5 Questions You Should Ask Yourself Before You File Your Taxes – Part 1

Should I do my own taxes or hire someone to do them for me?

The answer to whether you can do something and whether you should do something may often yield different results. While many of us can file our own return, whether you should file your own taxes comes down to comfort level, complexity, and cost.

Comfort-level:

How do you feel about doing your own taxes? Does it provide you with huge amounts of anxiety or are you as cool as a cucumber? Just because you aren’t necessarily comfortable doing taxes on your own, doesn’t mean that you need to hire a CPA (Certified Public Accountant) or EA (Enrolled Agent). Many tax filing software use algorithms that guide you through this process so that it is as simple as answering basic questions and entering information from the tax forms you may have received.

Complexity:

Are you single with no dependents, have only one job (paid as a W-2 employee), and a bank/investment account? If so, the level of complexity is relatively low, and you could consider filing your own taxes without hiring someone else to do this for you. If you were promoted to partner and now receive a K-1 (instead of a W-2), need to make estimated tax payments, or are self-employed, you may want to consider hiring a CPA/EA so that you pay the appropriate amount of tax throughout the year and to make sure you don’t miss any important deductions.

Cost:

While this likely isn’t the most important part of the decision, it is something that should be considered. Doing your own taxes, even if you use software, can range from free in certain instances to relatively expensive in other circumstances. Depending on who you end up working with, hiring a CPA or EA can cost you anywhere from a few hundred to a couple thousand dollars depending on the complexity of your return and where you live. Do your research, but if you have a complicated tax situation, it is better to pay someone to do it right than to miss something by doing it on the cheap.

This is not something you should wait until the last minute to ask yourself – tax preparers are usually fully booked by early February as tax season starts to ramp up. If considering hiring someone, you should begin the process in the latter part of the calendar year so you can make inquiries by year-end. One additional benefit? This also doubles as an opportunity for you to receive some last-minute tax planning strategies from a potential CPA that you might have missed.

In short, if you choose to do this on your own, there are countless online options available. Should you decide hiring someone might be the right choice for you, ask friends or your financial advisor. At Glassman Wealth, we frequently work with many CPAs and Enrolled Agents and can help you find the best fit given your unique situation.