Tax Tips: Should You File Your Own Taxes or Seek Professional Help?

It's Money Monday, and we're in the heart of tax season.

While some of us choose to file independently, you might be contemplating whether to enlist a tax professional for your return. Paul Hood joined News On 6 to clarify when it's appropriate to do it yourself and when seeking professional assistance is the better option.

Determining Your Tax Situation

"If you don't understand what the finished product looks like, or that it is correct, you shouldn't do your return," said Hood.

He explained that for those with a simple tax situation, such as a single filer with one W-2, handling their own taxes may be feasible. However, for individuals with more complex financial arrangements, such as rental properties or a business, professional assistance is often necessary.

"If you've got a basic individual say, let's be real simple. You're single, you have one w2 Okay, your income, let's standard deduction. Is taxable income, your withholdings. You understand it's pretty simple," Hood said. "But you get off into having rental property and a business and you don't know what Qualified Income, qualified business income deduction is, or you don't know what passive activities are. You don't know what you know the effect on rental property of you being a real estate professional, you're not going to be able to understand that, that the finished product is correct."

Cost-Benefit Analysis

While some may be hesitant to spend money on a tax professional, Hood argues that the potential savings can outweigh the initial cost. "When people come to us, or any other competent prepare, the result typically is a lot more than what it costs them," he said.

Hood emphasized that tax professionals can identify deductions and credits that individuals may have overlooked, ultimately leading to a lower tax bill.

"There's just little things. It's not one plus one equals two. There are some complicated things in there that you need to know. One, is it correct? Two, are there other ways to do it?"

Conclusion

Ultimately, the decision to hire a tax professional or file one's own taxes depends on the individual's financial situation and level of understanding. By considering the complexity of their tax situation and the potential benefits of professional assistance, individuals can make an informed decision that best suits their needs.