How to File Your Taxes : DIY vs Hiring a Professional

In the beginning of your freelance career, it may be pretty simple to do your own taxes, but as your revenue streams increase, you may find that you need more and more guidance to file your income taxes.

While there are several benefits to doing your own taxes, hiring a trustworthy tax professional can make all the difference when it comes to tax time.

Find out how to file your taxes and determine whether you should DIY or hire a professional.

In this article: 

Should you file your own taxes?

There are various factors to consider once you’re prepared to file your taxes.

Filing your own self-employed taxes could save you nearly $500 per year as most Schedule C tax filing software costs less than $80 to file. The IRS even offers free efiling for taxpayers who have simple returns.

It’s also less time consuming to file your own taxes since you can do so on your own time. You don’t have to make an appointment with a tax pro and sit in their office for hours on end.

Still, this is definitely not a decision you should make hastily. Before deciding how to file taxes yourself, ask these important questions.

Are you good with numbers?

If you enjoy keeping track of all the numbers, transactions and receipts then by all means you’re the best person for the job. You know the ins-and-outs of your situation the best and can control everything accurately.

Is your tax situation simple or unchanged?

If you only have a few clients, don’t have any dependents and have no other investments or sources of income, you can easily file your taxes on your own.

Do you own property or investments?

Once you acquire property, have multiple businesses, investments or retirement accounts, it can be difficult to stay up-to-date on everything.

Each type of asset comes with deductions and credits that can be very beneficial to your taxes. Having a professional to help in the case, is probably the best idea.

Do you understand tax laws?

If you can browse the IRS website, comprehend their tax jargon and stay up-to-date with changing tax laws, then go ahead and feel confident about filing your taxes.

Some tax forms and laws are simple and can be interpreted with a little research. Independent Contractor, Sole Proprietor and LLC Taxes Explained in 100 Pages or Less, is a great guide if you’re attempting to do your own self-employed taxes.

However, as we get older and our businesses become more complicated, it’s important to evaluate how much tax advice and help we need.

Should you hire a tax professional?

I’m slightly partial to hiring a professional as a self-employed freelancer and tax expert myself. Still, I know that it’s really only necessary for certain situations.

For example, if your income and expenses are always changing, it’s usually best to hire a tax pro or accountant.

Hiring a professional comes with additional benefits. You don’t have to stay updated on the always-changing tax laws as you can pick their brains anytime. You’ll have another pair of eyes to catch any mistakes or missed tax deductions. They may also know about additional tax savings that you may not be aware of.

If doing the books and tracking the numbers just isn’t your forte, there is no reason to get yourself into trouble with the IRS or get in over your head. Hiring a tax preparer is like finding the right tool for the right job, the whole thing can be done correctly from the beginning (and potentially save you money in the long run).

Is it worth it to hire a tax preparer?

Starting a new business or hobby venture takes expert knowledge. You wouldn’t jump off a diving board without swimming lessons, so you shouldn’t try to do your business taxes without some guidance. Tax experts can help you find lots of deductions and prevent you from getting into trouble. Those savings and peace of mind alone, can pay for themselves.

If you got married/divorced, had another child or lost a spouse, you might need help finding the best filing status for that year. Some of them are easy, but others (like being a widow) have time sensitive dates. Also, as your dependents get older tax credits and deductions might expire depending on their ages. Determining these situations accurately takes someone who is knowledgeable.

How To Find The Best Tax Pro Near You

Hiring the right tax professional could honestly make or break your freelance business.

A tax preparer is privy to all your financial details, including everything from your income, bank accounts, relationships and business ventures.

First and foremost, you want to make sure this person is qualified and trustworthy.

Here’s how to find the best tax professional near you.

1. Look for a pro who works with freelancers

In other words, you want to work with a tax professional who specializes in your type of business.

The IRS is a bit behind on the laws related to running an online business, so a knowledgeable CPA or tax pro will be able to help you successfully navigate these unknowns.

In the past 15+ years, I’ve helped many self-employed tax professionals who also run their own business online.

