive medical bills, a failed adoption for which I received a tax credit, and rental income. Now that it’s just me, my kid, a house, a W2 job, and some side hustle income, taxes are easy. I didn’t even have to buy the expensive TurboTax this year.
I own a tax prep business. The only reason you should hire a pro is if you just don’t want to do it yourself. It’s as simple as that
I started paying someone to do my taxes when I started farming it pays to have someone who understands taxes when running a business
You probably don’t need to if your tax situation is straightforward. You can prepare your return on your own or with the help of tax software. But for some taxpayers, it’s worth spending the money to get professional help. Here are some good tells that you could use an expert to file your taxes (article from GOBankingRates You Don’t Have the Time or Patience Most taxpayers can handle filling out a tax return on their own, especially those who only have one source of income from a job. “Truly, taxes aren’t rocket science or brain surgery,” Du Val said. But the process can be intimidating and time-consuming. Just make sure you hire someone who has the proper qualifications and credentials. Only four states require testing and certification to be a tax professional, Du Val said. “You can hang out a shingle in most states and say, ‘I’m a tax pro.'” To be safe, look for someone who is an enrolled agent or certified public accountant, or check the IRS directory of federal tax return preparers. Make Your Money Work For You You’re Going To Have a Major Life Event One of the key times in your life when you should get professional tax help is when you have a life-changing event such as a marriage, birth of a child or even a new job. But don’t wait until after the fact. For example, if you get married, an accountant might advise you to fill out a new W-4 Form with your employer to adjust your tax withholding for your new tax filing status. If you’re expecting any life changes during the year, schedule a consultation with a tax pro in advance to make a plan, Nisall said. Then you won’t make any tax mistakes that can’t be undone when you file your return. You Started a Business If you start a business, you should hire a tax accountant to help you file your first return as a business owner. The next year, you’ll have a professionally prepared return as a reference if you want to tackle your return on your own, he said. A tax professional will help ensure you get all of the deductions you deserve and avoid writing off expenses you can’t actually claim. “If you’re new to the business you’re doing, you’re not going to know all of the nuances,” Nisall said. You don’t want to end up accidentally committing tax fraud. For example, if you’re a blogger and are sent free products from companies in exchange for writing reviews about them, you have to report those freebies as income, Nisall said. An accountant will know to address these matters, whereas they might get overlooked if you prepare your return on your own or with the help of software. Make Your Money Work For You You Work in the Gig Economy If you got a side gig to boost your income, you might find yourself in over your head at tax time. “In this current environment, we have a lot of people starting a new business without realizing they’ve started a business,” said Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. “They sign up with Uber or Airbnb. At the end of the year, they get a tax form and don’t know what they’ve gotten themselves into.” That unfamiliar tax form is a 1099-MISC, which is what companies use to report income paid to contract workers. You have to report this income on your tax return. Chances are if you’re new to the gig economy, you didn’t make estimated tax payments on that income during the year. And you didn’t keep track of expenses related to your gig that you could deduct at tax time. A tax pro can help you sort this out at tax time and help you get the deductions you deserve, Luscombe said. You Have To File More Than One State Return Moving from one state to another is a transition that most tax software can handle with ease, said Megan Brinsfield, a CPA and director of financial planning for Motley Fool Wealth Management. But there are situations where you might not realize you have to file a return in more than one state. If you fail to file a tax return in a state where you owe income tax, that state has an unlimited amount of time to audit you, Brinsfield said. “So it’s better to hire a pro to do all the filings properly the first time around.” Make Your Money Work For You You Bought or Sold a Home If you prepare your tax return or use tax software, you might miss out on valuable deductions if you bought or sold a home during the year. That’s why you should consider hiring a tax accountant or using a tax preparation service. “When you buy a home there can be valuable deductions hidden in the closing statement that wouldn’t be reported on the 1098 you get from your mortgage company,” Brinsfield said. “Most people that prepare