For the average layperson, doing taxes is not a lot of fun; most of us really don’t know enough about this to feel confident in our tax filing skills. If your tax situation is straight-forward and uncomplicated, filing on your own with tax software can be simple. There are certain situations, though, when a tax pro is pretty darn close to a necessity. Learn when to hire a tax professional for your sanity and your wallet.
You’ve Started a Business
If you’ve recently launched a business, chances are you did a lot of research and know what you’re doing. However, the tax laws for these businesses are a whole different ball game. Don’t wait until you make mistakes. Hire a tax preparer the first year you’re in business or risk going down a bad road before you even get started.
You’ve Inherited Money
Inheriting money can be a wonderful thing, especially if it comes at a time in your life when you’re living paycheck to paycheck. This is all the more reason to hire a tax preparer, as he or she can help you avoid paying large capital gains taxes on this sum.
You Got Married, Divorced, or Had Children
Any change in your family status would make it extremely helpful for you to hire a tax preparer. Depending on when you got married, your tax professional could tell you whether it would be more beneficial for you to file jointly or separately. Conversely, your tax professional can help you tackle unpaid tax liabilities caused by a former business partner. This person could also help you ensure that you’re filing your alimony correctly. Having children simply means filing differently; it’s better to be safe than sorry, especially when it comes to leaving money on the table.
You’ve Made Mistakes on Past Taxes
Let’s face it—doing taxes isn’t for everyone. Many of us simply have no idea how to file, anything about deductions, or even the first thing about tax breaks and credits. Because this ignorance often means money out of our pockets, it’s best to hire a tax pro if you’ve made errors on past tax filings. Not only that, but your tax pro can help you go in and rectify mistakes from past years.
You’ve Purchased Real Estate
We’ve all heard about the tax breaks you’ll get as a home owner. It’s often what motivates many renters to get in the game. But what do you do if you have no idea how it works? Well, you hire a tax preparer. As Barbara Taibi, a partner at accounting firm EisnerAmper, says via US News, “For the sale of a house, if it’s your primary residence and you live in the house and own the house [for at least] two out of the last five years, you may qualify for a capital gains exclusion of a half million dollars if it’s a joint return.” Now that’s significant and something you likely wouldn’t have known without consulting a tax pro.
You’ve Adopted a Child or Children
Adoption is a lengthy and bureaucratic procedure in and of itself, but often the most rewarding thing many parents will say they’ve ever done. On top of expanding your family, though, you need to know about the tax filing factors that go with this. As that same US News article notes, the IRS was offering a tax credit of up to $13,400 per child as of 2015. This is for expenses related to the adoption and is considered in relation to income limits. In order to properly document payments and submit eligible expenses on your tax returns, you need to hire a tax advocate.
If you’ve done taxes on your own as well as hired a tax preparer, you likely know that the latter is the safer way to go. With knowledge of the ever-changing tax laws and how to submit and document everything correctly, the amount you pay this person will likely pay off in a big way when it comes to tax refunds.