DIY Tax Filing vs. Hiring a Tax Professional: How to Decide

Filing your own taxes can be fast, cheap, and educational. Hiring a professional can save you money and reduce errors when your situation gets complex. In this episode, Ryan maps out exactly where the line is between the two, based on what is actually in your return, not just how you feel about it.

Simple W-2 income, standard deduction, no dependents or investment accounts? Software probably handles it fine. Self-employment income, rental properties, a major life change, or retirement account withdrawals with different tax treatments? A CPA earns their fee. Ryan also makes the case that proactive tax planning, not just annual filing, is where working with a professional adds the most long-term value. This is education, not tax advice; consult a CPA about your specific situation.

Find "Your Fiscal Physical" the book on Amazon

If you have suggestions or feedback, please email us at: Podcast@AlchemyWealth.com

And, as always, Stay the Course!

Transcript

Podcast Introduction

Speaker 1 0:01

Welcome to the Fiscal Physical Podcast . Join us each week as we sit down with the founder of Alchemy Wealth Management and author of your Fiscal Physical , Ryan Nelson . Tune in to gain valuable insights and practical tips as we simplify complex financial concepts into digestible lessons . From budgeting to retirement planning , this podcast is your go-to resource for mastering financial literacy .

Aaron Hoisington 0:33

Welcome everybody to this week's episode of the Fiscal Physical Podcast . My name is Aaron . I am here with Ryan Nelson , founder of Alchemy Wealth Management . Published author . Find his book on Amazon . You will not be disappointed , ryan . How are you today ? Mr Published Author , I'm doing really really well . How about yourself ? I'm doing great . Nice , you threw in a couple of reallys there . That's right . That's always good . That's how you know that something's going really well . That's exactly right . I'm doing

Tax Filing Dilemma: DIY or Hire?

Aaron Hoisington 1:09

good , man , I'm doing good .

Aaron Hoisington 1:09

You know , as , as , uh , you know , the year kind of creeps to the end here , uh , you know , one of the things that is is coming up is a tax season , as they call it . Um , granted , as we've mentioned several times , we are definitely not , uh , tax professionals here , so take that , uh , with a grain of salt . But I believe you know I'm at this time I'm 34 , I think are you 35 or 34 ? I'm 35 . 35 . Gotcha . So you've probably filed taxes for 17 , 18 years , something along those lines . Like it's kind of funny to put that into perspective . I have as well . So you know , we've had our fair share of , you know just different , I guess , life events that have happened . So you think back on when you probably filed at 18 versus like 34 is probably a little bit different , so we have some experience in that case .

Aaron Hoisington 1:46

So today we're going to be talking about I don't know if you want to call it a dilemma , maybe a decision I don't know about whether you should file yourself or call in the experts , hire somebody to have that done . I'm hoping you can kind of break down pros and cons with this here , ryan , of why you know DIY of your taxes might be good , why it might not be good , what benefits cons all those good stuff ? So I'll let you take it away .

Ryan Nelson 2:09

Yeah for sure . So yeah , as we make this decision . So I'm not personally a tax professional . I know enough to be dangerous here .

Aaron Hoisington 2:16

Yeah , I love that line .

Ryan Nelson 2:18

I love that line , I can probably help point the listeners in the right direction if they might want to consider doing it themselves or hiring a tax professional .

When to File Your Own Taxes

Ryan Nelson 2:27

So I would say if you are considering doing it yourself , so filing your own taxes , right , when might you decide to file your own taxes ? So one instance might be if you have a simple financial situation , so maybe you just have W-2 income , so you just get a W-2 from your employer , you just use the standard deduction and you have no dependents or special credits that's going to be a pretty simple situation and you might benefit from just doing it yourself , or even kind of outsourcing , but using some sort of tax software to do it yourself , and the tax software can easily handle a situation like that and it would be very cheap and painless and still relatively quick and easy for you . Yep , I love that . Another thing would be depending on your comfort level with technology . So , if you're going to be using one of these tax softwares , how comfortable are you using and navigating these online platforms ? Obviously , some people are super comfortable and happy to do so and some hate doing it or are just not comfortable logging in online and doing that themselves , in which case they may not be a good candidate to do it themselves , right ? If you have limited assets or investments , you may want to consider doing it yourself , or if you just have the desire to save money . So if you're just the type of person who says , man , I , you know , I , I value doing these types of tasks myself in order to save money , then it would be a great . This would be one of those tasks that would be great for you to take on .