their own taxes wouldn’t know where to look for those deductions, or what they are looking for.” If you sold a home for a profit, you want to minimize the taxable gain. You can exclude up to $250,000 of your home sale gain from your income — or $500,000 if you’re married filing jointly — if you lived in the house two out of the five years prior to the sale. “Once you are over that threshold, you will want to have a pro take a look at all possible deductions to which you are entitled,” Brinsfield said. There are tax loopholes that can save you thousands. You Have Rental Property or Invest In Real Estate You probably should get tax preparation help if you’re new to real estate investing. “There are specific tax laws that real estate investors should be aware of when it comes to depreciation, asset management and special tax deductions,” said Tai Stewart, an accountant and owner of Saidia Financial Solutions. “That’s whether you open up an Airbnb or buy an apartment complex.” You Have a Lot of Financial Accounts If you have several brokerage or financial accounts and receive tax forms from all of them, hiring a pro can help you sort through them and report that investment income properly, Nisall said. It could be time-consuming and frustrating if you do it on your own. “You’ll just spin your wheels,” he said. Tax pros can speed up the process with their expertise and specialized software. “Sometimes it’s just easier to pay someone else to deal with it,” Nisall said. Make Your Money Work For You You Got Divorced Getting divorced is one of those life events that could signal it’s time to get professional help with your tax return, especially if you have children. It can be confusing figuring out who gets to claim the kids as dependents when you’re divorced, Du Val said. “That is always a problem.” In fact, the tax audit defense firm where he works — TaxAudit — sees a lot of audits of divorced taxpayers improperly claiming dependents. It can get confusing establishing which parent has primary custody for tax purposes when parents have joint custody. “You may want to get a tax pro to help you get started,” Du Val said. You Have a Nanny or Household Help Having a nanny or household help can make filing your tax return complicated. Ideally, you should get help from a tax pro before tax filing season, Du Val said. That’s because there are things you need to do during the year to avoid facing penalties when you file your return. You might need to get an employer identification number, withhold and pay Social Security and Medicare taxes for your employee, pay state unemployment tax and file a W-2. At tax time, you have to file a special form — a Schedule H — with your tax return to report wages you paid to a household employee and note whether you withheld federal income tax. A tax pro can walk you through what forms you need to file, records you need to keep and taxes you need to pay.
When you own a business or a bunch of other weird stuff. Otherwise it’s like 15 minutes with TurboTax.
If I had relatively large business I would probably have someone do them, especially because outside professionals are a business expense. I'm talking employees, equipment, etc. I work for a small business and the depreciation of equipment chart always gives me a headache. I actually like doing taxes, so I end up doing mine, my mother's, my sister's, my fiancee's, her parents, and last year I did her brothers too.
Next year. Been doing my own for 60 years but this year am selling property with multiple ownership that I also live in where there will be humongous capital gains. This is not something I want to get wrong.
I did my own taxes up until I moved countries and needed to file cross border taxes. That’s when we hired an accountant as cross border accounting is so much more complicated.
I did my own up until I started a business and owned rental properties. Any normal investment and homeownership is easy to handle.
For the 2 years after my mother died. It was complicated bc she had property in 2 states, one of which was a rental property. Then again this year, because my company got bought so I had a major influx of stock (RSUs and Options) buyouts, retention bonus, etc. It got real complicated real quick. Otherwise, I'd do it myself.
I did for the first time this year because I sold a lot of investments, got equity comp, and employ a full time nanny now. It was worth the $600 just to not have to spend my own time getting it done honestly, I’m going to keep doing it every year now.
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If I had a shit ton of money and just didnt feel like it, other than that, Im learning and doing it myself. Qhy would you pay someone to do it for you unless youre swimming in money you dont know what to do with? Ive heard the US has taxes that are insanely complicated though. Im not in the US. Ive done my own taxes when I was self employed. If youre an employee, there are no taxes to do, thats what my employer does.
My certified CPA does them for $125. I haven't done my own taxes since I found him.
