75% of Americans Plan To File Their Own Taxes — Why This Is a Good Money Move
Written by
Dawn Allcot
Edited by
Nicholas Morine
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A recent GOBankingRates study revealed that roughly three-quarters of Americans plan to file their taxes on their own this year, either using do-it-yourself tax software or completely by themselves with no assistance. Nearly one-third (31.4%) are going it alone, while 44% are relying on programs provided by H&R Block or TurboTax.
Nearly 22% use a certified public accountant (CPA) to help with their tax returns, while a small percentage (3%) rely on a tax lawyer.
Most people probably don’t need a tax attorney to file a tax return unless they are in potential trouble for tax evasion or tax fraud. But relying on the services of a CPA or a tax preparer could be a smart money move, depending on your situation.
A Reddit thread in r/tax explored the question: “Is it better to do taxes yourself or let someone else do it?”
The Case for Doing Your Own Taxes
First, understand that your tax returns are based on numbers and facts. As long as you plug the right data into the boxes on the form, you’ll get the same answer as a CPA regarding your tax refund or a liability you might owe. “Assuming your return is completed correctly, the result you get will be the same as having a professional do it,” got_me_some_popcorn pointed out on Reddit. “There’s no magic trick to getting a better result from a CPA.”
Redditor SaltyHasp agreed, “[I]t is mostly collecting 1099s and W2s and entering them into a tax program like FreeTaxUSA. You can do that yourself or pay someone to do it. Pretty much anyone can do that.”
Tomead64, a Reddit user who claimed to own a financial services office with two CPAs on staff, agreed that free online services work well for someone with W-2 income and simple returns. “Completing a simple 1040 with just W2 income will probably be a lot simpler than a pop quiz in your financial literacy class,” he said.
Another self-reporting professional tax accountant on Reddit said he highly recommends young people with W-2 income do their own taxes to get a feel for the process. “It’s an important skill to learn and your return will likely never be as easy as it is now,” Quentin_Taranturtle wrote.
Who Needs a Tax Preparer?
As you get older, your tax returns are likely to get more complicated. Hano_Clown is like many Redditors who said they did their taxes on their own when they only had one source of income. “I used to do it myself from 18 to 26 years old until I started getting assets, stocks, crypto… so now I use a CPA,” they said.
If you have more sources of income and more credits and deductions, you might want to shift the burden of preparing your returns to a tax professional. “Clients with businesses, oil leases, royalty income, rental property, or just in need of tax planning are better off with a qualified professional doing their taxes and can benefit from doing so,” Tomead64 wrote.
Likewise, if you itemize deductions on a Schedule C, have investment income, file as self-employed, use strategies like tax loss harvesting to reduce your tax bill, or qualify for lots of tax credits, there’s a greater chance you might miss something on your return. Errors can be costly, leading to a smaller tax refund, a tax bill, or even an IRS audit if one of your claims or deductions raises a red flag with the agency.
Redditor ImproveOrDieYoung pointed out the biggest benefit to hiring a CPA: “I prefer to use an accountant because it saves me the stress of worrying if I messed anything up. I don’t mind paying a premium for peace of mind,” they wrote.
Tax Software: A Compromise
Many tax software programs offer an option to get professional help from a tax expert. Often, this service costs more than the basic software, but it can be worth it. The majority of Americans (44%) told GOBankingRates they will use tax software for their 2024 tax returns. IRS Free File is also an option for taxpayers who fall under a certain income threshold.
The Bottom Line on Proper Tax Prep
It’s true that CPAs and tax preparers don’t hold any secrets to get you a larger tax refund. However, they might be aware of deductions you didn’t know about, or even tax strategies to help you keep more of your income. If you itemize deductions on a Schedule C, you can even deduct the costs of tax prep, making using a tax professional a smart money move in the long run.
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