5 Questions to Ask Before Doing Your Taxes Yourself (Plus How to Get Free Help!)
I’ll be first to admit it: I’m cheap.
Since the age of 16, I’ve done my own taxes.
I’ve considered getting help -- especially since I have a freelance business and often live in multiple states in the same year -- but never pull the trigger.
This year, though, the thought of doing my own taxes is pretty overwhelming. They’re going to be ultra-complicated, and I just don’t want to do them.
I started wondering: Is there a certain threshold (be it income or other factors) when professional tax help is definitely worth it?
It’s somewhat subjective, based on how much you value your time, but I figured there must be some concrete questions to help determine if professional tax prep is right for you.
During my research, I discovered something even more important: In many cases, you can get professional tax help for free.
What?! Had I known, I would’ve done it years ago.
Keep reading to learn about when you should seek professional tax help, as well as how to get it for FREE…
Should You Seek Professional Tax Help?
If you have a simple W2, you’re probably fine using one of these eight free tax filing services.
“For somebody with a 1040-EZ, I’ll happily do it for them,” explains Micah Fraim, a CPA in Roanoke, Virginia.
“But in those cases, they’re mostly buying convenience and comfort. There is very little I can actually adjust.”
If your taxes are a bit more complex, here are five questions to ask when deciding whether or not to get help.
1. Do I Have Kids?
If you’re a parent, you should be aware of several available deductions and credits.
“The tax advantages of having children include: qualifying for the Earned Income Tax Credit (EITC), the child and additional child tax credits, dependent care expense credit and education credits, just to name a few,” explains Bonnie Lee, an enrolled agent with the IRS.
“Navigating through the forms and qualifications can be daunting. That’s why it’s best to have a tax professional guide you through the process. You will likely save more in taxes than you pay in fees.”
2. Do I Understand the Earned Income Tax Credit?
The Earned Income Tax Credit (EITC) is a “benefit for working people with low to moderate income” that “reduces the amount of tax you owe and may give you a refund,” according to the IRS.
“About 20% of the people who are eligible don't claim the credit,” says Martha O'Gorman, chief marketing officer for Liberty Tax Service.
“Some people think they must have children to claim the credit, but that isn’t the case,” O’Gorman says. “A good tax professional can help the taxpayer figure out if he or she eligible.”
3. Did I Go Through a Major Life Change?
If you got married or divorced, bought a house, received an inheritance or retired, it’s probably wise to see a tax professional.
“A lot of people do their own taxes because of the consistency of their tax situations,” says Eric J. Nisall, founder of AccountLancer.
“When a big life event comes along, it introduces a new set of variables which they may have no frame of reference to deal with. In those cases, it’s especially beneficial to seek out professional help.”
Nisall actually encourages you to think about how life changes will affect your taxes before they occur.
“Tax preparation software and websites are after-the-fact solutions, and many chain employees are only trained to input information,” he explains.
“It’s important to sit down with a qualified tax professional to work out the best way of dealing with such events tax-wise.”
4. Did I Spend a Bunch on Education, Medical Bills or Charitable Donations?
If you spent money in any of the above categories, a tax professional could help you find deductions to lower your tax bill.
“Even if a student received a Pell grant that covered all of the expenses of attending college, he may qualify for education credits, and possibly get up to $2,500 off his tax bill, or up to $1,000 if he didn't owe any taxes,” explains enrolled IRS agent Dana Bell.
5. Did I Receive Any Self-Employment Income?
If you own your own business, or received any 1099s from contract work (think: driving with Uber), professional tax help might be a smart move.
“So many more parts of the tax code affect [business owners], and with that comes a tremendous amount of risk and opportunity,” Fraim explains.
“I have been able to reduce the tax bill enough to at the least cover my fee (and in most cases, well in excess of my fee) in the vast majority of these returns,” he adds.
One other bonus benefit of getting professional help? Your tax preparer can review your prior returns.
“Most tax returns can be amended up to three years after their due date,” explains Bell. “If they see you missed a deduction or credit, you can file an amended return to get the extra money back, plus a little interest.”
How to Get Professional Tax Help for Free
So you’re ready to get professional help with your taxes? That makes two of us.
But what if you can’t afford it?
One piece of advice I heard over and over was to avoid the tax preparation chains that’re all over TV this time of year.
If you can’t afford to hire an experienced tax preparer, you’re better off going with one of the free programs listed below.
“[These] programs will usually provide better quality than quick tax shops,” Bell explains. “The volunteers often have several years of experience, and have a one-week review each year. Many quick tax shops may have workers with only a week’s training total.”
Personally, I was surprised to discover you can get high-quality tax help for free. Was I the only one who didn’t know this?
Here’s a brief rundown of the free services:
The Volunteer Income Tax Assistance (VITA) program is offered by the IRS, and available to people who earn less than $54,000 a year, have a disability, can only speak limited English or are elderly.
All volunteers are trained by the IRS, and many have professional tax backgrounds. Call 800-906-9887, or click here to find the VITA center nearest you.
Though TaxAide is run by the American Association for Retired Persons (AARP), its free services are available to anyone.
If you’re 50 or older, or can’t otherwise afford tax preparation services, its site says it was “made especially for you.”
TaxAide has more than 5,000 locations across the country and all its volunteers are certified by the IRS.
What do you think? Are you going to use a tax professional this year?
I’m convinced it’s time for me to get help. (Tax help, that is.) I’ll report back later with whether or not it was worth it!
Your Turn: Do you plan to get help with your taxes this year?
Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.