Should we do our taxes ourselves or hire a pro?

My wife and I are debating if we should hire someone to do our taxes this year. Last year was kind of messy—we dealt with me being laid off, collecting unemployment in Texas, getting rehired, and juggling three different income sources. We also earned over $600 in interest income and have a brokerage account that didn’t hit $600. On top of that, we paid my mom $450 as a contractor to watch our baby.

Last year, we spent $450 on a tax professional, but it didn’t feel worth it. This time, we’re thinking about trying TurboTax with professional help, which costs less than $200, or maybe one of the free options. Should we go back to our original tax people, or try to figure this out ourselves? Appreciate any advice.

This doesn’t sound too complicated. Some tax preparers charge a flat fee, while others charge based on the forms you need. Have you checked prices with any other tax offices?

Sage said:
This doesn’t sound too complicated. Some tax preparers charge a flat fee, while others charge based on the forms you need. Have you checked prices with any other tax offices?

We haven’t shopped around yet. I just wanted to see if $450 sounded high for our situation. Back in college, our taxes were done for free because my mom worked at the office, but now that she’s watching our baby, no more freebies. Maybe $450 isn’t so bad, but it just didn’t feel worth it, especially since filling out her 1099 form doesn’t seem that hard. It’s more tedious than anything else.

@Weston
Is your mom watching your baby at your house?

Lexi said:
@Weston
Is your mom watching your baby at your house?

It’s about half and half. She comes back for lunch and stays for about an hour at the end of the day since my wife and I both work from home. So, I think it qualifies as a contractor situation.

@Weston
Paying your mom isn’t considered a business expense, so you don’t need to issue her a 1099-NEC. That said, she does need to report the income, especially if you’re claiming the Child and Dependent Care Credit.

@Remy
So I don’t have to report what I paid her, but she does?

Weston said:
@Remy
So I don’t have to report what I paid her, but she does?

That’s correct. But if she watches the baby at your house, you’d need to file Schedule H and meet all the related requirements.

Weston said:
@Remy
So I don’t have to report what I paid her, but she does?

Exactly. She’d need to give you a receipt for what you paid her, including the details you need to claim the Child and Dependent Care Credit. She’d also need to report the income on her tax return.

Lexi said:
@Weston
Is your mom watching your baby at your house?

I think using the 1099-NEC might still work here.

This doesn’t seem too tricky. Why not pay yourself $450 to do it?

What’s your budget for this? Federal and one state return for $300 is reasonable. Add $150 for the household employee forms. Take your time and shop around.

Jessie said:
What’s your budget for this? Federal and one state return for $300 is reasonable. Add $150 for the household employee forms. Take your time and shop around.

I don’t have to file state taxes since we’re in Texas. I’m leaning toward TurboTax with full service since it’s capped at $200, even for business filings.

I don’t know any decent professional who’d charge only $450. Most CPAs I know won’t touch a return for less than $1,000.