I highly recommend working with the following tax and bookkeeping pros.

2. Take advantage of online resources

I can’t stress this fact enough, but if you have an online business you need to work with a tax expert who’s online. DUH, right?! But it’s an easily overlooked fact.

Use the below go-to resources for finding the best tax professional near you. They’re tried and tested by me and also recommended by many other freelancers within the Careful Cents community.

  • ProAdvisor Directory for QuickBooks
  • Xero Accounting Advisor Directory
  • Search the IRS directory
  • A simple Google search using your location

Depending on which bookkeeping software you use — whether it’s FreshBooks or QuickBooks — you can find a pro who specializes in these programs.

I’m actually a Certified FreshBooks Bean Counter, so I too can answer any questions you have about the program.

3. Verify the PTIN and other certifications

Every legit tax professional must have a valid PTIN (Preparer Tax Identification Number) that’s included in the signature part of the tax return.

You can see this section in the image below, next to the “Paid Preparer Use Only” section.

PTIN for tax return

If this section is blank, you may be encountering a problem with the legitimacy of your tax pro. You can easily verify a tax preparer’s PTIN using the National Directory Registry of Professional Tax Return Professionals.

Another important aspect of a good tax professional is that they must participate in continuing education programs. This helps keep tax professionals on the cutting edge of tax law changes and various updates that are happening that may affect you.

For this reason, they’re often members of professional organizations, such as the National Association of Tax Professionals or the American Institute of Certified Public Accountants.

Verify their credentials and inquire about any continuing education or other certifications they may possess.

4. Ask for recommendations

Who do your friends, family and fellow entrepreneurs use to file their taxes? Ask around for recommendations and referrals for the best tax preparers in your area.

This is something I see a lot of within business-related Facebook groups that I’m a part of. Since these groups are often closed or private, you can be sure that the advice will be non-promotional and usually very helpful.

Just keep in mind though, that someone else’s tax preparer may not be the best fit for your needs or business.

Take recommendations with a grain of salt and don’t be afraid to test out a few different accountants before finding the right one.

5. Compare tax prep fees

The best tax professionals usually charge by the hour or by the number of forms/complexity of your return. If you come across someone whose rates are based on the size of your refund, this is definitely a red flag.

When it comes to preparing taxes, a tax professional’s rate should not be based on their performance of how much money they can get you in return.

According to the U.S. Tax Center, a survey done by the National Society of Accountants showed that the average cost for preparing a 1040 along with a Schedule C Tax Form (for being self-employed) is $370.

Other tax forms, such as preparing an 1120 Tax Form (for C corporations) costs upwards of $806, so be prepared to pay several hundred dollars for the best tax filing services.

Should I Do My Own Taxes or Hire a Tax Pro?

In the end, DIY taxes versus hiring a pro is completely up to what you’re most comfortable.

You can always find a tax expert to get you started and then phase them out if you don’t need their on-going advice.

Trying to find the best tax professional as a freelancer? Check out this list of online resources, recommendations and tips for hiring the best tax professional near you.

