Do I Need an Accountant to File My Taxes?

An accountant pores over an economics book.

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Your need for a tax accountant depends on your personal situation. You might consider using an accountant if you're self-employed, or if you experienced significant life changes during the tax year. You might also want to use an accountant if you need to amend a previous year's tax return.

It can be worth the expense, because many people find that they actually save money by going to an accountant because their tax refund increases significantly.

When You Need an Accountant

A few circumstances will wave a flag that you might be better off using an accountant than trying to handle preparation of your tax return on your own. There are advantages in going to an accountant if you have a complicated situation.

You Own Your Own Business

Using an accountant can help you to file your taxes correctly and prevent you from making any costly mistakes if you're self-employed or own your own business. Your accountant can also help determine how much you should pay in quarterly estimated tax payments going forward so you're not faced with a big tax bill at filing time.

Major Life Changes

Your tax picture will change significantly if you buy your first home. An accountant can make sure you're taking advantage of every tax break available to you and help you determine how to adjust your withholding to accommodate that.

You might only need to use an accountant in the first year you buy a new home.

Other major life changes can be a good reason to use an accountant as well. A tax professional can help you make tax adjustments if you got married, had a child, were divorced, or if you began investing for the first time. Again, you might only need to use an accountant for tax year in which you experience these changes. 

You Failed to Pay in the Past

Reach out to a professional if you didn't file necessary tax returns in past years, or if you owe unpaid taxes to the IRS for a previous year and you haven't made arrangements with the IRS to address that issue. A tax accountant can help you file several years’ worth of tax returns and will know about the programs offered by the IRS for people in this situation. They can guide you to the one that's most suitable for your financial situation.

For example, the IRS might be willing to set up a payment plan with you if you meet the qualifying criteria. It helps to have an accountant work on your behalf to make sure everything is filed correctly as you attempt to rectify the issue.

You might also want to contact a tax attorney if you failed to file previous years' returns because this can be a serious situation. Your accountant might be able to recommend someone who works specifically with circumstances like this.

When You Don't Need an Accountant

You might not save any significant money if your tax situation hasn't changed over the last year, or if you're single, work for an employer, don't have children, and rent your home. Your tax return would be pretty basic in these situations, so you could be just fine using tax software to prepare your return. It might not be worth paying a professional if there's nothing going on in your life that can complicate your tax situation.

It never hurts to reach out to a professional accountant or CPA if you have questions, however.

Alternatives to Using an Accountant

Most people can do their taxes at home with tax software that's available for purchase. In fact, you might qualify for IRS Free File if your income was less than $72,000 in 2020. This federal program is an alliance between the IRS and several well-known software providers that allows you to access the software and prepare your return at no additional cost to you.

You may also consider using tax apps, which make it possible to directly prepare and file your individual tax returns from your smartphone or other mobile device. 

Many "retail" tax preparation services such as H&R Block use the same types of software that you can purchase online so you can handle your taxes yourself. In fact, several are part of the Free File alliance. But using a service might be an option to consider if you're just more comfortable having someone else fill out your return for you and give you some guidance.

Consider the fees that the tax preparation places charge and weigh that against using an accountant or purchasing software, then decide which makes the most sense for you.