Seven Signs You Should Hire a Tax Accountant
Doing your own taxes with user-friendly software like TurboTax can be a great option when your finances are relatively simple. But there often comes a time when your tax situation becomes more complicated and filing your return yourself is no longer the best approach. How do you know when it’s time to move from doing your taxes yourself to working with a certified public accountant (CPA)?
If you understand your tax situation and are confident that you can complete your return so that it is accurate, timely, and error-free, then there is nothing wrong with using a program like TurboTax or using IRS Free File. However, whenever something major changes your financial situation, it may be time to seek professional help. “Changes in your situation could also be things you don’t know about,” explains Atiyah Brown, CPA , “such as tax law changes that affect your tax situation.”
When do you need an accountant?
You have several sources of income. Whether you have significant investment income, rental properties, freelance work, or other varied sources of income, a CPA can help you report everything correctly and maximize deductions. Complicated income can be difficult to manage on your own.
You are making serious changes in your life. Getting married, having a child, buying a home, or retiring can all impact your tax strategy. A CPA can advise you on how to adjust withholdings and take appropriate deductions for these life changes.
You are starting a business. When you become self-employed or start an LLC, additional forms, schedules, and considerations apply. Working with a CPA from the beginning can ensure your business’s success from a tax perspective.
Do you need help with estate plans? If you have significant assets that you plan to pass on, a CPA’s tax expertise can help you minimize estate taxes and ensure your wishes are properly carried out. DIY software is not designed for such complex planning.
You have a taxable international activity. If you send money overseas, own foreign assets, or travel abroad for work, you may have to report these activities to the IRS. A CPA can help you avoid costly mistakes when dealing with international tax issues.
You will be checked. Checking can be intimidating. Having an experienced CPA represent you and communicate directly with the IRS can make the process much less stressful. They know exactly how to conduct an audit.
Taxes seem huge. If you’re afraid to do your taxes, make mistakes, or are unsure of your returns, it could be a sign that your situation is too complicated for DIY software. Handing over your taxes to a CPA can give you peace of mind and peace of mind.
Tips for hiring an accountant for the first time
“People need to understand that finding a professional is a two-way street,” Brown says. Just like finding the right doctor, you need to advocate for yourself to find the best doctor for you. This means you must be prepared to ask the right questions. Brown advises that you ask your accountant if they are familiar with your specifics. For example, if you own a rental property, you will be able to ask them if they have experience in this matter. “A professional should also be able to answer any questions you have,” and the right person for you “should be able to answer in a way that you understand.”
Brown explains how the average person should understand that your tax return will determine your rate: “Are you a W2 and/or 1099, do you rent out real estate or sell stocks? These different scenarios will impact your prices.” You need to know what type of return you need to file and what type of information is being reported.
And remember: you are responsible for your tax return, and you should review it before you sign it. Both the taxpayer and the preparer will sign their signature, and thus both will sign what is being reported.
Brown warns that if you pay someone to prepare your return and they don’t sign, “that’s a huge red flag for what’s called ‘ ghost preparation .’ It is illegal for an accountant to receive a salary and then not sign your report.
The bottom line is that handling complex personal and corporate taxes requires experience. Don’t leave money on the table or make mistakes that will lead to audits; know when it’s time to let a CPA take over your tax preparation. CPA services are worth the investment in more complex tax situations.