Should You File Your Own Taxes?

I get a lot of questions about whether or not you should complete and file your own taxes, especially this time of year. I could talk about this for hours, but I wanted to give you a quick, updated guide to answering this question for yourself. 

First, if you haven’t received your 1099 or W-2 from a client by now (mid-February), double-check your email. Because we have to file the 1099s electronically, it’s becoming more common for businesses to send the forms via email. These can easily go to your spam/junk folder, so if you’re missing a form, check there! 

Now, let’s get down to the subject at hand. 

If all you have are W-2s for you and your spouse, file them yourself. You will spend less time and money entering the information into tax software. Be leery of programs that claim to be free, however. There’s often fine print that indicates situations where you will be charged. 

What if you are an S-Corp, a partnership, or an LLC taxed as an S-Corp? Hire someone. Just pay the professional. Those tax returns are very different from the traditional 1040 you’re accustomed to. The forms are detailed, complicated, and easy to mess up. There are rules you won’t understand, so please hire someone who can help. 

What if you’re somewhere in the middle? If you are a sole proprietor or a single-member LLC, those businesses report their income on the 1040. But it can be tricky. A service-based business is the easiest to file on your own, and tax software will walk you through the questions you need to answer to complete your taxes. 

However, If you have inventory, rental property, a lot of equipment, etc., I suggest using a professional. These situations can go from simple to complex very quickly! 

Here is where I will also caution you about making mistakes. If you make a mistake on your tax return, fixing it is not as easy as logging back in, changing the number, and then resubmitting it. To fix a mistake on a tax return, you have to file ANOTHER tax return, called an Amended return. Yes, that is true, and no, you can’t make this stuff up! So it pays to go slowly, read the instructions, and make sure you know what information you are entering and why. 

There is one other situation where I think you can safely consider doing your own taxes. If you love reading rules, the fine print, and other tax information, feel free to do that and complete your own taxes. Plenty of people do tax returns on their own, but you really do have to be willing to read the pertinent IRS publications and find some guidance before you know what to report. There is zero shame in hiring a professional if the idea of doing all that reading makes your eyes glaze over and gives you a headache! 

If you get overwhelmed, don’t worry. It’s perfectly fine to file an extension and make an appointment with a tax preparer once their schedule frees up after April 15. If you think you might owe, I recommend making an online tax payment when you file the extension so that you will be charged less interest when you do eventually file your taxes. 

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