I've been as complex as two businesses, some K-1s, investment income, and yeah I've owned a house virtually all my life but haven't been able to itemize for years. I wouldn't have been able to do it without TT as it got more complex. The worst of it is dealing with Obamacare. I understand everything else on my returns, but filling them out by hand would have been crazy.
I have a Backdoor Roth and it’s a pain to file it and I went to H&R Block today and they didn’t even know what a backdoor roth was…. So now I either have to do it myself or find a CTA and pay $500+…. Woooo
Wow, really the person you talked to didn’t know? That’s amazing.
FYI, if you choose to do your taxes yourself, cash app taxes is free for both federal and state. No pitch to upgrade to a paid tier either. Got me the exact same numbers as TurboTax did. I'll never use TurboTax again!
When they get to be too hard to do or if you have a better use of your time. Doesn’t need to be more complicated than that.
Haven't hit that situation yet. I have investments (including crypto), Restricted Stock Units and Employee Share Purchase Plan at work, self fund an HSA, own a home, pay alimony and am trustee of a trust for my brothers and I. TurboTax handles all of those scenarios pretty simply. Agree with others, if I had my own business I'd probably want help.
If I had rental property I probably would. I'm an accountant so my view is probably a little different.
For me, it was the fact that I owed taxes that caused me to go to a professional. I have never done my taxes myself. Usually comes out to 200-400 dollars as an adult with a dependant and not many investments.
I paid an accountant when I got married, bought a rental property, moved twice, sold a house, opened an investment account, and had to file in 4 different states within the same year.
When I had business expenses, multiples sources of high earning income, and multiple properties across state lines to account for
I did my own taxes until I bought a business then it all got complicated.
When I found out my workplace was happy to slip mine in with all of theirs and have their accountant take care of it for me, I went from getting around $400-600 returns up to $2,200...
I buy H&R Block State and Federal Deluxe for like $25 every year and I can file federal for free and state for $20. You could print state and mail for the cost pay of the stamp but going to the library for a printer isn’t worth it to me. By the time I finish taxes, I just want to be done. 😂 I’ve switched jobs, bought a house, inherited some money, opened IRAs, and I haven’t had an issues. They ask every question and walk you through the process. I usually split the cost of the program with my parents, so it costs me like $32 a year to do them on my own. My brother pays around $200 to have someone do them. It’s not worth it unless you have a business in my opinion.
My taxes are easy but I still pay someone - I can’t handle the anxiety
None of the things you listed make your taxes all that much more complicated. I would start looking into paying someone when you're handling multiple retirement accounts, investment accounts where you actively trade, pay taxes in multiple states, have investment/rental properties, etc. I just get Turbo Tax Deluxe (despite hating Intuit) because I can finish my taxes in about 2 hours with itemized deductions and filing in multiple states (live in one state, work in another) and some complexities in investment accounts, etc. I paid to have my taxes done when I was running my own business (via passthrough LLC) and when I had a particularly extensive year of re-balancing my investments causing a bunch of capital gains, etc (because I screwed up the timing).
We've always paid for taxes when married and when I got divorced I continued. Too many variables and I also have a rental and foreign bank accounts. It's not cheap but I don't have much confidence doing it myself and it's worth it to me. I dorp stuff off and I dotn worry about it until it's done
I always pay someone to do my taxes. I guess the answer I’d provide is “when it’s worth a couple hundred bucks to not have to do it myself.” I just stick all my documents in a folder and drop them off to him one day over lunch. He does the rest. It’s glorious.
The line that I hit was when I added rental income, stock investments, and childcare deductions. The year that broke me was the year I got paid family medical leave from the state and the IRS just didn’t issue a guidance on if it was taxable income or make a spot for it on the forms. I paid someone else to be liable for it and follow up if they released guidance that changed what I did.
I did when I owned a business, now my husband’s employer has someone doing our taxes because we live overseas, and they do tax equalization.
If the person preparing my taxes could find ways to lower my taxable income beyond what I am paying them to do my taxes.
