Your need for a tax accountant depends on your personal situation. You may consider using an accountant if you are self-employed or if you have experienced significant life changes during the tax year. You may also want to use an accountant if you need to amend a prior year’s tax return.
It may be advisable to use a tax accountant in some cases, as many people find that they actually save money when going to an accountant because their tax refund increases significantly. However, there are also situations where you can file your return yourself.
When You Need an Accountant
There are some circumstances that indicate it may be better to use an accountant rather than trying to handle tax return preparation yourself. In most cases, there are advantages to going to an accountant if you have a complex situation.
Owning Your Own Business
An accountant can help you file tax returns correctly and prevent you from committing any costly mistakes if you are self-employed or own your own business. Your accountant can also assist you in determining how much you should pay in estimated quarterly taxes in the future so that you do not face a large tax bill at the time of filing.
Note: Business owners or many self-employed individuals face different requirements than regular employees. For example, an employer must withhold income taxes, Social Security taxes, and Medicare taxes, in addition to unemployment tax on wages paid to employees. However, if you hire independent contractors, you generally do not have to withhold or pay taxes on their payments.
Significant Life Changes
As your financial situation grows and becomes more complex, your tax picture can change significantly. For example, if you buy your first home during the tax year, it will affect how you file your return. An accountant can ensure you take advantage of every available tax deduction and help you determine how to adjust your tax withholdings to match that.
A tax professional can assist you in making tax adjustments if you get married, have a child, divorce, or start investing for the first time. Again, you may only need to use an accountant for the tax year in which you experience these changes.
Not Filing in the Past
Contact a professional if you have not filed necessary tax returns in past years, or if you owe back taxes to the IRS for a previous year and have not made arrangements with the IRS to address this matter. A tax accountant can help you file several years of tax returns and will be aware of programs offered by the IRS for individuals in this situation. They can guide you to the most suitable program for your financial situation.
For example, the IRS may be willing to set up a payment plan with you if you meet the qualification criteria. It is beneficial to have an accountant work on your behalf to ensure everything is filed correctly while you attempt to resolve the issue.
Note: In addition to hiring an accountant, you may also want to contact a tax attorney if you have not filed returns for previous years, as this can be a serious matter. Your accountant may be able to recommend someone who specializes in cases like this.
When You Do Not Need an Accountant
You may not have a strong need for an accountant if the following statements are true:
- Your tax situation has not changed over the past year
- You are single
- You do not have children, and thus are not responsible for dependents
- You are working for an employer
- You do not have any property
Filing your tax return will be simple in the situations mentioned above, so you can rely on tax preparation software or do it yourself. It may not be worth paying a professional if there are no complexities in your financial life that could complicate your tax situation.
Note:
If you are confused or have any questions about your financial situation when filing your returns, it’s always a good idea to reach out to a professional or a certified public accountant (CPA). In some cases, they may answer your questions for little or no cost.
Alternatives to Using an Accountant
Most people can prepare their taxes at home using tax preparation software or tax apps available for purchase and online use. This way, you can prepare and file your individual tax returns directly from a smartphone or another mobile device.
Some individuals may also be eligible for the IRS Free File program, a federal program that gives you access to software that prepares your return for free. If your adjusted gross income was $73,000 or less in 2022, you qualify for the program.
Many tax preparation services “retail” like H&R Block use the same types of software that you can purchase online so you can handle your taxes yourself. In fact, many are part of the Free File Alliance. Using the service can be an option to consider if you feel more comfortable with someone else filling out your return on your behalf and providing some guidance.
Note: Before using an accountant or tax preparation software, review the fees charged by both sides and compare your available options. This way, you can then decide which makes the most sense financially.
Frequently Asked Questions (FAQs)
How much does it cost to use an accountant to prepare my taxes?
If you choose to use an accountant to prepare your taxes, the average cost ranges from $220 to $323 for a Form 1040. The average hourly fee for this type of return ranges from $154 to $161. Compare these costs to tax preparation software, which may range from $40 to $180, without state filing fees.
What should I bring to the tax preparer?
If you choose an accountant to prepare your taxes, be sure to bring all documents, receipts, and forms that you received from the IRS, employers, and financial institutions. This includes W2s, 1099s, and paperwork related to matters like mortgage payments, retirement accounts, or student loans. Also, provide your Social Security card and bank account information, as well as your spouse’s and dependents’ information if you have any.
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Sources:
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and of high quality.
Internal Revenue Service. “Independent Contractor (Freelancer) or Employee?”
Internal Revenue Service. “Additional Information on Payment Plans.”
Internal Revenue Service. “File Your Tax Returns Online for Free.”
National Association of Accountants. “Income and Fees Survey Report for Public Accountants and Tax Preparers 2020-2021.”
TurboTax. “TurboTax Desktop.”
Source: https://www.thebalancemoney.com/do-i-need-an-accountant-to-file-my-taxes-2385782
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