Have you been hemming and hawing on whether or not to hire a professional to do your taxes? Has there been a large change in your life that has impacted your finances or maybe you just aren't sure what you are doing? Read through some commonly asked questions and changes and then make your decision.
Some people have used online tax preparation software for years. When would be the best time to consider hiring an accountant?
Hiring a tax professional can save you time and will often save you money, too, because a tax professional knows the current tax code’s advantages and limitations which they can apply to your specific situation to create tax savings.
If your taxes are relatively straightforward (i.e., you have a job with a W-2 and don’t have any rental properties or complicated business interests) then you may be able to handle them yourself. However, once you have any of the following situations to contend with you may want to engage professional help:
Your marital status has changed. If you are recently married or divorced, you might need help to choose the right filing status. This is particularly true if you’re in the process of divorcing, because when it comes to filing taxes, “both spouses are jointly and severally liable for all taxes owed on the return” according to the IRS.
In addition, being a new college grad or having a new baby, getting a new job or losing a job are also worth having a professional opinion to avoid any negative impact on your tax return and potential refund.
You started a business or are self-employed. If you started a business this year, you should consider hiring a professional to prepare your tax return. If you are self-employed spending your time doing things other than your taxes is more lucrative. In addition, you cannot forget to consider sales tax returns, too, if you are selling physical goods and taxes owed in other jurisdictions as noted above.
Rental real estate purchases. If you bought a rental property during the year a professional tax preparer can help you navigate the tax implications. A professional can help you report tax items accurately and maximize deductions in addition to properly handling the tax implications of depreciation.
You are involved in complicated investments or trading cryptocurrency. If you are receiving a 1099 at the end of the year for capital gains on investments or cryptocurrency transactions, both you and the IRS will receive a 1099 form showing all the dividends you earned and any sales you made. This can become complicated and there are specific tax rules you need to follow. A professional tax preparer knows how to handle these situations, so you remain in a favorable position with the IRS.
You owe back taxes or more tax than you can pay right now. IRS resolution is not an area to go it alone. If you have a tax problem or receive a notice from the IRS you cannot handle, then paying a professional to help you is well worth the money. It will save you time, stress, and frustration. It can also keep you out of legal problems and mitigate monetary penalties related to tax issues.
If you have questions or need help filing your taxes this year, let us give you a hand! Contact us!
Jonathan Medows is a certified public accountant licensed in New York, New Jersey, Maryland, and Pennsylvania. He is also a recognized expert in taxation for freelancers and the self-employed—often tapped for his expert knowledge and perspective on self-employment taxation by national and regional publications such as The New York Post, BusinessWeek, Forbes taxation blog, WebCPA, CPA Practice Advisor, and others. You can read some of Jonathan’s press coverage here.
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