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We’ll help you decide.

Americans may feel more empowered this year to do their own taxes with TikTok, Google, ChatGPT and other AI tools to turn to when they have questions.

But is that a good idea?

Like almost any tax issue, it’s complicated. Deciding to do your own taxes depends on how messy your finances are, how much you hate complicated paperwork, and whether you’ve had a recent life change.

Typically, do-it-yourself taxpayers are young and have few assets. An IRS study showed 53% of all taxpayers in 2021 used a paid tax professional, but Gen Z was significantly less likely to than any other age group. Thirty-three percent of people 18 to 24 used a tax professional compared with more than 50% in every other age group.

Middle-income earners with income between $75,000 and $90,000 were most likely (59%) to turn to a tax pro, the IRS said.

There are pros and cons to going it alone, relying on tax software, the Internet, social media and AI or enlisting professional help.

We’ll unpack them here to help you make an informed decision. After all, a wrong decision could cost you money or, worse, invite an audit.

When’s a good time to DIY? 

Doing your taxes may be the way to go if you have a limited number of income sources, say a W-2, bank accounts, and some 1099s, and you plan to take the standard deduction, a specific dollar amount that reduces your amount of taxable income.

You can save yourself money and should be able to complete your tax return fairly quickly using basic tax software or the free forms found on the IRS website.

If your taxable income falls beneath certain thresholds, if you have a disability if your English is limited, or you are elderly, you may qualify for one of the IRS’ free filing programs.

Itemizing deductions takes more time and requires more paperwork, but it doesn’t necessarily mean you need a professional.

If your list of deductions is straightforward and you’re organized, it’s doable for the average taxpayer. If you get stumped, you can always ask basic questions and definitions using ChatGPT or other AI tools and web searches for guidance as long as you double-check the answers in several places.

You can also look up answers on the IRS website or call the IRS but be prepared for potentially long wait times.

Just be careful of looking for tax tips on social media like TikTok and Reddit. Sometimes answers are incomplete or misinformed. A report commissioned by cryptocurrency company Paxful in 2021 found one in seven videos from TikTok finance influencers is misleading, and only one in ten influencers is transparent about their qualifications.

If all of this sounds tedious, time consuming and makes you uncomfortable, consider calling in a pro, accountants say.

“It’s a balance of cost versus time,” said Mark Jaeger, vice president of Tax Operations at tax software company TaxAct.

Also, a tax pro can ensure you maximize your benefits. Remember, if you miss a credit or deduction when you do your taxes, no one will correct you, Steber said.

“If you leave it off, it stays off,” Steber warned. “People think the IRS will review and correct it, but that’s only half true. The IRS will only correct it if you leave income off but not if you leave tax benefits off.”

When does it make sense to hire a tax pro? 

Anytime your taxes are complicated.

Hiring a pro is a prudent choice after a major life change like getting married or divorced, having a baby, buying or selling a home or business, experiencing a major health issue, or retiring. Paying a tax professional is also wise if you now receive income from many different sources, have investment losses you need help dealing with, received an inheritance, or settled an estate.

If I decide to hire a tax pro, how do I choose one? 

Choosing the right tax professional is vital. They know your most personal financial details and you need to trust that they’ll accurately file your income tax return. Ultimately, you’re responsible for your tax return, regardless of who prepares it.

Original source: https://www.usatoday.com/story/money/taxes/2023/01/27/do-own-taxes-hire-pro-heres-what-consider/11126504002/

Disclaimer: The opinions and views expressed in this blog post are solely those of the author and do not necessarily represent the views or opinions of our company. The content is provided for informational purposes only, and readers should independently verify any information provided and consider their own circumstances before making any decisions. We do not assume responsibility for any errors, omissions, or consequences arising from the use of this information.