I always hear this, but what does "simple" mean? Do you recommend a professional if you have rental income? Stuent loan interest? Stock sales? Stock options? Convert a 401(k) to an IRA? Inherit money? Own a small business?
I've done all these things painlessly with regular tax software. I've also tried a professional CPA once, and he was useless. Just sat there asking me every question that the software normally would, and then typing my answers into his software. Nice guy, but not worth $400 compared to $50 software.
> Do you recommend a professional if you have rental income?
Unless you know exactly what your cost basis is, yes. It gets complicated with construction loans, HELOCs, refinances, having lived in a property for quite a while before renting, etc.
Even as a full-time college student, I've used a professional, and I'm glad I did. He did things as straightforward as claiming relevant education credits to more esoteric such as maximizing refunds around housing stipends for summer internships. I didn't have to do much else other than reach out to my accountant and provide a W2.
It's fully within the bounds of tax law, something which I (and my accountant) made very clear I want to stay within. Our tax code is a joke, yes, and in need of actual reform, but this itself doesn't put me in any legal grey area whatsoever.
I would hope anyone who made it through A US K-12 education would be able to do their own taxes if all they have is W-2. Even 1099/student loan interest deductions/etc is pretty easy.
I would say it only gets really complicated once you venture into dealing with equity and AMT and stuff.
It’s funny though that people will scour the web and clip coupons to save money, but they won’t research how their biggest expense (tax) is calculated.
Researching how taxes are calculated takes up valuable time and mental capacity, and you have to reeducate yourself every couple years on whatever new tweaks to the tax system happened.
> Researching how taxes are calculated takes up valuable time and mental capacity
So does deal finding and coupon clipping, which is what the parent was comparing to.
If you have just a salary, no mortgage, and no stock/equity transactions, nothing has changed in 20 years, and it takes all of 10 minutes to fill the Federal form out (and I'm being generous). Every once in a while there is some extra credit, but it's usually prominently advertised. A simple hack is to look at the previous year's tax form and compare to see if anything has changed, and look up the guide related to those entries.
If you do basic stock transactions (RSU, SPP, buy and sell), then it's a bit more pain, but still easy.
Deductions are things one can easily miss, but even then, once you figure it out, you just have to keep an eye out for changes to deductions. The recent tax changes screwed it all up (although they also made taxes overall easier for those not in high COL states), but the usual deductions to watch out for are mortgage interest, state taxes, property taxes, and charitable donations.
If you have other things going on (side business, etc), then I would suggest paying for a CPA.
Worst case, just plug the numbers into TT and see if what you get is the same. If they imply you can get more, then pay someone to do it for you.
I know people like to think it will take a lot of effort, but at least for my salary, if I count the hours it takes for me to do all this, it's always cheaper than paying a CPA.
My experience has been the opposite. Unless I'm prepared to spend literally thousands of dollars, tax preparers don't seem to be able to do any better than I can. They largely make me do the hard stuff (splitting RSUs by state, fixing incorrect 1098Ts) myself anyway.
Unless you own a small business your taxes are really simple though and it isn't money well spent. The pros try to tell you they are doing something hard, but your situation isn't unique or hard.
I've done all these things painlessly with regular tax software. I've also tried a professional CPA once, and he was useless. Just sat there asking me every question that the software normally would, and then typing my answers into his software. Nice guy, but not worth $400 compared to $50 software.