It’s tax season – and predictably, it begs the question of whether to use tax software or a professional. There are a number of factors you’ll want to take into consideration as there are benefits to both, but ultimately your personal circumstances and financial situation should play a critical role in what you decide.
For example, if you don’t have very complex financial and employment situations and have few investments, it may make the most sense to use tax software which can save you time and money.
However, if you have multiple employers, a number of investments, or own a business, you may need the security of working with a professional that fully understands all of the tax rules and regulations.
Before you decide, consider the following to help you make the most informed decision.
Tax prep software is useful for tax compliance, and there are a number of benefits to using tax software such as TurboTax, TaxAct, or H&R Block at Home. Here are few instances when it would make sense to choose tax software:
- Cost efficiency. Often, filing your own tax return using tax software can save you a lot of money.
- Time. If you have one W2 with standard deductions, it’s possible to complete your taxes in minutes.
- Information. Good tax software can help you understand specific tax laws or guidelines.
- Ease. Tax software can double check your return to minimize deductions and credits.
- Quick refund. Most tax software is compatible with e-file for faster filing and returns by direct deposit.
- You’re good at math. If you keep good records and enjoy math, filing on your own can be a great option.
- Your finances don’t change. If there aren’t changes to your financial situation, you can file on your own.
- No property or investments. Without property, investments or retirement accounts, file on your own.
- You know tax laws. Tax software will guide you, but you should still have an understanding of tax laws.
If you’re a small business owner, have multiple schedules or need some long-term tax planning help, you’ll probably want to speak with a professional. Here are a few instances when it would make sense to hire a professional:
- Comfort level. If you’re concerned you’ll miss something, it might be best to put it in the hands of professional.
- Continued support. If you’ll need financial advice beyond the traditional tax time window, hire a professional.
- Major life events. For example, if you just bought a new home, are newly retired, changed your marital status or have been widowed, a professional can help guide you.
- Investments. A professional can help you navigate your 1099 tax summary from your brokerage account, determine if you’re picking up all the income in the proper place or check to see if there are tax exempt amounts that are not taxable to federal taxes, state taxes – or both.
- Rental properties. A professional can assess rental losses and rental deductions throughout each year.
Bottom line: If you just have a W2, few assets and no major life events, consider using tax software. But if you’ve had big life changes, have assets to protect or want to take steps toward a long-term tax strategy, you should hire a professional.
Still unsure? Contact the professionals at Bedinghaus today to make the most informed financial decision this tax season.