Platforms such as TikTok, Reddit, ChatGPT, and Google provide ample resources for tax assistance today.

But does that mean you should confidently prepare your own taxes this year?

Tax-related matters can be quite complex. Your decision to file independently hinges on the intricacies of your financial situation, your tolerance for navigating detailed paperwork, and any recent significant life events.

Typically, individuals who choose to file their own taxes are younger and possess fewer assets. According to an IRS study in 2021, 53% of all taxpayers utilized a paid tax professional; however, Generation Z opted for professional help at a notably lower rate than older generations. Just 33% of those aged 18 to 24 sought a tax professional’s help, in contrast to more than 50% of every other age group.

Middle-income individuals, making between $75,000 and $90,000, were the most likely (59%) to hire a tax professional, as per IRS findings.

There are advantages and disadvantages to filing taxes on your own, using tax software, online resources, social media, and AI, or opting for professional assistance.

We’ll break down these factors to help you make a well-informed choice. A poor decision could result in financial loss or potentially trigger an audit.

When is it wise to DIY?

Handling your own tax return might be suitable if your income sources are limited to a W-2, a few bank accounts, and some 1099s, especially if you plan on claiming the standard deduction, which is a fixed amount that lowers your taxable income.

This approach could save you money and allow you to complete your tax return swiftly using basic tax software or using the free forms available on the IRS site.

If your taxable income is below certain thresholds, if you have a disability, if your English language skills are limited, or if you are elderly, you could qualify for one of the IRS’s free filing programs.

You can verify your eligibility through the IRS website.

This year, the standard deduction amounts are $14,600 for single filers and separate married filers; $20,800 for heads of household; and $29,200 for couples filing jointly.

If your deductions surpass those limits, you might want to detail them to lower your taxes.

Typically, opting for itemized deductions follows significant life changes, according to Mark Steber, chief tax information officer at Jackson Hewitt tax preparers.

For instance, “if you purchased a new home, that is one of the key life changes that will significantly impact your tax situation,” Steber explained.

Itemizing does require more time and paperwork, but it doesn’t necessarily mean you need to hire a professional.

If your deduction list is simple and you’re organized, the average person can manage it. If you encounter difficulties, you can always turn to ChatGPT or other AI tools for basic questions and definitions, ensuring to validate your findings by consulting multiple sources.

You can also find information on the IRS website or reach out to the IRS directly, but be prepared for potentially lengthy hold times.

However, exercise caution when seeking tax advice on platforms like TikTok and Reddit. Sometimes the responses can be incomplete or inaccurate. A report by Paxful in 2021 revealed that one out of seven tax-related videos from TikTok finance influencers was misleading, and only 10% of influencers are candid about their qualifications.

If all of this seems overwhelming, tedious, and daunting, consider reaching out to a professional, as advised by accountants.

“It’s a balance between cost and time,” stated Mark Jaeger, vice president of tax operations at TaxAct.

Additionally, a tax professional can ensure you take full advantage of credits and deductions. Keep in mind, if you overlook a credit or deduction while preparing your tax return, no one will rectify it, Steber cautioned.

“If you exclude it, it stays excluded,” Steber cautioned. “People often assume the IRS will correct errors, but that’s only partially true. The IRS will only correct missing income, not missing tax benefits.”

When is it advisable to hire a tax professional?

You should consider hiring a professional anytime your tax situation becomes complicated.

Engaging a tax expert is a wise choice following significant life events such as marriage, divorce, childbirth, buying or selling a home or business, dealing with a serious health issue, or retirement. It’s also beneficial to employ a tax professional if you have income from multiple sources, need help with investment losses, received an inheritance, or managed an estate.

Any of these circumstances can open up additional deductions or credits for you, according to tax advisors.

And with tax laws being constantly updated, amounting to more than 2,652 pages (or over 1 million words compared to the King James Bible’s 788,280 words or War and Peace’s 560,000 words, according to the non-profit Tax Foundation), it can be overwhelming to keep up with changes.

“Tax matters are the most complicated financial transactions you face annually, and the tax code is nearly 70,000 pages long, with new regulations introduced every year,” said Steber. “Tax professionals are equipped to comprehend every detail, particularly when life circumstances get complex – such as marriages, divorces, new dependents, cryptocurrency investments, and more.”

“Think of it this way: while you can cut your own hair or fix your plumbing, it’s possible to make mistakes that may lead to greater issues than if you had sought a professional’s help initially,” he added.

How should I select a tax professional if I decide to hire one?

Selecting the right tax preparer is crucial. They will have access to your most sensitive financial information, so it’s essential to feel confident they will accurately file your tax return.

Be particularly wary of ghost preparers, who often submit incorrect or fraudulent returns and neglect to sign the completed tax forms, Steber cautioned.

Remember, you are ultimately responsible for your tax return, regardless of who completes it.

The IRS provides several tips for finding a reputable tax professional:

• Verify the preparer’s qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications allows taxpayers to locate preparers with specific qualifications.
• Investigate the preparer’s history. Inquire with your local Better Business Bureau about the preparer’s standing, including any disciplinary actions or licensing issues. Other organizations that may help include the State Board of Accountancy for certified public accountants, the State Bar Association for tax attorneys, and the IRS’ enrolled agent status page.
• Inquire about service fees. Steer clear of preparers who set fees based on a percentage of your refund or boast about generating larger refunds than competitors.
• Ensure the preparer remains accessible after the tax deadline.
• Provide necessary records and receipts. A good preparer will ask for your documents and receipts, along with questions to ascertain total income, tax deductions, and credits.
• Never sign a blank return. No tax preparer should request that you sign a blank form.
• Review everything before signing. Don’t hesitate to ask for clarification if part of the return is unclear. You should feel assured about your return’s accuracy prior to signing.
• Confirm refund information. Verify the routing and bank account numbers on the final return for direct deposit, or check refund details if it’s to be issued differently.
• Verify that the preparer signs the return and includes their Preparer Tax Identification Number. All filed returns must have the preparer’s signature and ID number by law. However, this ID is not mandatory on the taxpayer’s copy of the return.

Medora Lee is a reporter focused on money, financial markets, and personal finance.