Whether to do your own taxes or hire an accountant comes down to three numbers: the fee, your own hours at what your time is worth, and the cost of an error you might miss. A wage earner with one or two forms usually comes out ahead alone. Self-employment, rentals and messy records tip it the other way.
What does doing your own taxes cost next to an accountant's fee?
Doing your own taxes costs software or nothing, plus your hours. Hiring an accountant costs their fee, plus the hours you still spend gathering records for them. Neither side is free. The fair comparison adds the money and the time on each side, then adds an allowance for the errors each route is likely to make.
The money side of doing it yourself
The IRS runs a program called Free File. Its page on IRS Free File lists guided tax software for people with an adjusted gross income of $89,000 or less, and Free File Fillable Forms for any income level. Fillable Forms are electronic versions of paper forms with little guidance, so they suit people who already know which lines they need. Above the income limit, or for a state return the free option does not cover, commercial software charges a fee that varies by product and by how many forms you need.
The money side of hiring
Accountant fees vary widely by region, by credential and by the forms involved. A return with a business schedule or a rental usually costs more than a return with only wage income. The best way to know is to ask two or three local offices for a quote with your actual forms in hand. Watch for a fee quoted as a share of your refund, which rewards a bigger refund rather than a correct return.
Who prepares returns
The IRS page on choosing a tax professional lists certified public accountants, enrolled agents, attorneys and others who prepare returns. It notes that anyone with a Preparer Tax Identification Number can be paid to prepare returns, and that skill levels vary. It also points to the IRS directory of preparers with recognized credentials, which is a free way to check a name before you book.
Your hours on a self-prepared return, priced at your own rate
Your hours are the hidden fee on a do-it-yourself return. Count the time to gather forms, sort statements, enter numbers, read help screens and check the result. Multiply by an hourly rate that reflects what that time is worth to you, such as your take-home pay per hour or what you would earn freelancing instead.
Most of that time is not the software. It is the records. Typing a year of card rows into a deduction list, or hunting through PDF statements for each medical payment, takes far longer than answering the interview screens. Cutting that step is where the biggest saving sits for anyone who itemizes or has business income.
A worked comparison for two example households
The figures below are made up to show the method. Use your own quotes, hours and rate.
| Item | Household A: wages only | Household B: wages plus freelance |
|---|---|---|
| Forms | W-2, one 1099-INT | W-2, two 1099-NEC, 1099-INT, card statements |
| DIY software | 0.00 (Free File) | 90.00 |
| DIY hours | 3 | 14 |
| Hourly value of your time | 30.00 | 30.00 |
| DIY time cost | 90.00 | 420.00 |
| DIY error allowance | 25.00 | 300.00 |
| DIY total | 115.00 | 810.00 |
| Accountant fee (example quote) | 250.00 | 650.00 |
| Your hours gathering for the accountant | 1 | 5 |
| Time cost of gathering | 30.00 | 150.00 |
| Accountant error allowance | 10.00 | 75.00 |
| Accountant total | 290.00 | 875.00 |
In this example Household A should clearly do it alone, and Household B is close enough that one change decides it. If Household B cuts the gathering hours by getting statement rows into a sheet quickly, both totals fall, but the do-it-yourself total falls more, because more of its hours were gathering.
Counting your hours honestly
People tend to remember the evening they spent in the software and forget the rest. Keep a rough log this year: the hour spent finding last year's return, the two evenings sorting card statements, the call to a bank for a missing form. That log is the most useful input for next year's decision, because it replaces a guess with a measured number.
Also count the hours an accountant does not remove. You still collect the forms, answer their questions and review the draft they send. For a simple return, those hours can be close to the hours of doing it yourself, which is why hiring rarely pays for wage-only households.
Where the error allowance comes from
The error allowance is a rough guess at the money a missed deduction or a wrong entry would cost, times how likely it is. It is honest to set it higher for the route you are less sure of. A missed home office deduction or a forgotten 1099 changes the result far more than a typo in an address.
Which records tip the choice toward an accountant?
Records tip the choice when they contain items that need judgment, not just entry. Business income without forms, a rental property, a home sale, stock sales with missing cost figures, or several states all need decisions about how to treat a number. Software asks the questions, but you still have to know the right answer.
Records that are fine to handle yourself
- Wage forms from one or two employers.
- Bank interest forms. These are a simple entry, though it is worth checking each one against your statements, as described in matching 1099-INT bank interest to your statements.
- A handful of 1099 forms for freelance work that you can add up. Collecting them into one sheet first, using the steps for getting 1099 PDFs into Excel, makes the totals easy to check.
- Standard deduction with no itemizing.
Records that point to a professional
- Freelance income with no forms, where the bank deposits are the only record.
- Expenses you need to split between business and personal use, such as a car or a phone.
- A rental, a sale of property, or an inherited asset.
- A letter from the IRS about an earlier year.
- Several years of unfiled returns.
None of these makes do-it-yourself impossible. Each one raises the error allowance in your comparison.
Accountant fee drivers you can shrink before the first meeting
The parts of an accountant's fee you can shrink are the ones that pay for sorting. An accountant who receives organized statements, a summary of totals and the year's forms in one folder spends their time on tax questions, not clerical work. Less sorting usually means a smaller or steadier bill.
What to hand over
- All tax forms, in one folder, with a list of what you expect so missing ones stand out.
- Bank and card statements for the year, one folder per account.
- A sheet of totals by category, built from the statement rows, with the rows behind it.
- A short note on anything unusual: a move, a new job, a large gift, a debt paid off.
Turning a year of PDF statements into rows is the slow step. CheapBankConvert is being built to convert one statement for a one-time price, with a bundle for a stack, and free previews of the first two pages. It is in early access, so the homepage shows when it opens.
Paying the bill itself
A large tax bill or preparer fee sometimes ends up on a credit card. If you plan to move that balance to a card with a lower rate, the transfer fee is part of the cost. The worked numbers in when a credit card balance transfer fee saves money show how to check whether moving it pays off before the interest does more damage.
When not to do your own taxes, even with good software
Do not do your own taxes when the cost of a wrong answer is large and you cannot check it. Software prevents arithmetic errors, but it relies on you to answer its questions correctly. A wrong answer to a question you did not understand flows straight onto the return.
The same logic applies to the person you hire. The IRS page on choosing a preparer is a reminder that skills differ, so pick someone who has handled returns like yours.
These situations usually justify paying, at least for one year:
- Your first year of self-employment. Setting up how you handle business expenses, estimated payments and records affects every later year.
- A year with a big one-off event, such as selling a home, receiving an inheritance or exercising stock options.
- Unfiled years or an open IRS letter.
- A business or rental with records you have not reconciled to the statements.
A middle path
Some people prepare the return themselves and pay a professional to review it, or pay for one year of help and copy the approach in later years. Both keep the learning with you while capping the risk in the year it is highest. Either way, keep the folder and the sheet you built. Next year's comparison starts from much better numbers.