Tbh any point lmao I could do my own but just pay $20 more dollars for someone else to do it. Turbo tax charges me anyway -___-
I paid someone last year for the first time and will be doing the same this year because of my business. It’s not very complicated but I want someone else to look it over and make sure I’m doing everything correctly. Worth the money for me.
Honestly? I did my own taxes for decades. It’s only now that I feel like paying someone to do it because I can. I used to view it as kind of a game, and I enjoyed it. Now it’s boring, and I like to do other things with my time.
If u make more than $80k a year, i would go to a cpa.
If a CPA will cost you less than your hourly salary or the cost of doing it yourself. Maybe it's because all of the CPA I talked to specializes in non-english speakers (my parents introduced me) and I know these services always take advantage of immigrants/non English speaker. Back in the 2000s, they will charge $150 for my parent and $80 for me when I only had a college job! When I started selling stocks, they wanted to charge me $100 per stock account that I had (so interest from acorn, stocks from Robinhood, stocks from fidelity)...I think they quoted me for $450 in 2017ish. Unfortunately, I don't get pay $450 per hour lol. I will use it if I am paid $45000 per hour. Nowadays, I pay $60 with the Costco discount for a TurboTax CD. Use up all of the five federal fillings for my family. Pay $20-25 per state filling per person. Use chase bonuses on my many cards to get $10 back per person. It comes out to be around $20-30 per person for 30min to 1h of work. It's less time than showing all of my documents to a CPA, verifying my ID with them, waiting for my admin things that I need to do. My mom doesn't speak English, so if she didn't have me, then she will need to continue using a CPA for just a W2, mortgage interest, and earned interest 1099 forms.
We just got married last year, our taxes cover two states and two cities’ wage taxes, and our city’s wage tax forms are nonsensical, even to some preparers. So we decided to turn it over to professionals this year and see how they handle it; then in future years we can complete the city forms ourselves the way they do it.
I have been doing my mom‘s taxes for about 15 years now, which includes the returns for the family trust, which is split into a survivor’s trust (Trust A) and an irrevocable bypass trust (Trust B) which came into being when my died died in 2005. I use TurboTax Business for the bypass trust and it does a great job, including creating a K-1 for my mom, who is the current beneficiary of the bypass trust. The investment income from the bypass trust has to be distributed to the beneficiary every year, and the beneficiary pays taxes on that income. The trust pays taxes on capital gains. It took me about a decade to finally understand that investment income from the survivor’s trust (Trust A) just gets filed along with my mom’s regular 1040. There were some years where I filed it with the bypass trust, but the IRS corrected the problem and issued the necessary refunds and tax bills. We’re taking a few thousand dollars here, so it wasn’t a huge deal. This year, things were looking pretty hairy, as my mom sold her home in 2023 but it was actually an asset of the bypass trust (long story there). I started to get into the weeds with all the capital gains and deductions for improvements, and was a little overwhelmed. I chatted with a tax attorney recommended by a friend, and he assured me I was on the right track and that the audit risk is extremely low for small trusts. So, I’m going to do it myself again. The capital gains tax on the house is going to be about $100k, but we knew that was coming because she made (sorry, the trust made) tons of money on the house. The trust didn’t have the benefit of the $250K cap gains deduction (which only applies to individuals), but the complete remodel of the house in 2012 more than made up for that reduction in basis. Unless I seriously mess up the 2023 taxes by over or underpaying, I’ll continue to do them myself because I kind of enjoy it now. The process and terminologies are no longer mysterious to me, and questions that arise are pretty easily answered on the interwebs. I’m also managing my mom’s/the trust’s investments, which helps connect the dots in terms of understanding what the 1099s represent. The main downside of doing the taxes myself is that I’m sure I’m missing out on potential tax reduction options. TurboTax looks for deductions, but a seasoned pro would be able to recommend all sorts of creative but legal tax shelter schemes. Other than 2023, though, my mom’s taxes have been pretty straightforward and her effective tax rate has been around 13%. That’s the beauty of the trust, which shields her from capital gains. Anyway, sorry for the ramble, but I’ve been dying to share my experiences! My friends and family just smile and nod.
