5 Times You Should Never File Your Taxes by Yourself, According to Financial Experts
Sometimes it's not wise to do taxes without a professional at your side.
Taxes may be the one thing we all have to do every single year, but that doesn't necessarily make them any easier to file. And while you might take pride in your ability to file your taxes by yourself, in certain circumstances, you could be better off seeking out some assistance to avoid issues down the line.
"Taxes can be complicated, and sometimes it makes sense to use a professional," says Robert Farrington, founder of The College Investor. "The cost of using one could significantly outweigh any future issues. Plus, it could take a lot of time off your hands!"
So when is the right time to seek outside help? Read on for all the times financial experts say you should never file your taxes by yourself.
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After a major life change
Taxes are notoriously one of the only constant things in life. But as time goes on, major events could drastically alter how your report to the IRS. That's why experts say you may want to seek out an accountant when you've reached another milestone.
"If you have recently undergone a major life change such as getting married or divorced, having a child, or retiring, your tax situation may have changed significantly," Alex Oware, a certified public accountant and tax expert at JustAnswer, tells Best Life. "A professional accountant can help you understand how these changes impact your tax liability and ensure that you are filing correctly."
If you're self-employed
Charting your own career path as an entrepreneur or self-employed person can be as rewarding as it is challenging. But besides the self-discipline and expertise required to be successful, you might also need some help when it comes time to file with the IRS.
"If you start to have self-employment income or other complicated tax situations related to your salary, it can be very valuable to have a professional help you to both make sure you don't miss anything," says Farrington. "And they can make sure you don't mess up and subject yourself to an audit, penalties, or other issues."
This rule can also apply to money you're making passively or on the side. "If you receive income from multiple sources, such as investments, rental properties, or freelance work, you may also benefit from professional tax assistance," says Tim Doman, financial expert and CEO of TopMobileBanks. "These types of income can be difficult to navigate on your own, and a tax professional can help you ensure that you are reporting all of your income accurately and taking advantage of all the tax breaks available to you."
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If you've been audited
While filling out tax forms may be among the most dreaded of all annual events, arguably the only thing people fear more is running afoul of the IRS by accident. That's why experts say it's best to hire a professional after an audit or other issues with the agency.
"If you receive a notice from the IRS, it may be best to work with a professional accountant to ensure that you are responding appropriately and resolving the issue as quickly and painlessly as possible," Oware advises.
If you have a complicated financial situation
No two people's finances are exactly alike—that's one of the major reasons why filing your taxes can be so complicated to begin with. But if you're someone with a broad portfolio or a complex fiscal arrangement, you'll likely need someone to help you prepare your information.
"If your tax situation is complicated, such as owning a business, receiving income from multiple sources, or investing in stocks or other securities, it may be difficult to navigate the tax code and ensure that you are maximizing your deductions and credits," Oware says. "A professional accountant can help you understand the nuances of the tax code and ensure that you are filing correctly."
It's not just about avoiding mistakes. "A professional tax preparer can help ensure that you take advantage of all the tax breaks available to you while minimizing your tax liability," adds Doman.
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If you're short on time
We all know that taxes are due come April of every year. However, this doesn't change the fact that your schedule could already be jam-packed with other obligations. If you're feeling too fraught to tackle your financial information alone, you should bring in someone else to help ease the burden.
"Filing taxes can be time-consuming and may require significant resources, especially if you have to gather information from multiple sources," says Oware. "If you have a limited amount of time or resources, working with a professional accountant can help streamline the process and ensure that you are filing accurately and on time."
Best Life offers the most up-to-date financial information from top experts and the latest news and research, but our content is not meant to be a substitute for professional guidance. When it comes to the money you're spending, saving, or investing, always consult your financial advisor directly.