When should I hire a CPA to file my taxes?

This year, you might find yourself wondering when you should stop filing your own taxes and work with a CPA. Maybe your taxes are getting too complicated. Maybe you’re always worried about missing things. Maybe it’s just causing unnecessary stress. 

But how do you know if it’s worth it? 

You might find there are some unexpected benefits to working with a tax professional for yourself, your business, or your family. So take a look at a few common situations that signal it might be time to hire a CPA. 

If you’re expecting a credit through the Affordable Care Act 

The Affordable Care Act brought new credit opportunities into the tax return landscape for 2014. But it also made filing your taxes more complicated. 

If you bought health insurance through the health insurance marketplace, you might receive a tax credit if you meet certain criteria. The marketplace system uses a projection of your anticipated tax situation to estimate your credit, but you won’t know your true eligibility or potential amount until you file your return.

Also, when you applied for insurance there were different options for how you’d like to receive your credit, whether you wanted your monthly premiums lowered or wanted to receive the funds along with your income tax return. Depending on what you selected, there are different implications for how to file your taxes. 

Overall, the credit adds five new tax forms to your filing process, which will likely make the task more challenging. 

If you’re spending too much time on your taxes

Every year, it’s a good exercise to assess how much time you spend on your taxes versus how much you think your time is worth. 

If you spend more than two consecutive weekends on your taxes, it might make good financial sense or improve your general well-being to free up that time and hand off your tax prep to a professional. 

This is especially true if you’re self-employed. Calculate your hourly rate against how much time you spend filing your taxes. Then get a quote from a few CPAs to compare. You might decided it’s more practical to use your limited time generating business or making more money rather than doing your tax work yourself. 

If finances cause tension in your household 

Finances can create a lot of friction in a relationship. If you’re married, filing joint taxes can often raise the tension. 

It could be that fine-combing through the details of your finances brings on additional stress. Or you might simply have a hard time working on a complex, math-related project together because of personality differences or conflicting opinions about how to interpret tax laws. 

Some spouses decide it’s better to sit down with a CPA who can guide them through the process, ask good questions, and help them understand their tax situation together. As you learn more about your financial options and become more comfortable with the process, you might find it also improves your financial conversations at home and eases your stress. 

If your tax situation is growing more complex 

Your tax situation can change considerably year to year. Maybe you purchased a rental property, started a new business, or received an inheritance. Big life changes make filing your taxes more challenging, especially when these changes are new and you’re still trying to understand how they impact your finances. 

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

When you have more assets and tax considerations, you might be missing opportunities for credits. 

A CPA can help you understand the changes and ask good questions to make sure you explore all possible reductions. You might also learn about changes you should make for the next year to put yourself in a better tax situation. Ultimately, learning with a CPA by your side will make you feel more confident and comfortable managing your finances. 

These are just a few of the situations that might indicate when you could benefit from the help of a CPA. And there are likely more. So if you want to ease the stress of tax season or if you want to feel in control of your finances by better understanding your tax situation, talk to Tom’s team today.

4 Tips for Your 2013 Tax Return

Tax tip number one: Get your taxes prepared now!

You should have all your statements and documents in hand by this time for activities in 2013. Your W2s were required to be mailed to you by mid-January. Most tax statements were issued on February 18th this year. Filing early puts you in a position to collect a refund quicker and make a payment plan if necessary. Filing taxes early also helps stave off an unscrupulous fraudster grabbing your refund before you do. There are plenty of tax fraud schemes as you may be aware. We found a great “Dirty Dozen” list of schemes from Daily Finance.

Tax tip number two: 2013 taxes are the first opportunity for same-sex married benefit options

The IRS and Minnesota have declared same-sex married couples can choose their filing status for joint, married or single filing status. Also ruled as acceptable is amended or original income tax returns from same-sex married couples for all open, prior tax years. For more information, see Minnesota Tax Information for Same-Sex Married Couples.

Tax Tip number three: Avoid a penalty and enroll in health insurance

Your 2013 won’t be affected if you are not carrying health coverage, but you will be asked if you have health coverage. Plan to have coverage by March 31st to avoid a 2014 penalty.

Tax Tip number four: Contribute to a tax-advantaged account

There are several options for these types of contributions. The great thing is you have until April 15th of 2014 to make the contributions that you can attribute to your 2013 return. Some examples of tax advantaged accounts are: 401(k), health savings accounts (HSAs), Roth, SEP accounts.

We have many tips to share based on your unique situations. 

Call for an appointment. We will review your needs and explore how we can minimize the taxes you owe and keep the most amount of your earnings in the bank. 

Already had your taxes completed this year? Leave a us a review – much appreciated!

Plan is a four letter word: Do I really need a written business plan?

‘It’s just a time waster.’ ‘Can’t find the time to get it done’. ‘Don’t follow up on it anyway.’ Do any of these statements sound familiar? Yes, for most business owners plan is a four letter word. And most people just don’t make the time to get this important annual task done. The thought of creating a plan can seem daunting and overwhelming if you are new to the process. 

How hard can it be? 

Very hard if you’ve never done an annual plan before. So if you are new to this process or just haven’t done one in a while I recommend starting out with three simple but important steps.

One: It’s about time 

The hardest part of planning for your business is setting time aside to do it. I recommend you block out time on your calendar and find someone to hold you accountable to keeping that appointment with yourself. You also might want to break this into more than one appointment and spread the work out over the course of a month or a quarter. Quarterly reviews are important to build into this process too. Take 30 minutes each quarter to check your progress and make sure you are on track with what you set out to do. 

Two: Who’s counting anyway? 

One of the best things you can do to make planning work for you is find yourself an accountability partner. Find someone you can trust to hold your feet to the fire and give you a nudge when you get off track. They can also serve as a brainstorming partner to get you thinking ‘outside the box’ about your business. Good candidates are people outside your business like a colleague, another business owner or a trusted adviser like me.

Three: Simplify it 

You can make this as simple or as detailed as you see fit. Styles of plans range anywhere from the back of a cocktail napkin to a formal multi-page written or online document that is posted for all to see. Whatever style you choose be sure to pick one that you really like and suits your business. Odds are the more you like working with the plan the greater your chances of using it and seeing the results you want. I recommend a one page document with no more than 10 clearly written goals for the year. Watch for more details about this step in our next article.

Challenge: Don't worry that 2014 is already under way. When are you going to calendar some time to make an annual plan for your business? Tell us about your annual goals, plans or struggles with planning. We’d love to hear from you!