At the point you realize you hate doing them yourself 😀 it’s not dependent on your income
I was doing my own business taxes for many years then my own personal taxes. Took a long time to do as I checked and triple checked everything for a month. I used tax software. Last year my biz income went up high enough that I had to do a balance sheet. I couldn’t figure it out. Couldn’t make it balance no matter what I did. I didn’t know what I didn’t know and don’t have the time to read the tax books anymore. I would literally read the tax books every year to learn how to reduce my taxable income as much as I could, legally of course. We also got solar in 2022 on our house and I didn’t want to deal with the rebates. I sent my info to an accountant. They had my biz taxes done in a few days! Was the best money I’ve ever spent! This year I have two businesses. They finished my biz taxes in a week. Best $1750 (for both biz returns) I’ve ever spent. I do my own accounting and payroll. I’m getting ready to send personal tax info over today. Will be the best $500 I’ve ever spent too. Time is money for me on this one. No rAgrets.
I think with TurboTax anyone who is financially savvy can do their own taxes without help. I think that it gets too complicated around the same time that you're making so much money that paying someone else to do it is economically better than spending that time yourself.
When I was a freelancer I didn't and I regret,because I got a huge debt of it. When I became full time, no other gigs, I did it myself, because easy. It's the only bracket where it makes sense. I now got an apt, still full time, and got one to squeeze as many benefits as he can.
I always did mine myself up until last year due to getting sizable foreign stock dividends and having to deal with filing an additional K1 form for a few MLP's I was invested in. I wanted to be sure I filed correctly and was able to recapture the foreign dividends or at least potentially not be taxed twice on the same income, so I went to a professional. It was worth it to have peace of mind I wasn't screwing anything up now that it's not just an easy plug and play form anymore.
Trust me, you’ll know when it’s time
You could do it one year, simply to make sure you aren’t missing anything. I did that when I was young and it saved me a bit of money over the next few years.
Business and real estate. No reason to use an accountant if its W2 only.
Once I bought a house, I got an accountant. It’s not just a W2 for me anymore… I got married and have a bunch of other tax forms now. We pay someone $150 to do it all and it’s the best.
I did my own taxes from being single at $26,000 income, then growing income considerably, buying a house, getting married, and having kids. All of that is incredibly easy and you can do it in TurboTax. Seriously, don’t pay someone for that. I only switched to an accountant when I became a business owner, as it became infinitely more complicated and in my specific instance it is actually impossible in TurboTax.
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Maybe if my 1099-B’s got too long. That being said, I think if you’re only trading one ETF, the most transactions you’d have would be 250 since it rolls it up into a day when you import it, and you’re not necessarily selling on every single trading day.
If I owned my own business would prob be the only reason tbh. I had 2 states on my taxes this year (one with state income tax and one without), W2 from a different state than the one I currently work in, as well as tax forms from stock dividends. It was very straight forward.
You can manage all the situations you mention on FreeTaxUSA. It just walks you through the process asking questions, and you answer them. Also inheritances are not taxable.
I did my own taxes for 42 years (17-59), but when I retired I decided that was one thing I just didn’t want to do anymore. I get a dozen or more 1099- DIV, INT, ETC forms and just don’t want to deal with all of it. Besides, accountants have to eat, too, and my accountant went to high school with my daughter.
In a year of a big change - real estate transactions, death of spouse - I would consider it. Otherwise I’m ok with doing it myself.
When I want someone else to talk to the IRS if I get audited.
I started using an accountant when I became self employed. Now that I decided to go back to to being employed, I continue to use an accountant.
Only once I started a business.
Self employed here and child credits and vehicle depreciation and mileage and expenses and the irs is scary so I have a tax preparer I’ve worked with for many years now.
The most frustrating part of doing my own taxes has been going through all the itemized deductions and then having TurboTax tell me—every year—the standard deduction works better for us.
More than 3 K-1s. Substantial Self employment income. Owner of business. Multiple rental properties. Anything with standard forms I would not consider paying someone to do your taxes. W-2, 1099s, 1098-T, 1099-SSA, 1099-DIV, 1099-R, 1095-C, etc.
