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What are "complicated" taxes that require a professional? (USA) (lemmy.world)

submitted 8 months ago by Copernican@lemmy.world to c/personalfinance@lemmy.ml

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I always see advice about which software to use and there's always the advice that FreeTaxUSA is the best bang for your buck and does everything you need for when your taxes are "simple." I've used and thought it was great for years. But as my career has grown and no longer filed as a single I've begun to question when my taxes and earnings become "complicated" to the point where it is worthwhile to have a professional do my taxes. Are there general recommended bullet points or scenarios?

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[–] sugar_in_your_tea@sh.itjust.works 18 points 8 months ago

Here are examples of things I consider simple:

W2 income and you're <= 24% income tax bracket
most of your investments are in tax deferred/tax advantaged accounts (401k, IRA, etc)
mortgage, car loan, etc
married filing jointly, head of household, or single
modest amount of charitable donations

And here are some things I consider "complex":

married filing separately because you think it's more efficient for you
owner of a business
multiple real estate investment properties
lots of after tax investments (5 figure profits on an average year)
1099 income with lots of expenses
regular gambling income or other "irregular" income

The vast majority of people have "simple" taxes, so you really need a good reason to think you need a professional. That said, paying once and having them walk you through it can be educational.