How to Know If You Need a Tax Pro

Tax time is one of the most stressful times of year for everyone. Besides worrying about possibly owing even more than you’ve already paid, there’s always the question of figuring out exactly how you’re going to get your taxes filed. Aside from a few whiz kids, I don’t know very many people who feel comfortable doing their own taxes from scratch. Some depend on a personal accountant, some depend on a calculator-savvy friend, and some just walk into the nearest H&R BlockJackson Hewitt or R&G Brenner with an envelope stuffed full of receipts and a look on their face that says, “HELP ME!”

Lots of people have gotten the hang of using tax-prep software like TurboTax or Quicken, and these programs have become a reliable and easy way to get your taxes out of the way. But could going to a tax professional get you a bigger refund? Hiring a professional to do your taxes can be expensive, so how do you know whether it’s worth it?

Self-Employed? Call in the Pros

A good rule of thumb is that the more complicated your taxes are, the more likely it is that you would benefit from professional tax preparation. Ronald Seely, a senior tax preparer at Liberty Tax Service in San Francisco, says that professional help is best for “anyone who has income on a 1099 miscellaneous form … the self-employed, freelancers, and independent contractors.” Wages on a 1099 haven’t had any money withheld, so there are all kinds of taxes to pay — sometimes up to 40 percent of the total amount. That’s where a professional can help, Seely says. “We can find deductions to help with that.” You’ll be claiming deductions for business expenses, and it’s best to have a qualified tax preparer help you discover new deductions and find new ways to save money. If you’re a freelancer, going to a tax professional will help you get a refund that is well worth the cost of their service.

Higher Income = Higher Deductions

If you receive W-2 wages, you should think about professional help if you earn a large salary. If you earn $70,000 to 80,000 per year or more, it might be better to itemize your deductions in order to get the maximum refund and accountants can help you do that. People earning large salaries are also more likely to have taxes on investment income or rental property, as well as deductions like charitable contributions, all of which should be sorted out by a pro.

If you receive W-2 wages, but also have a significant amount of out-of-pocket expenses for your job, you’re a good candidate for tax help. If you do a lot of driving for your job, but are not reimbursed for mileage, if you have a home office, or have any other kind of legitimate business expenses, then you’ll want to claim those as deductions, and having professional help ensures that you won’t miss any opportunities to get money back.

Life-Changing Events Change Your Taxes, Too

Even if your taxes are usually pretty black and white, there are a few times in life when it’s a good idea to get a professional’s opinion. If you’ve just had a baby, bought a house, taken money out of a 401(k), or gotten married, there are tax implications that you’ll want to get help with and a professional tax preparer can help you become familiar with the kind of deductions you’ll be taking from now on. You’ll also get special consideration if you are in school or have recently moved for a job.

Source: Minyanville