As we are nearing the end of January, companies are finishing up all their tax documents for 2022 and are preparing to send them out, if they haven’t already. However, as the pile stacks up, you may realize that your taxes aren’t as simple as they used to be. If you dread the whole process, you may want to ask yourself, is it worth hiring someone to do your taxes?
7 Reasons to Consider Hiring Someone to Do Your Taxes
Once upon a time, I filed my taxes for myself. But as life got busier and I found other ambitions, preparing my taxes became one of those things that I’d prefer to leave to the professionals. If you are having similar feelings, here are 7 reasons to consider hiring someone to do your taxes.
1. Your finances have become more complicated.
As a young adult, filing my taxes was very straightforward – no itemizations and few deductions. But as I’ve gotten older, my life and finances have gotten much more complicated. I have gained more assets and debts that factor into the equation. While there is tax software out there to help guide you through it, I don’t want to risk making a mistake that could cost me money.
Hiring a Certified Public Accountant (CPA) was the right move, especially when I was working internationally and later, starting my own business. There were too many possibilities that I could miss something important. Hiring a professional removes this burden during an already stressful time of the year, and ensures that you keep more of what’s yours.
2. You are self-employed.
Those who run their own business or side gigs should also consider paying someone to prepare their tax return. If you aren’t sure if this includes you, the IRS defines the self-employed as those who own their own business or operate as a 1099 contractor.
Working online or having several side hustles can generate extra income. But, the paperwork can get messy. It gets even more complicated if you are still a W-2 employee. Being self-employed also requires you to pay your own taxes since they won’t be automatically deducted from your paychecks. While it’s possible to do all this on your own, working with a CPA will ensure you are in full compliance with all the tax codes, provide more accurate calculations, and help you avoid a huge bill from the IRS.
3. You have gone through a significant life change.
Anytime you experience a significant life change, it will impact your finances. These can be milestones such as finishing school, starting a new career, moving to a new city, paying off student loans, marriage, having children, gaining assets, and retiring. Unfortunately, it isn’t always positive as in the instances of job loss, divorce, or bankruptcy. But, any of these events can drastically shift your financial status and how you file taxes.
These life changes can also affect your tax obligations. The American tax codes can be difficult to understand on their own. If you are also dealing with a major life change, why not pay an expert to help you through it? Then, you won’t have to navigate your situation alone.
4. There are new assets in your portfolio.
When you start investing and gaining assets, your financial advisor will be your best friend. They can help you identify the best investments for your long-term goals and familiarize you with the tax laws associated with each asset class.
Even if you understand the advantages that come with different accounts, it can be challenging to apply this knowledge. Furthermore, you’ll have to stay on top of things if laws change or you acquire new asset types. However, your accountant will make sure that all your earnings are reported correctly. Having a professional in my corner helps me make sense of the laws and gives me greater confidence to invest and diversify.
5. An accountant can help you maximize your return.
One of the greatest benefits of hiring someone to do your taxes is that they will help you maximize your returns. A CPA will look for deductions and tax credits that you didn’t know you qualified for and help you keep more of your hard-earned money.
Hiring an accountant is also a smart move if you depend on deductions to lower your taxable income. They can help you determine which ones will give you the biggest return and teach you which expenses qualify. When you seek expert advice, they will make sure you understand your options and help you itemize so you don’t miss out on important deductions.
6. There is less risk of an audit.
No one is perfect. It’s a fact of life. People make mistakes, especially when they file their taxes. This is precisely why the IRS has forms when you need to amend a return. However, hiring an account can reduce the chances of you making a costly mistake and put you at less risk of an audit.
Many people prefer to use the tax software because it’s cheaper, but additional costs and fees to refile can quickly add up. And, the price of the software gets more expensive as the April 15th deadline approaches. It may save you more in the long run to hire someone to take care of it for you from the start.
7. It will relieve the stress of tax season.
If it wasn’t obvious by now, I absolutely despise preparing my taxes. Even though I try to file as soon as possible, I feel like a ball of nerves until it is done. For me, turning it over to our accountant has been well worth the cost. It relieves my stress and anxiety over making a mistake. And, I don’t have to spend extra energy on this important task.
As my family has discovered, the more complicated your finances, the worse it becomes. While helpful in the past, the tax software will only get you so far. I truly believe the price of hiring someone to do your taxes is worth the peace of mind.
- 5 Ways to Save Money on Your Taxes
- Filing Taxes Late? Here Are Some Excuses That Actually Work With the IRS
- Best Tips to Get the Most Out of Your Next Tax Return
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.