When Is It Worth It to Hire a Tax Pro?
Natasha Burton
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Good news for procrastinators: The deadline for filing taxes has been pushed back three days this year since tax day would fall on a Saturday and Washington D.C. is celebrating Emancipation Day on April 17. That doesn’t mean you should wait, though, if you’ve got your tax docs in hand.

But should you file yourself or go to a tax pro? Here’s how to figure that out, and how to make sure either method goes smoothly.

DIY or Hire Expert Help?

If all of your annual income comes from your full-time job, and you just have a few straightforward deductions plus some retirements savings, filing your own tax return should be pretty easy.

But if your home’s in foreclosure, you did a short sale or you refinanced, hiring a pro may be advantageous, as those can trigger more complicated questions about income and deductions, says Tana Gildea, a Georgia-based Certified Public Accountant and author of “The Graduate’s Guide to Money.”

Small business owner? Consider expert help to ensure you’re taking all the right deductions. Independent contractor? You might also benefit from guidance in assessing quarterly taxes, SEP IRA contributions and home-office deductions.

And if any special rules or circumstances apply to you—you’re a real estate professional or own complex investments, for example—you may want to hire someone to help you navigate them.

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If you’re going to DIY…

1. Use tax software. Gildea likes TurboTax because it’s easy to use, and, if you’re filing a very basic return, it’s free. Otherwise, fees range from $34.99 up.

There’s also Free File, which is software to complete federal returns from the IRS, available free of charge to people earning less than $64,000.

2. Take your time. Double-check your data and math at each step. “You have to be able to substantiate every number that shows up,” Gildea says.

3. E-file. According to Gildea, e-filing is the way to go. (It’s what the pros have to do unless they specifically opt-out.) It’s also faster than sending info via snail mail, which means a speedier refund.

4. Apply for an extension if needed. If you don’t have the info to complete your return, or you had a life event like a debilitating illness or death in the family, you can file an extension. Just don’t forget you’re still required to estimate your income, calculate any taxes owed and pay them by April 18.

Best Practices For Hiring a Pro

1. Understand what you’re getting. An Enrolled Agent is a tax expert who’s passed an IRS exam and is authorized to represent taxpayers in a dispute with the IRS. They may not also be Certified Public Accountants, explains Gildea. CPAs have “extensive knowledge” of accounting rules as well as tax rules.

2. Beware of chop shops. While the amount you’ll pay depends on the complexity of your return (and the rate could be billed hourly or as a flat fee), getting quoted a super-low cost could be a red flag. That may indicate they’re churning out hundreds of returns, and may not pay as much attention to the details of your situation.

3. Interview your prospective pro. Come armed with questions about your tax situation. And check credentials of anyone you meet through sites like the American Institute of CPAs.

4. Make sure you have all your documents. Gather copies of the tax forms you got in the mail from companies you’ve worked for, like a W-2 and 1099s, as well as receipts and any other supporting documentation you need (like receipts for any donations you made), keeping originals for yourself.

5. Don’t sign anything you don’t understand. Ultimately, you are responsible for what’s on your tax return—no matter who prepares it. “If you don’t understand where a number came from, don’t sign the return,” Gildea says. “If your preparer can’t, or won’t, explain the basics of how the taxable income was calculated, it’s time for a new accountant.”

This article was updated in January 2017.

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4 comments

    April 18, is a new date on my calendar. Thanks for the internal information on taxes. We will never avoid TAXES.

    Thanks for going over when and how to hire a tax professional. My wife and I have always done our own taxes, but this year’s taxes were more confusing than I thought it would be. Also, this year, we are planning on buying a house. Any way, we may look into getting professional for next year, but it is good to know our other options. Thanks for posting!

    Thanks for this helpful post on hiring a tax pro. I have always done my own taxes in the past, but I am not sure that I should continue to try to do it myself. My taxes are starting to get more and more complicated every year. I like that you put a section on understanding what you’re getting. I don’t know what exactly I would be expecting if I hired someone to help me. Thanks for this helpful post, I will have to consider getting tax preparation help.

    Natasha, you make a good point about how you should interview your tax preparer before you hire them. I would think that it is important to make sure they have the proper qualifications and experience. I have been thinking about hiring a professional to help me handle my taxes and finances, so I will have to make sure I ask a lot of questions before I make a decision.

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