The question probably comes up in your household every year when April rolls around. Should you hire an accountant to help with your taxes? This is a good question and the options are worth exploring.
The first thing to understand is that there’s a difference between a CPA (Certified Public Accountant), an accountant and a tax preparer. CPAs are repeatedly tested and regulated by the federal government, which may provide you with more peace of mind, but may also cost you more to hire. An accountant will have similar skills and knowledge, but not every accountant is a CPA, and you’ll want to research that person before putting your important financial needs in their hands. Likewise, a tax preparer is not necessarily a CPA either. They specialize primarily in personal tax preparation, which can be helpful come tax season, but won’t provide you with other financial services.
All are worth considering when it comes to doing your taxes every year because their knowledge and experience can be to your benefit. They know what can be written off and what can’t, as well as other things that you probably wouldn’t know on your own or find in tax preparation software.
Now, when it comes to overcoming tax debt or preparing for an audit, you’ll definitely want to consider professional help or options like Community Tax Resolution Services. This is where someone’s expertise and specialized knowledge can make a huge difference.
Let’s look at some advantages of hiring an accountant to handle your tax needs:
This is where many people get hung up because it will certainly cost you more out of pocket to hire a professional for their services. However, they may ultimately be able to help you save more money because of their expertise.
Experience & Knowledge
The reason you might hire an accountant to help with your taxes is the same reason you would hire a doctor to perform your surgery or a real estate agent to sell your house. This is their job and it’s what they are trained in. Odds are they’ll know a lot more about finances and tax preparation than you do, so you can put their expertise to work in your favor.
Preparing your own taxes—and preparing them properly—can take up a lot of your time and energy. Hiring someone else to do the job is certainly more convenient.
It can be hard to manage your own finances because you are so closely tied to your money—how you earned, where you spend it and how much Uncle Sam is taking from you every year. An accountant can approach your finances from a more objective viewpoint and give you professional advice without any personal biases.
On the other hand, if you are knowledgeable and diligent in your preparation, there are advantages to doing your own taxes:
If you do your taxes right and are able to save the same amount of money as an accountant/tax preparer, then obviously you will not have to pay out of pocket for their services. If your tax situation is simple (single, no home ownership and no significant write-offs), then there may be no need for professional assistance.
Better Financial Understanding
The more you understand about your taxes and your own financial situation, the better equipped you will be to handle things on your own. If challenges arise, then you’ll be ready for them. Or even better, you can take a proactive approach to make sure those challenges never come up. Start a separate savings account to prepare for expenses like taxes to help you be more prepared.
Again, if your situation is simple and you know what you are doing, then preparing your taxes should be a simple endeavor and won’t take you much time at all. Download some sort of budgeting software to track of everything dollar you’ve made. This will help you, should you decide to do your own taxes.
So, we circle back to the original question. Should you hire an accountant to help with your taxes? Ultimately, it’s up to you. The more complex your situation is, especially if facing an audit or dealing with significant tax debt, the more likely professional services will be able to save you money and simplify your life. The more basic your needs, the more likely you can do things on your own to avoid those extra expenditures that come with hiring a professional.
The important thing to remember is to not procrastinate when tax season is upon you. Whether you take the reins on your own or put your finances in the hands of a trained professional, it’s important to be proactive and have a plan in place to make sure your tax needs are covered long before April 15 rolls around.