The deadline to file your taxes is fast approaching, and you might be thinking that this year you should work with a CPA instead of filing on your own. Maybe you worry that you’re missing important details or potential write-offs. Maybe you’ve had a change in personal or business finances and your taxes are getting too complicated. Or maybe you just want help from someone you trust so you don’t have to deal with the stress.
So how do you decide if hiring a CPA is the right move this year?
Here are 4 common situations where you’d benefit from working with a CPA.
1. You’re spending too much time on taxes
How much is your time worth?
Try to estimate how much an hour of your time is worth, then think back to how many hours you spent preparing your taxes last year. This will give you a good sense of how much it actually “cost” you to file your taxes. Now you can make a more informed decision about whether it’s worth it to partner with a professional on your tax prep and filing.
This is particularly applicable if you’re self-employed or own a small business. Your time might be better spent on business development, building relationships, or billable hours.
2. You’re worried that you’re not getting it right
Tax laws are complex and they change frequently. This makes it challenging to keep up with them on your own.
There are two sides to this scenario:
- You worry about getting audited
- You worry that you’re missing deductions and paying more taxes than you need to
Either way, it might be wise to work with a CPA.
A CPA can organize and prepare your taxes to minimize your audit risk. This isn’t a guarantee that you won’t get audited, but you’ll be better prepared if you do.
Also, a CPA will make sure you take advantage of all the tax benefits, credits, and deductions available to you. You might even learn about changes you can make for the next year to put yourself in a better tax situation.
3. Taxes cause household tension
Filing taxes can be a stressful and complicated undertaking. Finances can cause a lot of tension in a relationship. And if you’re married, filing joint taxes can exacerbate this tension.
You and your spouse might decide it’s worth the investment to work with a CPA who can guide you through the process and help you get a clear picture of your financial and tax situation. By learning about your tax situation, exploring your financial options with an expert, and becoming more comfortable with your finances, you can improve your financial conversations, plan better for the future, and reduce financial tension.
4. Your tax situation has become more complex
There are many things that can impact your tax situation and make it more complex from year to year. Purchasing a home or rental property, starting a business, a change in your employment, or inheritances can all have significant effects on your taxes.
These major life changes can make filing your taxes more challenging, especially when the changes are new and you’re still adjusting to the impact they have on your finances and taxes.
Complex tax returns usually involve one of these situations:
- Rental income and expenses
- Self-employment income and expenses
- Income from multiple states
- Real estate purchase or changes
- Estate and trust considerations
In these scenarios, partnering with a CPA can help you explore all possible deductions and tax credits, ensure that you’re not missing any important details, and offer confidence that you’re correctly filing your taxes.