Ryan Nelson 4:00

That being said , there's certainly a time in life where it might make

When to Hire a Tax Professional

Ryan Nelson 4:04

more sense to hire a tax professional . So if you have multiple income sources maybe self-employment , rental properties , investment accounts , etc . Your situation starts just becoming a little bit more complex . If you're going through a significant life change , like marriage , divorce , purchasing a home or receiving an inheritance again your situation is just a little more complex . Home or receiving an inheritance again your situation is just a little more complex . If you have complex deductions or credits . So if you're getting some sort of business expense , you have some education , medical or energy credits coming your way . Again , you can see these all just kind of have to do with more complexity , right ? So that would create more complexity If you have a large investment portfolio or retirement account withdrawals with different tax treatments , again it adds a layer of complexity . If you have complex estate planning or legacy considerations with trusts and gifts and beneficiaries , again that can add a level of complexity . Or if you have IRS notices or you have getting audited or you have tax issues , again it creates another layer of complexity , right ? So any of those added complexities it may make sense to outsource this to a tax professional .

Ryan Nelson 5:13

I'll say some of the benefits of doing it yourself is going to be it's super cost effective , it's straightforward , it's fast . If you're filing it just using some software online , it's going to be very fast and you have this sense of like control and independence and the sense of like ownership over the task . So you probably learn a little bit more about like that . Even when you're using a tax software , you probably use just a . You learn just a little bit more about the um , the , the tax code , like when you put in a certain information . Sometimes you can see like an estimated refund or amount you owe .

Benefits and Drawbacks Comparison

Ryan Nelson 5:45

So you might type something in and see that it either helps or hurts your taxes and then that's information you could use in the future for your life , right , um ? So I'd say that's that nice little um benefit of doing yourself .

Aaron Hoisington 5:58

Um , I just want to cut in here . I think I'm so glad that you put this on there , because I've done mine pretty much forever . It's gotten more complex , but thankfully the software has also kind of made things a little bit more easy , if you pay you have to pay for the software , but then it kind of just like walked it through every situation . But I do think it's you do learn stuff as well .

Aaron Hoisington 6:18

Like , well , like , like I said , enough to be dangerous but I'm like oh , that's how , like the you know the solar credit works , right , that's how they calculate a standard deduction with a kid , like all these different the child tax credit , and like what you can deduct for childcare and all these different things that I wouldn't say that I'm an expert by any means on it , but now I have that exposure to where , like if it was to come up like I'm like oh , I know exactly what you're talking about . I don't know your situation , I couldn't give advice , but like I know , like what they're specifically talking about .

Ryan Nelson 6:48

True , yeah , a lot of times if you hire a professional , the nice thing is it's getting done right , but sometimes it's kind of like a black box . You just hand them all the documents and then you just kind of get like , hey , you owe this much , right , and you don't really know what aspects of your life contributed to you owing , versus getting refunds and stuff . So definitely there's that little bit of added transparency when you're doing it yourself .

Aaron Hoisington 7:08

Yeah , and a lot of the software that you can use now gives you a final breakdown at the end that really itemizes like cool , this is where it went , this is where it went , this is how much you paid . Like you didn't pay enough here , that's why you owe here . So it's cool . I mean it sucks when you owe taxes and stuff too , but it's also like you're like oh , now I understand why . Potentially I can adjust what I'm doing in my life to avoid that in the future . Or was that actually the best move for me at that point ? So , yeah , pretty cool , just to kind of have that freedom and knowledge , if you will .

