As we draw closer to tax season, consider whether or not you need to hire a professional to help you with your tax needs this year. The answer to this question is highly individualized, and you can determine the right course of action for you depending on your answers to the following questions.
How Thorough is Your Tax Knowledge?
You may already possess the basic knowledge of the tax process; i.e. relevant forms including W2’s and 1099s. However, filing your taxes goes far beyond just this basic information, and this is where filing can get tricky. You’ll need in-depth information on deductible expenses, like student loans and charitable donations, and if you’re a business owner, you’ll have to provide records of your expenses and your income. If you have a single income, no dependents, and don’t own a house, your taxes will probably be pretty straightforward and easy to handle. However, if you have any complications or feel unsure about how you should file, it’s probably in your best interest to hire an accountant or get professional tax debt relief.
Do You Make Money from Freelancing?
If you make extra income from a freelancing position and don’t pay taxes on it throughout the year, then you’re required to pay self-employment taxes in April. Even if you have another full time job that takes taxes out, the government still considers you self-employed because you make an untaxed side income. With this side job, your employer will report your earnings to the IRS as a deduction with a 1099-Misc. form, and if you don’t report it, you may find yourself in a load of hot water.
Self-employment also comes with its benefits during the tax season. You have a variety of potential deductions available at your fingertips, and a professional can help you navigate the deductions that apply to your particular situation, and help you avoid making any questionable deductions that could trigger an IRS audit. In this case, a professional can save you money, make you money, and keep you out of legal trouble—three tempting benefits to hiring a tax service.
Are You a Financial Supporter?
This may seem like a cut and dried question, but it’s more complicated than you think. Do you have dependents that you support financially? You may think you do, and file as such, but in actuality said individual may not qualify for that distinction. For example, even if you support a relative, if they’re not your direct descendent, the government may refuse your claim. Talking to a tax professional can help you correctly file any and all dependents.
How Much Time Do You Have?
If you’re busy and don’t have a hefty chunk of time to dedicate to getting your taxes in order, then you should definitely consider hiring a tax professional. The IRS claims that the average taxpayer will spend 22 hours preparing their taxes with the correct forms. If an entire day sounds like way too much time for you to spend neck deep in tax information, then you may want to shift the responsibility over to a professional.
Do You Have a New Business?
Did you just start a new business? If so, a professional can help you seek out essential business deductions, and pay all the essential federal business taxes, along with state income taxes, sales taxes, and excise taxes. An experienced CPA can help you forecast the costs associated with your business and help you save hundreds to thousands of dollars come April.
Have You Recently Had a Status-Changing Life Event?
If you recently had a child, got married, or got divorced, then your filing status has changed and you may need the help of a professional to determine the appropriate status. Some of these statuses may have time-sensitive dates which could make things more complicated. An experienced CPA will understand the nitty gritty of this process. Working with a CPA as time goes on is also a good idea because tax credits and deductions in regards to your dependent children could expire depending on age and salary.
Hiring a tax professional may be essential for maintaining your financial security. While those with uncomplicated incomes, no mortgages, and no dependents may find it easy to file alone, if you have any complicated tax issues, it’s in your best interest to use tax filing services.
