When You Need to Have Your Taxes Done by a Professional When You Need to Have Your Taxes Done by a Professional
Your tax position is one of the most important things you should know. Many times, people that are in a difficult tax situation attempt to file their own taxes, and end up in a legal bind. Help is out there, and if for no other reason that maintaining your sanity, you should be willing to pay a fee to have your taxes done by a professional. These professionals find tax preparation, even in difficult circumstances, to be business as usual. There is every kind of help available, from franchise operations like H&R Block to professional CPAs. Here, we discuss when to use the services of a professional.
If you find that your tax return is a bit difficult, but does not warrant the services of a CPA, consider using services such as H&R Block for your tax filing. These franchises offer simplicity and convenience, and you know that your taxes are done correctly. They offer a guarantee, and will stand behind you in case of an audit by the IRS. If they offer a Refund Anticipation Loan, tell them no. This service can hit you with up to a 100% APR in anticipation of your refund. It is just not worth it.
The Enrolled Agent
A step up from the franchises is the Enrolled Agent. This tax professional is certified and licensed to prepare taxes by the IRS. The Enrolled Agent is the one to turn to if your taxes are in need of more help than what a franchise can do, but you feel a CPA is not required. Naturally, the fees would be less than a CPA. An EA can represent you in any form of litigation by the IRS including audits and appeals. An example of what an EA can do is helping you at tax time if you own rental property, or have moved from one state to another during the reporting year. Use an EA if you have sold a home, and figure that you have a larger gain than the standard $250K/500K exemption.
A step up from the EA is the Certified Public Accountant (CPA). These professional accountants are certified by the states in which they do business. A CPA has a professional education and a degree in accounting. Although they typically focus on business and corporate accounting, many also work with individuals who might have a difficult tax situation.
The CPA is more knowledgeable about many tax laws than an EA or franchises like H&R Block. They may charge you more to do your taxes than the others; this might not be a bad thing if your tax situation is complex. The CPA is also the best choice if you need to go to court over taxes. They know the ins and outs of the law, and can often bail you out of a bad situation. Be sure that when you hire a CPA, though, that he is proficient with taxes. Just because they can do the arithmetic does not mean that they have studied tax law.
So when is it advisable to hire a CPA to do your taxes? One of the best times to seek a CPA for taxes is when you receive money in the form of a settlement or an inheritance of $1 million dollars or more. This certainly justifies a CPA. The next best time to see out the advice is when you start your own business. Trying to build a business without the help of a CPA is like giving a hand grenade to a baby to play with. Unless you yourself are a CPA, don't try to do this without help. Working with a CPA in your first year of business will teach you what you can and cannot do, and you can spend your time and energy getting your business going.
There are times when you need a CPA, whether for tax business or when starting your own company. Take advantage of his or her learning and expertise, and save yourself a ton of grief further down the road.