I get a lot questions around this time of year in regards to recommendations for filing taxes. I figure similar to other financial topics, tax preparation is likely misunderstood and with a lot of confusion. Your situation and experience might be different from mine, I thought I’d at least lay out what I do and why I do it.

How I file my taxes

I file my taxes using online software, H&R Block. H&R Block is one of the big ones, along with TurboTax. I find either of them to be trustworthy, and reliable and would recommend using either of them to most young professionals. It costs me about $90, as I have a few more complex documents to file (dividend and interest income and mortgage interest deductions) but for simpler taxes to file it’d be a decent amount less, or even free. It takes me about 2 hours to file all my taxes and is really easy to work through the process. I can e-file which means no printing, no mailing and no having to sign and re-scan. Easy stuff!

Why I file this way

I don’t have a ton of complexities that I feel would warrant the human interaction of a CPA (certified public accountant) to help with my taxes. I’ve got a few friends that pay $200 or so to file with an actual tax preparer. I don’t personally feel like I have the need to pay a little extra for the services of a tax preparer, although there’s something about the human interaction and assurance of a CPA. I’ve filed this way ever since I started filing taxes (when a 16 year old YoungMoneyFinance was cleaning pools and working at Dairy Queen) and it’s worked out fine so far. Looking forward, once I have kids, start saving for their college, start a business or buy a rental property I think I might look at little closer at an actual CPA for their tax filing services.

Why I might not file this way

For right now, using online software meets my needs. However, I could definitely see myself switching over and using an actual accountant in the future. This might be an actual accountant that I know in my friend group of from the recommendation of a friend (word of mouth is huge!) or it might be paying a little extra for a H&R Block (the software I use) tax professional to review my taxes with me. Things that would cause me to go that route: having a baby, having more complex investments or if my income continues to grow and my taxes get more complicated with more sources of income and deductions. Having a baby will involve lots more complexities, from healthcare expenses (definitely getting into HSAs), setting up a college fund for them and various deductions that come with a dependent (childcare expenses, claiming a dependent…). I could also foresee the need for more professional tax help if my investments get more complicated. Right now I’ve just got stocks/mutual funds and I’ve still got a little money in Lending Club which somehow is still making me money (current rate of return is 3.5%). In the future, I could see some investments in real estate; likely in the form of a rental property. Finally, with more income and more complexities will also come (hopefully) more deductions. The higher the stakes with more income, I feel the more worthwhile it is to have more than just an online software tool helping me out.

I hope that helps! For many of you, I would imagine that using online software like H&R Block or TurboTax would be sufficient. With simpler finances, they’ve served me just fine in the past, and I’ll plan to continue using them for the foreseeable future until I reach some of the milestones laid out in the previous paragraph. Best of luck in the tax season!

 How about you? How do you file your taxes?