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Should You Hire a Tax Professional?

Updated on February 18, 2013

Do You Need a Tax Preparer?

As a CPA, I hear the question "do I need to hire a tax preparer?" a lot!

And the answer is... it depends. Many tax returns are very simple with just one or two W-2s and no deductions other than the standard deduction. Other returns are very complicated with multiple businesses, rental properties, itemized deductions and other items that make preparing a return more difficult.

Every taxpayer and every situation is different, so some people may be able to prepare their own tax returns, while others will need to hire a qualified, experienced tax professional.

This lens will discuss who should hire a tax professional, the benefits of working with a tax pro, questions you should ask before hiring a tax professional and more...

Tax Preparation Poll

Do you prepare your own taxes or hire a tax pro?

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When Should You Hire a Tax Professional

Whether you're an individual or a small business owner, there are many times and situations when you should hire a tax professional.

Here are a few examples of when you should hire a tax preparer:

* If you have a complicated tax situation - including business income, investments, real estate transactions, etc.

* If you value your time! Preparing a tax return can take 10-40 hours depending on how complicated your taxes are. If you are a small business owner, your time should definitely be valuable enough to hire a tax professional.

* If you don't have time to keep up with the tax laws. The tax laws are constantly changing, so you need to keep up with them in order to make sure that you get all of the deductions, credits and other benefits you are entitled to.

Here's another tip: If you decide to hire a tax professional, get your tax information to them early! They will be much fresher in February than they will be in late March, early April.

5 Benefits of Working with a Tax Pro

The biggest reason people hesitate to hire a tax professional is the cost. A good tax preparer is worth far more than the cost of hiring a professional, especially if they can save you more in taxes than he/she charges.

Here are five benefits of working with a tax pro:

1. They can save you more money than you would pay in taxes simply because they know more about the tax law. They stay up-to-date on all of the tax law changes and know all the tax breaks that apply to your small business.

2. A tax pro can save you time. A small business tax return can take 30-40 hours worth of work. Even if your time was only worth $10 per hour, it would still be worth it to use that time for income producing activities.

3. Small business taxes are complicated and may have legal considerations that need to be followed. Having a professional review these items can provide a "peace of mind" factor that's valuable to all small business owners.

4. Many tax professionals provide audit assistance in the event that you are ever audited. They can also help you respond to IRS letters, which can be terrifying the first time you receive one!

5. Tax professionals can help you avoid common tax filing mistakes, which can lead to interest, penalties and additional taxes owed.

Recommended Reading for Do-It-Yourselfers!

J.K. Lasser's Your Income Tax 2013
J.K. Lasser's Your Income Tax 2013

Who can keep up with the ever-changing tax landscape? Now you can easily find the new breaks that apply to you and your family on your 2012 return and beyond in J.K. Lasser's New Tax Law Simplified 2013.

Contains over 2,500 easy-to-use tax planning tips and strategies and easy-to-understand coverage of the year's tax law changes

Packed with hundreds of updated examples, practical advice, and real-world examples

Includes filing tips and instructions to help you prepare your 2012 return

Comprised of a quick reference section that highlights what's new for 2012 as well as a topic index to help pinpoint the biggest money-saving deductions

Offers instruction for customers who use software or CPAs to file their taxes

Filled with practical tax guidance you can't find anywhere else, J.K. Lasser's Your Income Tax 2013 will help you plan and file your 2012 tax return in the most efficient way possible.

 

More Recommended Reading...

Whether you prepare your own taxes or go to a tax professional, it's important to understand at least the basics. Here are some great books from Amazon to help you reduce your tax bill.

Questions You Should Ask Before You Hire a Tax Preparer

You've decided that your tax situation is difficult enough (or your time is valuable enough) that you want to hire a tax professional to prepare your taxes this year. But how do you know which tax pro is right for you?

You want to find an experienced tax preparer who understands your unique situation. Asking for referrals from friends, family or colleagues who have similar tax situations is always a good idea, but you should do your own homework too.

Interview several tax professionals to make sure you find the right tax pro for you. Here are some questions you should ask when interviewing a tax preparer:

  1. How long have you been preparing taxes?
  2. What licenses, experience or other credentials do you have?
  3. Do you specialize in any areas?
  4. If you have a small business, you should ask the potential tax professional if they are familiar with your type of business, or if they have other clients who are in the same business you are in.
  5. Are you available throughout the year if I have questions or need to do any tax planning?
  6. What are your fees?
  7. Do you prepare my return yourself, or do you outsource it to someone else?
  8. How long will it take to prepare my return?
  9. Can you help me if I get an IRS notice or if I am audited?
  10. Do you do tax planning and tax estimates, or do you just prepare taxes?

The point is to find a tax professional who understands your unique situation and who will be available to provide help throughout the year instead of only at tax time.

Investigating Tax Pros

Want to Learn More about Taxes Before You Hire a Pro? - Check out these great resources, or use the search box to find even more!

IRS Circular 230

Disclaimer: Any tax advice contained in this message is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. It is strongly recommended that you get additional help from a (paid) tax professional who is familiar with your unique circumstances. In other words, don't take take advice from a Squidoo lens, or forum, or blog...

Disclosure

EbizTaxTips (Kristine McKinley) is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com, endless.com, smallparts.com or myhabit.com.

Do you work with a tax professional? Share your experiences and questions here!

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    • Frischy profile image

      Frischy 4 years ago from Kentucky, USA

      I have always used TurboTax, but now that my business is taking off my taxes have become more complicated. I hired a CPA yesterday. I wish I had seen your list of questions before I met with him. I see a few I wish I had thought to ask. I'm sure this article will be helpful to many! Good work!

    • profile image

      anonymous 5 years ago

      Great lens! I had to file my first 1040 this year, along with two different W2's from prior employers. I wanted to find a tax preparer to help me through the process, and I really appreciate the help they gave me. If anything just preventing a headache for me.

    • profile image

      SandyBabon 5 years ago