Five Reasons Why You May Want to Hire a Tax Professional
As you
progress through your life, your finances get more complicated and preparing
taxes becomes more time consuming and stressful. In fact, according to the IRS,
it took an average of 37.8 hours to prepare the regular Form 1040 in 2006, even
when using even when using tax software. No wonder tax season is declared by
various pollsters as the second most stressful time of the year just behind the
Christmas season.
If you are one of many Americans who prepare their own
taxes, the following list should help you consider whether to hire a tax
professional (e.g. CPA or EA) or continue to self prepare using online tax
software. You should consider hiring a tax professional if any one of the
following applies to you:
You have a relatively complicated
return. By “complicated” we mean a tax return that involves a moderate
level of itemized deductions, capital gains/losses from investments, self-employment income, home sales,
rental, AMT, etc. In addition to saving yourself from the stress and countless
hours spent in preparation, an experience tax professional should help you
prepare accurate and audit-proof tax returns.
Your life changed in
the past year. If you started your own business, bought a home, got
married or divorced, started investing, changed jobs, or had other life changing events, you should
work with a tax professional to make sure that income is properly reported and
no deduction is overlooked.
You get headache thinking about
tax. It’s only natural given the complexity of the U.S. tax code and
the fact that you do not spend most of your waking hours studying tax laws.
Also, an average taxpayer does not have the time or the motivation to keep up
with the constantly changing U.S. tax laws.
You don’t have
time. If you simply can’t afford to spend days on preparing taxes or
can’t take on additional stress, you should have a tax professional prepare your
taxes. Fees paid to a tax professional may be well worth the price if it means
that you can go about your life uninterrupted by the stress of tax
preparation.
You need professional advice on how to
structure your activities to minimize your tax exposure in the future. If you
are concerned about your high tax bills year after year, you should consult with
a tax professional regarding ways to structure your finances to maximize tax
credits and deductions. Some examples include shifting income among household
members, deducting various business related expenses, and deferring income to
future years.
Martin Lee, CPA, is with taxCPAdirect, an online CPA firm. For more
information, email mlee@taxcpadirect.com or visit www.taxcpadirect.com.
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