Tax-Filing Season Is Coming Up. Should You Hire an Accountant This Year?

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Hiring an accountant for tax help makes sense in some situations, including after lifestyle changes. Read on for advice on whether to hire a tax professional. 

Tax season is fast approaching. It’s important to make sure you’re ready to submit your tax returns on time so you don’t get into trouble with the IRS.

For many people, free software options can help you do your taxes. There are also paid options available for those with more complicated returns. These programs can walk you through the process of filling out your paperwork and filing it with the IRS. They’re also usually affordable and easy to use.

In some cases, though, it pays to hire a professional even if that means more money coming out of your bank account to pay for a tax pro. If any of these situations apply to you, hiring an accountant to help with your taxes could make good sense.

1. You’ve had a major lifestyle change

Certain lifestyle changes can impact your taxes in big ways. For example, getting married or divorced can change your filing status. With your combined income, you may become eligible for deductions or credits you previously couldn’t claim, or may lose eligibility for deductions and credits you were allowed to take before.

Buying a house, having a child, losing a spouse, or moving to a new state are also major lifestyle changes that can impact your taxes. When you’re entering uncharted waters due to these big changes, it could pay to get professional advice on the tax implications during the first year you file in your new circumstances.

2. You’re running your own business

Running a business of your own can complicate your taxes. You may have different deductions you’re eligible for, and you won’t have traditional W-2 income from an employer who withholds your Social Security and Medicare taxes for you.

Hiring an accountant can help ensure you fulfill your obligations and claim all of the tax savings you’re entitled to. Your accountant may also give you advice on the best way to structure your business, as forming an S-corporation could potentially give you more flexibility in how you’re taxed on earnings.

3. You have complicated investments

If you have complicated investments, it could also be beneficial to hire an accountant. For example, there are a ton of complex IRS rules surrounding cryptocurrencies, and you need to make sure you’re following them to avoid potentially facing tax penalties for not paying the full amount you owe on any gains you make.

Real estate investments can also be more complex, as there may be several different deductions you can claim to offset your income. And other alternative assets come with their own unique reporting requirements.

The bottom line is, you don’t want to trigger an IRS audit, nor do you want to miss out on opportunities to claim deductions and credits that could help you save on your taxes. While tax-filing software can help you identify opportunities to save and assist you in understanding what your obligations are, these software programs are meant to help the typical taxpayer — not necessarily someone in your unique situation.

It can be far better to pay for the professional advice you need to do your taxes right, especially if you have any doubts about your ability to comply with the rules while maximizing your opportunities to reduce your tax bill.

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