Tax DIY vs. preparer: Which makes most sense?

Ads for tax prep services and do-ityourself products are everywhere this time of year.

So, what’s the best way to tackle your 2019 tax return? Should you take the DIY approach, which may be a laborious but money-saving option? Or should you put your W-2, credit card statements and other receipts in a folder and head to a professional tax preparer’s office?

Three tax pros share their thoughts on the DIY vs. tax preparer question.

Dean Hedeker, a certified public accountant and owner and principal of Hedeker Wealth in Lincolnshire, Illinois, says tax software is great for basic returns, “like for someone who works at a company, has kids and not too many investments. This constitutes the vast majority of filers in the U.S. If you have substantial real estate holdings, other investments and/or a business of some sort, those returns can be more complex, and a tax professional is the best option to ensure everything is filled out correctly.”

Lloyd Sacks, a certified financial planner and managing director of the private client group at Sacks & Associates in Bridgewater, New Jersey, agrees.

“Most people do not have complex financial situations that require the use of a professional tax preparer or large accounting firm to handle their affairs,” he says. “Technology continues to streamline and simplify our lives. Lucky for us, that innovation has spread to the task of filing our taxes. Unless you have itemized deductions that exceed the standard deduction, multiple sources of income, are a business owner or have portfolio income, chances are you would be better served preparing your own taxes.”

Sacks himself is a Turbotax proponent for many reasons, including “their intuitive user interface,” he says. “It is not difficult to navigate around their site or use their software.”

Paul T. Joseph, a CPA at Joseph & Joseph Tax and Payroll in Williamston, Michigan, also recommends going the DIY route if your return is fairly simple.

“Preparing your own return is best suited for people who have one or two W-2s with no dependents,” Joseph says. “If you have dependents, you may qualify for child tax credits, educational credits and other types of credits which are more involved and should be done by someone familiar with tax preparation.”

According to Joseph, there are several benefits of using tax software.

“It checks all the calculations for you and in some cases will walk you through a simple form. Most of the tax software programs will allow you to e-file your return through their software package at a cost,” he says. “Also, most of the packages will provide a summary sheet where you can double check your work before filing the return.”

There are things to watch out for if you go the DIY route, Joseph notes.

“The cons of using tax software is that you are probably missing deductions you may be entitled to,” he says. “You essentially become your own tax professional and, therefore, there may be things that you qualify for on the return but are unaware of when you file your own return.”

It’s a different story for the self-employed, other business owners or filers with substantial net worth “who may have more multifaceted finances and derive income from multiple sources, which can quickly create a tangled web when it comes time to pay their taxes and file returns,” Sacks says. “Often what we see are underpayments requiring one of our advisers to search through previous years of returns and file amendments, something which the ordinary taxpayer seldom has to do.”

Other issues also come in to play when dealing with more complex situations. Those include the titling of property, estate planning and wealth transfer, all of which may require the use of a certified financial planner or professional tax preparer, Sacks says.