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When You Should Hire a Tax Professional vs. Doing It Yourself


When You Should Hire a Tax Professional vs. Doing It Yourself

The 2017 tax filing deadline is a month away (April 17, 2018), so you’re probably in the middle of preparing your taxes. For those who have yet to get started, the clock is ticking!
Last week, I mentioned why it’s not always a good thing to get a tax refund. Regardless of whether you’re getting a refund this year, tax preparation is no easy task. A range of life circumstances can impact how you decide to file, such as marriage, on top of dealing with complex tax codes and jargon.
If you’re completing a 1040EZ form this year, you have the simplest route. Several online services offer free federal filing tools and can easily be completed without the help of a certified public accountant (CPA) or tax professional.
However, many are strapped for time and don’t want to bother with tax forms, receipts or itemizing items. Hiring a CPA or tax professional can be a huge benefit – from ensuring you share the most accurate information about your taxes to saving you money by identifying deductions of credits you didn’t realize you had before. If you hire a CPA or tax advisor, ask them to share details about what they’re filing and why.
I often work side by side with my clients’ CPAs and on several occasions I’ve caught mistakes that they have made. CPAs and tax professionals are humans too; they might make small mistakes that can cost you hundreds in the long run. Remember that most tax advisors are filing hundreds if not thousands of files, not just yours. So, be sure to discuss your draft filing before allowing them to submit it on your behalf. 

Life circumstances can make filing your taxes more complex by default. If any of the below apply to you, it’s worth meeting with a CPA or tax advisor to discuss how you can optimize tax savings and reduce your tax liability as much as possible.
1.) You got married. Decide if you and your spouse are filing separately or jointly. There are significant pros and cons to each.
2.) You had a child. Most parents are eligible for the Child Tax Credit, which is worth up to $1,000 per qualifying child.
3.) You bought a house. Itemized expenses paid toward your home, including mortgage interest, real estate taxes, mortgage interest and homeowners’ insurance premiums.
4.) You received a significant bonus or salary increase. The IRS considers bonuses “supplemental wage.” Don’t get hit with a huge tax bill at the end of the year.
5.) You started a business or became a partner at a firm. Business owners have a laundry list of expenses to itemize and must file specific tax forms to report income. If you became a partner at a firm, you may be receiving a K-1 tax form.


The Bottom Line:

Deciding whether to file taxes on your own or hire a professional is an individual choice that takes many personal life factors into consideration. Either way, most people’s finances don’t change year over year. However, it’s never a bad idea to consult the experts. Meet with an advisor every two to three years to discuss your goals, life changes, and re-evaluate your tax planning (i.e., what to itemize, how much to withhold, etc.).

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This data is for informational purposes only and Capital Benchmark Partners, LLC ("CBP") is not affiliated with any of the businesses mentioned nor endorses them. CBP is not endorsed by any third party entities for their inclusion in this article nor is compensated for mentioning them. Past performance is not a guarantee of future results. The information contained herein has been obtained from sources believed to be reliable but the accuracy of the information cannot be guaranteed.

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