Ryan Nelson 7:42

Yep Makes sense . Some negatives of doing it yourself , right . So we talked about some of those benefits . Some negatives might be hey , maybe you're missing some deductions or credits that you're just ignorant about . Maybe you're uncertain if certain rules apply and if you're applying them correctly , and you're not going to have a lot of support . So if you're audited , you just don't have support . You're doing this yourself , right . So those would be some things , some potential cons and considerations if you are considering doing it yourself .

Ryan Nelson 8:10

Whereas some benefits of hiring a professional is now you have an expert that's going to help you navigate these changing tax laws right . They can help partner with you proactively , so throughout the year , to help identify tax strategies to reduce the liability . So instead of just filing your taxes , you could actually partner with a professional to create a strategy proactively to help reduce taxes . So then , when it comes to filing , you maybe get a little bit more back . One of the biggest benefits is probably just the peace of mind , right , knowing that you filed it accurately . I do , you know . One of the common things I hear is people just have this concern , this question mark , not knowing if they filed correctly , and so hiring a professional oftentimes gives them that peace of mind , that okay , I have more confidence that I did this correctly . Tax plan , like tying in the tax planning to the filing itself , is big , which I had touched on already .

Aaron Hoisington 9:06

Yeah , and I think that , with the tax planning too , if you go back and listen to some of our other episodes , as you get farther along in life , as you're approaching like retirement , like what might be the best way to use that tax preparation to , you know , if you're going to , you know , be converting , you know doing a backdoor Roth or something like these , these , these different elements that uh , um , you know you're thinking about , okay , cool , how am I going to ? How does my 401k work If I'm getting close to retirement , really consulting all those different professionals as you get farther along , I think it's going to be , you know , invaluable in the end too . So , just making sure that , like it's it's cool to do things by yourself I love DIY and stuff that's great , but like sometimes , when , if you're unsure , like it , can't hurt to ask for help sometimes too .

Speaker 1 9:50

I always tell people like if you don't know , you don't know .

Aaron Hoisington 9:54

Somebody gets paid to do this . So , as long as you're comfortable with your decision in doing it , like more power to you , but just think of what could potentially you know the impacts of that overall , definitely Awesome . Anything else to add on this one here , ryan .

Ryan Nelson 10:08

No , that sounds great .

Aaron Hoisington 10:09

I love it , man . This was super cool . I was really excited to do this one because you know taxes are what is it ? Death and taxes ?

Ryan Nelson 10:16

That's right .

Aaron Hoisington 10:16

The only thing certain , the only thing certain in life , if you will , death and taxes . So whatever we can do to you know , increase financial literacy there and at least get the listeners thinking about it . I think is a good day on our end here , definitely Awesome , man , we'll go ahead and pause

Personal Segment: Memorable Jingles

Aaron Hoisington 10:35

here .

Speaker 1 10:35

We'll be right on the other side of this . Everybody hang tight . And now to put the personal in personal finance .

Aaron Hoisington 10:41

Welcome back everybody to the personal side of the physical physical podcast , ryan . I am well . I'm still here with Ryan , which is great , Otherwise it'd just be me talking . But , ryan , I get a question for you here . What's a commercial jingle or just a jingle in general that tends to get stuck in your head . If you hear it , you're like I'm probably going to repeat that or I'm going to be thinking about that for a while . I'm curious to hear your thoughts on this one .

Ryan Nelson 11:07

God , yeah , I don't know Not a ton of these commercial jingles jump out at me or resonate . I saw recently I can't remember if I saw a replay of the old commercial or if they're coming out with a new commercial , but you remember those old commercials ? It was like the uh , what's up ?

Aaron Hoisington 11:25

budweiser yeah , I think they were .