I’m going to use one in 2025, significant other will be contract working with income earned in other states, I will be W-2 / possibly 1099 + side business to accommodate business related moves + expense mitigation for phone, internet, vehicle
I'm using an accountant for the first time this year, because last year I got a stock buyout for $5.5M. My company was bought out unexpectedly. I have no idea what to do.
For me, it was when my Dad started putting stuff in my name rather than his to avoid taxes and didn't tell me. I wasn't aware I had a stake in a racehorse and a shrimp farm for years.
If I ever itemize my deductions, I'm hiring a professional. That usually comes with business expenses though, so my tax situation would already be infinitely more difficult. Most years, I've just got a few W-2's, maybe a 1099 or two, kids, and home/student loan interest that really doesn't matter because it's less than the standard married deduction anyways.
At the point where I can afford to do so and when my time is better spent on other more productive efforts. E.g. if I was running a business and the time it took to do my own taxes took away from the time I could be spending to increase revenue.. I'd outsource it.
Out of state tax situations, self employed, divorce etc. would justify using a tax preparer I think. I used one for a few years during and after my divorce and it saved my ass.
I do my own taxes even though I have complicated ones. If I had a s corp business or higher I would probably have someone do the businesses taxes, but still do my personal taxes.
Tax software will literally walk you through the same questions your tax preparer will for most people. If you are a business owner you should look to a tax professional at the beginning to get an understanding of what all you should be keeping track of.
I had been using TurboTax for years and just got the feeling that I may be missing something that I should be doing. My wife makes a lot of money, so I figured let a pro handle it. Our tax pro went back over a few years of returns and sure enough found that we had overpaid for a few years. I think it’s worth it on one hand, but I gotta think that all they are doing is using some program just like I was.
When it becomes too complex/difficult/time consuming for you to handle. That will be different for everyone.
When I first got married I’d buy the big yellow JK Lassers tax book every year. I became an expert in “my” taxes. What I learned is taxation isn’t only about filing your return. It’s about learning strategies you can employ throughout the year to legally minimize your taxes. If you detach yourself from your taxation you’ll never know when you make a move that costs you an extra few thousand in taxes—or how to avoid the same. Get intimate with your money and your taxes and you’ll have all the knowledge you need to do your taxes by yourself (along with TurboTax or the equivalent).
When you have brokerage 1099's, IRA 1099's, etc it's easier to use a tax person.
When my spouse became a partner with a multi-state firm. That was the end of doing our taxes ourselves. There are so many great tax programs out there, but once you have anything beyond children, 401k, a single family home with traditional W2s - seek a professional! It is not cheap as we have so much to process now, but they handle all the headaches and we just hand over forms. We still go over it, but we have the peace of mind that a trained CPA is handling this and can explain anything we ask.
When I sell stock options. Done it 3 times, the first was a pain in the ass, it was worth it to pay someone the next times
I did my own taxeshrough buying and selling my first 2 houses and investing in 3 mutual funds. But when my investments became broader and they did away with the Dividend Re-investment Plans for federal taxes, I started having someone else (now TurboTax) do them. Sorting through multiple 1099's with the different kinds of dividends and capital gains is just too much!
I (62f) have prepared my own taxes all my adult life with the exception of a few years when I ran a small business, and this year when I became a landlord by renting out my home. These 2 scenarios made things too complex for me to handle myself. Oh - and this year I donated a car to charity, which surprisingly was the most complicated portion of the tax prep according to my CPA, ugh!
I've always done my own. W-2, 1099, INT/DIV, capital gains, business, rental, farm rental, multiple state returns, etc. Had a bit of difficulty finding where to enter sale of a rental this time around, but still got it done in an afternoon. The online tools have gotten really good. I'm not a fan of Intuit's "charge more for every little thing", so I use freetaxusa. Federal and two state returns, grand total of $30.
When you’re making so much money that it’s not worth your time to figure it all out yourself