When Tax Help Needed?

The decision of whether to do your own taxes or hire someone keeps getting more difficult.

Companies continue to offer updates to their do-it-yourself tax tools. With names like CompleteTax, Jackson Hewitt Online, H&R Block at Home and, of course, TurboTax, the tax solutions purport to make doing your own taxes easier.

But even as the Internal Revenue Service plans to regulate paid tax preparers to help prevent taxpayers from paying for bad advice, the tax code continues to get more complicated (it’s now at nearly 14,000 pages). The I.R.S. has also been increasingly filing claims on property or income against taxpayers with little or no property and auditing the middle class, which means you may end up with a lot of extra headaches if you don’t have extra help.

In fact, even the commissioner of the I.R.S. doesn’t do his own taxes. He is among the 60 or so percent of Americans who hire tax preparers to do their income taxes.

Still, you may be unsure of whether your particular situation warrants extra help. So here’s some guidance.

One factor to consider is the convenience. Pay someone to do your taxes if you simply don’t want to spend the time doing them yourself. And you should also look for professional tax help if you find yourself scratching your head as you try to answer the questions in the do-it-yourself tax preparation software.

If your taxes are relatively simple for instance, you just have a W-2 form from your employer and one interest-bearing account then you should be able to handle doing your own taxes.

“When people’s financial situation gets more complicated, they should not be doing their own returns”. The situations are:

• You are self-employed.
• You are an active trader in securities.
• You are part of a limited partnership (think hedge funds or private equity funds).
• You have a trust fund.
• You are going through a major life change like a divorce or retirement.
• You need to file in multiple states or cities.
• You have a significant amount of money in I.R.A.’s and are grappling with how the new Roth I.R.A. rules will affect you.

Other articles like this one offer more situations where you might want to get help, including if you sold a home through a short sale or receive rental income.

What do you think is missing from this list? If you fall into one of these categories, do you seek tax help? Why or why not?

But if you fall into one of the situations propose to talk with tax professionals.