6 Questions To Ask Yourself Before Filing Your Own Taxes

you might need to go the professional route
Source: Monstera | Pexels
Source: Monstera | Pexels

It feels like five minutes ago we were celebrating the holidays and setting goals for the new year, and suddenly it’s already time for taxes—is this what our parents mean when they say time flies? If you’re reading this article because you’re trying to decide whether to use an accountant or file your own taxes this year, you’ve come to the right place. Filing taxes can often seem like a super complicated adult thing that’s impossible to understand, but I promise you it’s not that bad! 

If you need a refresher on all things taxes, including a full breakdown of using an accountant versus going it alone, we’ve got the perfect guide for you to check out. Some obvious pros of using an accountant include the reassurance that you’re filing correctly and getting every deduction and credit possible, but they can be pricey. The pros of doing it independently include saving money and really understanding your whole financial picture, but it can take time and be confusing at points. The decision to do your own filing (usually with the help of software online, like TurboTax) or hiring an accountant really comes down to how confident you feel and how complicated your tax situation was over the past year. Here are six questions you should ask yourself when deciding which option might be best for you. 


1. Did you move states or countries? 

If the answer to this is yes, you may want to use an accountant to go over your information and see if there are any deductions available to you. There are a surprising number of things available to deduct upon moving (like gas and hotel stays), but there are requirements around how far you moved and why (it usually has to be for a job). If you just moved because you felt like it or wanted to be closer to friends and family, you likely won’t be able to claim deductions. This situation can be a bit vague and many people accidentally think they’re eligible when they’re not, so it’s probably best to get an expert’s opinion to make sure you aren’t filing incorrectly or leaving money on the table. An accountant will also make sure all of your information is updated with your new address by using Form 8822


2. Did you start a new job?

Starting a new job doesn’t necessarily mean you can’t file taxes on your own, but it will require a bit more preparation and organization since you’ll need to have documents from both companies. In addition to your W-2s, you’ll need documentation for any employer-matched 401(k)s or profit-sharing reports if that was part of either role. As long as you have those documents and can clearly identify how much you earned and contributed to your 401(k) in each role, filing online without an accountant should be fairly straightforward. However, if you’re also layering on other forms of income (see below!), missing any information, or aren’t sure of what information to input where, an accountant could be a good option to help wrangle everything. Just note that if you use an accountant you’ll still be responsible for gathering all of your documents, so now is a great time to get everything organized. 


3. Did you start a side hustle? 

Yay! You finally took the leap and decided to start selling your art on Etsy or freelancing as a content writer in the evenings. We love a gal with multiple income streams, but it can make your taxes a little bit trickier. The good news is that you’re often eligible for some self-employment deductions if you’re working from home or if you spent money to build your side hustle (for supplies, marketing, etc.), but the downside is that figuring out what you can deduct can be confusing. 

The first time you add freelance income into your tax filing you’ll need to determine what’s considered “ordinary and necessary” for your industry, as well as what qualifies as your home office space. From there, you’ll need to have clear records of when you got paid (and Form 1099-NEC for income outside of your main employer) as well as receipts for anything you want to expense. This can be done without using an accountant if the rest of your taxes are fairly straight forward, but if you have other complexities or feel uncertain about your calculations, opt for an accountant to provide support for your first year. As a heads up, adding in freelance money is often when the tables turn and you have to PAY taxes instead of getting money back (boo), so mentally prepare yourself for that. 


4. Did you have a major life event, like getting married or having a baby? 

If you answered yes to one of these questions, congratulations! Such an exciting time with lots of changes, including to your taxes. There are tax changes and benefits to getting married in the form of filing a joint return instead of a separate one and being able to write off larger charitable contributions (meaning more money back in your pocket), and there may also be state-specific benefits you’re eligible for. It’s not too complicated to file jointly as a married couple, but if you changed your name this year or sold property at the same time as getting married, you may want to book an appointment with the professionals to get everything sorted. 

If you had a baby or gained a dependent, you’ll most likely be eligible for certain tax credits, but typically only one parent files for them. If this is your first tax season after having a child it might be worth the peace of mind to have an accountant provide support (especially if you’re claiming medical bills that weren’t reimbursed through private insurance or if you took an extended leave from work), although tax software will also guide you through the most basic questions needed to file correctly. 


5. Did you buy property? 

Buying property is a big deal, and easier to swing in some states over others (California, looking at you). No matter where you made it happen though, it’s an exciting accomplishment and worth celebrating. The IRS agrees, and that means there are some changes when you file (but they don’t provide champagne, unfortunately). In terms of how it impacts your taxes, this is one situation where it makes sense to use an accountant if it’s your first purchase, or if you’re now adding an income property. There are some deductions and credits you may or may not be eligible for, plus you’ll need to update your address with Form 8822 (assuming you live in your new property) and it can be a bit confusing to navigate without someone providing guidance. As with the other situations, there’s nothing stopping you from filing by yourself, but if you’re uncertain this could be a good time to call in the experts! 


6. Did you start investing? 

We all know that investing is important once you have your financial bases covered, and you should feel super proud if this past year was the first where you finally funded that investment account. Investing is handled differently when filing taxes depending on whether you used a government-sheltered account (like a 401(k) or Roth IRA) or a regular investing account (often called a brokerage account). If you used a 401k, your contributions were made with your pre-tax income, meaning you don’t need to do anything specific for your tax returns since the money was never taxed in the first place. For a Roth IRA, you get a tax refund for any money added now, but you’ll get taxed when you withdraw the money down the road after age 59½ . If you used an investment account that isn’t tax-sheltered, you won’t be able to claim a deduction, and you may also need to declare any income you made off of your investment, such as stocks you sold at a gain or dividends that were paid out. 

As you can see, this can all get a little confusing based on the exact investment vehicles you’re using and the amounts you invested, so if you’re unsure of what you need it could be best to go to an accountant. After you’ve done it once and know what to look out for, you can always try filing by yourself next year, and don’t forget to check out our investing guide to learn more about everything investing 101!