Ryan Nelson 11:26

Yeah , um , that's always a classic , yes , um , outside of that , it's probably just like the normals . Like what ? Uh , you know the state farms and the sure I mean they just have so many commercials , that . But now that I say that I can't even think of state farms , jingle like a good neighbor oh yeah yeah .

Ryan Nelson 11:44

So I don't know , I don't , I don't . I Honestly I don't watch that much TV and a lot of now what I watch is streaming . A lot of it has no commercials . But when you do get a commercial streaming , it's just like two commercials .

Aaron Hoisington 11:56

That is on repeat for the entire yes , exactly , right in a row . Yeah , exactly .

Ryan Nelson 12:01

What about you , which commercial uh ?

Aaron Hoisington 12:03

you know it's funny . I , I feel like , just because you insurance companies hammer those and they , they , they do a great job . I'm always just like , oh , like , like a good neighbor . You know , the , the nationwide is on your side , the different ones like I always whenever I listen to the radio . I listen to the radio quite a bit like there's like oh , oh , oh , o'reilly's auto parts . But it's funny .

Aaron Hoisington 12:26

This past year we went to this isn't a commercial jingle , but I feel like it's still stuck in my head when we went to Green Bay for your bachelor party . They do like a thing at the stadium and they play like a tune and then they go , go , pat , go . That has been stuck in my head for like months at this point here , like it's so , which is good . I mean , that's kind of the you know in a big part of that like stadium and the fanhood and such too . So it was , it was . It's not a bad thing . But every time I think about I hear like the word go or pack . It automatically is just go , pack , go it's .

Ryan Nelson 13:01

It's like that uh , was it pavlo's dogs , or whatever ? When you ring the bell and they start salivating , I feel like the same thing . It's like that uh , was it pavlo's dogs , or whatever . When you ring the bell and they start salivating , I feel like the same thing . It's like they just play that music in the stadium and then everybody just starts chanting and it's like you don't even know you are .

Aaron Hoisington 13:12

It's just so ingrained it is even even not being like a specific packers fan , like I'm just like . Well , I , I now have to say this like it's like not up to me anymore . Yeah , yeah , exactly , you've been trained , yeah exactly .

Ryan Nelson 13:25

You can even hear during the NFL broadcasts . The stadium noise is in the background . They kind of make it a little quieter , but you can still hear that noise . And then the crowd is like go , pat , go , and it's like I notice a lot more now that I've been to the games and stuff , and I'll hear that little I it does like almost train you yeah .

Aaron Hoisington 13:51

Yeah , it's awesome . Just even I was there for like a weekend and I was like , oh wow , like this is now just part of my life .

Ryan Nelson 13:56

Yeah exactly .

Aaron Hoisington 13:57

They do a good job with that . But anyway , let us know what your favorite jingle is or maybe not your favorite , but the one gets stuck in your head . We'd love to hear about it . Send us a text , let us know and appreciate everyone , appreciate everyone listening . We drop these episodes every Tuesday morning , so please check them out whenever you get your podcasts here and , ryan , I'll leave you to play us out here , my man .

Ryan Nelson 14:21

As always , stay the course .

Speaker 1 14:25

Thank you for joining us for the Fiscal Physical Podcast . Until next time , happy listening and , as always , stay the course . Next time , happy listening and , as always , stay the course . If you have a question or topic suggestions , please email us at podcast at alchemywealthcom . If you enjoyed today's discussion , subscribe to the podcast to ensure you never miss an episode and consider leaving us a rating and review on your favorite platform . This helps other listeners like you find the show . For more resources , you can visit Alchemy Wealth Management's website at wwwalchemywealthcom or find your fiscal physical the book on Amazon . We'd be remiss if we didn't mention that personal finance is just that personal . Please don't take anything we say as advice . The preceding content is for informational and entertainment purposes only . It's not an offer or a solicitation , nor should it be construed or relied upon for tax , legal or investment advice . It doesn't consider your personal financial situation or objectives and may not be suitable for you .