Should a CPA Do Your Taxes?
A CPA is a Certified Public Accountant, someone knowledgeable about tax code who can help you maximize tax savings (or get a larger refund), plan for the next year, and represent you before the IRS if you’re audited. Understandably, this expertise comes at a price. If you’re unsure if a CPA’s services would be worth it for you, read on.
It might be worth it if…
Ultimately, it comes down to how complex your return will be. The more ways you’ve received income, forms, exceptions, and deductions and credits involved in your tax return, the more likely you’d benefit from the help of a CPA.
Owning a business or working in the gig economy are great examples of more complicated tax situations. There are write-offs to consider, multiple 1099s to collect, and figuring out what to do if a client never paid you. A CPA can also help you determine what quarterly estimated taxes you should pay at the federal and state (if your state has income tax) levels throughout the year.
Big life changes can also change your tax situation. Buying a home, losing a job, or having a child are a few examples. You can always use a CPA to file your taxes for just one year.
Speaking of children, if one of yours is headed to college in the next year, you’ll probably be filling out the Free Application for Federal Student Aid (FAFSA) soon. A CPA can help ensure you don’t have unwanted assets or income in your child’s name, because that can hurt their chances for financial aid.
Self-directing your retirement with the use of non-traditional investments or retirement vehicles is another tax situation that can be murky without the insights of a CPA.
And finally, if the IRS ever contacts you, even for something as apparently straightforward as a substantiation of expenses for something you purchased, the aid of a tax professional can smooth out the process, lessen the worry, and keep you from mis-stepping.
Besides hiring a tax professional, you also have the option of using tax preparation software like TurboTax. You can even get a version for small business owners. The monetary investment in software like this is much smaller than the cost of a CPA, and you may qualify for a discount with a credit union membership or based on your yearly income.
Using software means you will most likely only have the option to e-file your taxes. You’ll need your W-2s, any 1099 forms, tax documents from all investments, and documents regarding interest you paid on things like student loans. It will take anywhere from one to several hours for you to complete your taxes, depending on your situation. The software will guide you through questions and form sections you may have missed if you filled out the paper form unaided.
Like most decisions in life, choosing whether or not to use a CPA at tax time comes down to weighing the costs and benefits in your particular situation.Go to main navigation