How it works
The DIY-versus-preparer question is an arithmetic problem with one honest unknown. The arithmetic: filing yourself costs the software price plus the hours it takes you, valued at what your time is worth. Hiring a preparer costs their fee minus any tax they save you by finding deductions you would have missed. This tool puts both on one scale. The unknown is that last figure — the deductions a professional would catch that you would not. For a simple W-2 return with a standard deduction, that number is close to zero, because there is little to find and software handles it correctly. For a return with rental property, a side business, equity compensation or multiple states, it can be large, because those are precisely the situations where software silently applies the wrong treatment and a competent preparer does not. The break-even deductions line makes it concrete: how much a pro must find to justify their fee at your marginal rate. If they need to find $2,000 of deductions and your return has no $2,000 of deductions to find, file it yourself. The complexity selector applies the judgement the numbers cannot — at the complex end, a preparer usually pays for themselves not through extra deductions but through not getting the return wrong, which is worth more than any single deduction.
Formula
DIY = software + hours x hourly value | Preparer = fee - (deductions found x marginal rate) | Break-even = fee gap / marginal rate
Tips
- Simple W-2 returns with the standard deduction: file yourself. There is nothing for a preparer to find.
- Complex returns — business, rental, equity comp, multi-state — are where preparers earn the fee by not getting it wrong.
- Count the full software price, including the state filing and the tier upgrades the interview pushes you into.
- Value your time honestly, but remember it is not cash — unpaid leisure hours weigh less than the software price.
- A preparer who guarantees a bigger refund before seeing your documents is selling, not advising.
Frequently asked questions
- Should I file my own taxes or hire a preparer?
- File yourself if your return is simple — a W-2, the standard deduction, maybe an HSA or a credit. Hire a preparer if you have a business, rental property, equity compensation, a multi-state situation, or a major life change, because those are where software quietly gets the treatment wrong.
- Is a tax preparer worth the cost?
- When they find deductions you would miss or prevent an error that would cost more than their fee. At a 22% marginal rate, a $450 fee is justified if they find about $2,000 of deductions or save you from one meaningful mistake. On a simple return, neither exists and the fee buys only your time back.
- How much does tax software cost compared to a CPA?
- Software runs from free to around $200 for most filers, plus state and upgrade tiers. A preparer typically charges $250 to $600 for a straightforward return and far more for complex ones. The real comparison adds your time to the software side and subtracts tax saved from the preparer side.
- When is DIY tax filing a mistake?
- When the return involves a business, rental income, stock compensation, a home sale, multiple states, or a major life event like marriage, divorce or an inheritance. Those carry elections and treatments that software interviews handle poorly and a professional handles routinely.
- Do tax preparers get you a bigger refund?
- Sometimes, by finding legitimate deductions and credits you missed — but a refund is just your own overpaid tax returned, and a preparer who promises a bigger one sight-unseen is a warning sign. The honest value is accuracy and deductions found, not a magically larger cheque.