I've always done my own taxes but my situation is getting more complex with investments and rental property. At what point does it make sense to pay for tax professional advice instead of using DIY tax saving methods? What are the actual benefits you get from a pro that you can't get from software or online guides?
Once you have rental property, that's definitely when you should consider tax professional advice. The depreciation rules, passive activity loss limitations, and recapture rules are complex. A good CPA can help you maximize deductions while staying compliant. The cost is usually tax deductible too.
I switched to a CPA when I started my business. The main benefit is they know about deductions and strategies I never would have found on my own. For example, they helped me set up a retirement plan that saved me thousands. They also handle IRS correspondence if anything comes up, which is worth the peace of mind alone.
With investments, a pro can help with things like tax loss harvesting coordination across accounts, qualified dividend planning, and minimizing the net investment income tax. Also, if you have stock options, RSUs, or other equity compensation, the tax implications can be complicated.
I think it's worth paying for at least a consultation even if you continue doing your own taxes. A good tax pro can review your situation and point out opportunities you're missing. Then you can decide whether to hire them or implement their suggestions yourself using DIY tax saving methods.
I used TurboTax for years but switched to a CPA when I had a complex year with job change, relocation, and starting a side business. The CPA found about $4,000 in additional deductions I had missed. Their fee was $800, so net gain of $3,200. Sometimes you don't know what you don't know.
Another consideration is audit risk. While it's low for most people, if you do get audited, having a professional who prepared your return can be invaluable. They can represent you before the IRS and handle all the correspondence. That alone might be worth the cost for some people.