There’s no shortage of do-it-yourself software services for filing taxes — and a lot of them let you do the most basic stuff for free or close to it. But this year you might want to consider setting a piece of your refund aside to pay for the services of a professional accountant. 2020 was a tax year like no other, and a little money upfront could save you much more down the road in the form of mistakes never made.
Hustling Makes Taxes More Complicated
Millions of Americans suffered financial disruption in 2020 and many were forced to adapt, adjust and find new ways to bring in cash on a gig-by-gig basis. If you were among the multitudes who opened an Etsy shop, did some freelance writing, wrote code on a contract basis, or some similar side hustle, you’ve officially moved beyond the quick and easy world of W-2 taxpayer status. When money is coming in from different places in inconsistent amounts, taxes get more complicated and more likely to require professional help.
You’re Probably Going To Pay Extra Anyway
Even if you usually DIY your taxes with online software, don’t expect to keep using the free version if your income situation did become more complex in 2020. The free version is usually free only for the most basic services on federal returns — namely, W-2-based 1040s and little else — certainly not 1099-misc forms from your side hustle. That’s precisely the reason that the big online tax services like TurboTax list self-employment software at or near the top of their pricing structures. The point is, people who took on a side gig are going to pay to file their taxes anyway. Why not pay a little more for professional help to avoid novice mistakes that could cost you more in the long run.
Get Ahead: Tax Year Deadline Dates You Need To Know
Now Is a Good Time To Reset Anyway
Even if you didn’t work a side gig to get through the pandemic — or you didn’t change jobs, get fired or experience any real turmoil of any kind — this still might be the year to hire a tax pro just the same. 2020 was born for tax errors. First of all, Tax Day 2020 itself was extended by three months from April 15 to July 15, something that almost never happens, but the extension deadline remained the same. Then the IRS announced it was changing the deadlines for the estimated quarterly payments that independent contractors and the self-employed are required to pay every three months.
Did You Know: 8 New or Improved Tax Credits and Breaks for Your Return
Some people received two federal pandemic-relief stimulus payments. Others received none. Others received one and are hoping to get the second in the form of a rebate when they file their 2020 returns. All in all, it was a jumble. A visit with a tax pro can buy you peace of mind and the certainty that you’re moving into what will hopefully be a return to normalcy with everything in good order.
You Don’t Have To Actually Hire an Accountant
If you don’t have an accountant, and you don’t have any idea how to go about vetting or hiring one, join the club — and don’t worry. Many of the top online services let you buy into legitimate, professional tax assistance right through their software. Yes, it costs more, but certainly not as much as a full-service CPA, which is likely more than the average taxpayer needs anyway if they’re just looking to avoid mistakes and get the biggest refund.
TaxAct, for example, offers more basic live, professional tax and accounting services for about $140 at most. TurboTax offers several pricing tiers, including full-service professional tax help, which goes all the way up to nearly double that amount. There are also hybrid options like H&R Block, which has tens of thousands of tax professionals who can assist you online or in one of their thousands of nationwide physical locations, should you want to visit face-to-face.
More From GOBankingRates
- These Are the Best Banks of 2021 – Did Yours Make the Cut?
- 31 Hidden Ways You’re Bleeding Money Every Month
- Top 100 Banks Leading the U.S. in 2021
- How To Rebound From a Bad Financial Year: 2020 Edition