Is Paying A Professional To Do Your Taxes Really Worth It?

Filing taxes is no one's favorite thing. From different forms and schedules to confusing (and often misleading) online filing services, the process can make even the most patient person question their sanity. To make matters worse, the IRS is changing the income threshold of reportable income for businesses that use apps like Venmo and Cash App for payments, which means that a LOT of small businesses will be dealing with 1099-Ks for the first time during the 2024 filing season (by the way the new limit is $600). To make the prospect of doing your own taxes even scarier, there are a ton of red flags and potential mistakes that can increase your chances of not only being audited but also potentially fined. So, with all the frustration and confusion surrounding tax season, you might be asking yourself if it's worth it to pay someone else to deal with the whole thing.

It's important to know there are many different levels of tax preparer services depending on your exact needs, and with the advent of remote and live chat options, many choices don't even involve having to go to a specific physical location. If you do decide to use services, be sure to always use a reputable and correctly credentialed preparer. With that being said, there can be a lot of things to consider before moving forward with a tax preparer. Let's go through some key questions to ask yourself before taking the plunge with a paid tax pro.

What to consider

One of the most important things to ask yourself when deciding to pay a tax professional or not is just how comfortable you feel with the tax process. If you aren't particularly numbers-savvy or don't have a great understanding of the tax terms you're reading, it could be worth having someone with specific know-how handle them for you. This could especially apply if you're someone who needs to file a complicated return. If you are someone with multiple sources of income, assets, dependents, and/or retirement accounts, it can make the process of trying to file an errorless tax return on your own much more complicated.

Of course, finances can and should be a part of this decision as well. Depending on the specific tax preparer you choose, they could charge set fees based on each form they fill out for you, a minimum fee with add-ons, an hourly rate, or even a contingent rate based on your return. It's important to not only price compare different options but also (and perhaps more importantly) to ensure you have the budget necessary to pay for these specific services before you decide to use a tax preparer.

The National Society of Accountants' 2020-2021 Income and Fees Survey reports the average tax firm charged $323 for an itemized 1040. This doesn't include additional fees that can vary depending on necessary schedules (for instance, Schedule C for businesses cost an average of $192 whereas Schedule SE for self-employment tax cost an average of $41 in 2020).

Other things to know

We laid out whether H&R Block or TurboTax was the better option for filing tax returns, but you might also be considering a specific tax accountant or local tax preparer individual. In fact, 31.8% of tax preparer firms were sole proprietors in 2020, so going local could be a better option for you — depending on your preferences. With that in mind, it's important to realize there is no singular way to be a tax preparer. The tax-professional umbrella can include certified public accountants, enrolled agents, tax attorneys, and even tax preparers without professional credentials. All these professionals bring different expertise and knowledge and some might be better for your specific tax needs than others, so making sure to shop around for the right fit can be particularly important.

The IRS even provides its own tips for finding the right preparer. Some of its suggestions include more obvious steps, like checking your tax preparer's qualifications, but did you know you can also look into a preparer's history? This can help you find out if the tax preparer you're considering has dealt with any past filing errors, fines, or even charges. You can check an enrolled tax agent's history through the IRS website, or, for certified public accountants, you can look up their records with your state's Board of Accountancy. Similarly, you can check with your state's Bar Association if you're looking to learn more about a tax attorney. And, of course, always double-check all information before signing anything.