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Read Comments

  • Comment Author image blank
    Broke Gal NYC
    I do my taxes myself, but I usually ask tax pro friends for input if needed. If I ever started feeling really overwhelmed I would hire someone. Your friend is lucky to have you to check her stuff.
    • Comment Author image blank
      Carrie Smith
      Thanks! You can always ask me any questions too, I'd love to help if I can. :)
  • Comment Author image blank
    Jeffrey Trull
    I'm still on the fence on this for this year's taxes. I typically feel like I have a good handle on my return and always do it myself, but I did start a business last year and I am filing a Schedule C for the first time. There's a few things that I'm uncertain about with that, which is why I'm considering meeting with a professional.
    • Comment Author image blank
      Carrie Smith
      I think once you meet with a professional and get them to help you for the first time, you can probably file your own taxes every year. You're a smart guy, so once they get you on the right path I think you can handle it. :) If you have any questions, I'm available if needed. I'm a pro at schedule C's.
  • Comment Author image blank
    Modest Money
    Smart idea to take the income tax course.  That must help out a lot and could always act as an additional source of income around tax time. Personally I usually do my own taxes, but I have tried using a professional in recent years.  I was hoping that they could find other deductions to claim on my home business.  If you do decide to use a professional for taxes, check sites like craiglist.  There are plenty of professionals doing taxes from home for much cheaper than H&R Block.
    • Comment Author image blank
      Carrie Smith
      Taking the tax class was the smartest decisions I've made in my life. I like to be in control of my finances, so if I don't know very much about taxes, investing or something like that, I will research it and study till I do. Good tips on using sites like Craigslist to find a tax professional. I never thought about that. Thank you.
  • Comment Author image blank
    I always file my taxes with an accountant. I work with numbers all day and the last thing I have the patience for at the end of the day is my own personal income taxes.  Also if family and friends hear about me doing my own taxes they may ask me to file theirs and I may feel obligated to say yes. I have a great accountant and I know that I personally couldn't do a better job.
    • Comment Author image blank
      Carrie Smith
      That's a really good point. I actually had one of my co-workers do the number crunching for my taxes this year, because I work with it all day long. It's nice to have a second opinion too, and a second pair of eyes to catch mistakes.
  • Comment Author image blank
    I own businesses, so it is very helpful for me to hire a professional who knows nuances of tax laws and latest changes to help me save on my taxes. 
  • Comment Author image blank
    Alex Dean
    I know it's early, but I want to be prepared for next year's tax season and would like to hire someone to help me out. It's good to know one of the best to hire a professional, is to first ask family and friends for recommendations. That way we can compile a list of possible accountants, and then be able to find the right one for us.
  • Comment Author image blank
    Ridley Fitzgerald
    Thanks for the great tips on finding a tax pro. I want to take advantage of tax returns, so I definitely want to trust a pro, instead of myself. I'll be sure to find someone who works with freelancers, if that means they have more skills.
  • Comment Author image blank
    Deb Pearl
    I have been having a really hard time doing my taxes and I think hiring some help would be really good for me. That is a good idea to hire someone who specializes in my type of business. That would make it easier for me and them if they knew what kind of work I was doing. Thank you for the information and tips!
  • Comment Author image blank
    Anthony Wally
    I'm not very good with numbers or taxes, so I think I'd definitely be one of those people you mention that could benefit from hiring a professional. I certainly wouldn't mind doing so to help maximize my finances. Do you have any suggestion on how to go about finding a qualified professional to help me out?
  • Comment Author image blank
    Professional Tax Consultants
    Before using any Web service, check its privacy and security policies to see how well the company plans to protect your information. Ideally, your information should not be shared with anyone without your specific permission. Consumer Reports will be testing both software and other tax preparation services in the future.
  • Comment Author image blank
    Patricia Wilson
    I never knew that you can opt to discontinue a tax professional's service when you think you can already manage to do it on your own. I'm not really bad with numbers but there are certain technicalities about filing taxes that gets me nervous. Inadvertently committing a mistake is not something I'd look to do, so I hire a tax professional every tax season. Now that I know better I can probably just hire one for a short span of time just enough for them to go over what I have already done. Thanks for the advice!
  • Comment Author image blank
    Silas Knight
    It's good to know how to find a CPA. I like how you pointed out that one of them will be more up to date with running an online business than the IRS, or others. If I ever open up an online store, I'll be sure to hire one.
  • Comment Author image blank
    Khorae Olivier
    I like how you talked about the difference in professional and software pricing so you can think of which one to choose for yourself. My friend is looking into doing their taxes and really isn't sure what they will be able to afford since it's their first time ever filing. Thank you for the information about how it's a red flag if someone's rates are based on the size of the refund they can get you.
  • Comment Author image blank
    Katie Wilson
    Thanks for the advice about finding a tax service who works as a freelancer. It would also be smart to research them online in order to find out more about their qualifications and experience. My husband and I are looking for a tax service to help us deal with our state tax return, so we'll have to consider if they are a freelancer first.