Why You Might Need Professional Help for Tax Preparation

Paying taxes is already challenging. Why pay even more to someone else to prepare your tax return?

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Typically, if your tax situation is simple, you can prepare your return yourself or use tax software. However, some taxpayers may benefit from professional assistance.

“For people who have complex taxes and don’t want to handle them, there’s a tax pro ready to assist,” said Dave Du Val, chief customer advocacy officer at tax audit defense firm TaxAudit.

Understanding when to pay for tax services or hire an accountant can help you avoid costly errors.

You Don’t Have the Time or Patience

Many taxpayers can complete their returns independently, especially those with a single source of income.

“Truly, taxes aren’t rocket science or brain surgery,” Du Val noted. However, the process can often feel overwhelming and time-consuming. If you lack the time or patience, hiring a tax professional may be the best option.

If you find it challenging to tackle your return, consider seeking professional assistance—but only if you are prepared to spend the money on it.

Ensure you choose someone qualified. Only four states require testing and certification to become a tax professional, Du Val remarked.

“In most states, you can advertise yourself as a tax pro without any certification,” he explained.

For peace of mind, look for an enrolled agent or a certified public accountant, or consult the IRS directory of federal tax return preparers.

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You’re Going to Experience a Major Life Event

Seek professional tax assistance during significant life changes, such as marriage, childbirth, or starting a new job. Don’t wait until after these events unfold. “Consult a professional before a major life event to understand the upcoming tax implications,” advised Eric Nisall, an accountant and creator of Bookkeeping for Bloggers.

For instance, after getting married, an accountant might suggest you update your W-4 form with your employer to adjust tax withholding according to your new filing status. If you anticipate changes during the year, schedule a meeting with a tax pro early to plan accordingly. This proactive approach can help prevent mistakes that cannot be remedied at tax filing time.

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You Started a Business

If you recently started a business, hiring a tax accountant to assist with your first return as a business owner is advisable. “It gives you a solid foundation moving forward,” Nisall stated. With a professionally prepared return, you can refer to it in future years if you choose to file on your own.

A tax professional will ensure you take advantage of all eligible deductions while avoiding incorrectly claiming expenses. “If you’re new to your business, you might not know all the specifics,” Nisall added. It’s essential to avoid unintentional tax fraud.

For instance, bloggers receiving free products for reviews must report those items as income, according to Nisall. An accountant can help address such complexities, which may be overlooked if you prepare your return solo or with software.

You Work in the Gig Economy

If you’ve taken on a side gig for extra income, you might face complications at tax time. “Many individuals are starting businesses without realizing they’ve done so,” highlighted Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. “They sign up with services like Uber or Airbnb, only to receive a tax form at year-end and feel overwhelmed by the implications.”

This tax form, known as 1099-MISC, is issued by companies to report income paid to contract workers. You are required to declare this income on your tax return. If you’re new to the gig economy, it’s likely you didn’t make estimated tax payments throughout the year and might not have tracked related expenses you can deduct. A tax professional can assist you in navigating these issues and ensuring you receive the deductions you qualify for.

You Have to File More Than One State Return

Transitioning between states can sometimes create confusion regarding tax obligations. Most tax software can manage these changes efficiently, noted Megan Brinsfield, a CPA and director of financial planning for Motley Fool Wealth Management. However, certain scenarios may require you to file returns in multiple states.

For instance, if you own a business that operates in multiple states, invest in master limited partnerships (MLPs), or frequently travel between states for work, tax regulations can become complicated swiftly. “You must determine which state has the right to tax your income,” Brinsfield cautioned.

Failure to file in a state where you owe income tax could lead to penalties. Understanding the specific requirements can save you from difficulties down the road.