Posts filed under Filing Taxes

Top 4 Reasons People Look for a CPA

The deadline to file your taxes is fast approaching, and you might be thinking that this year you should work with a CPA instead of filing on your own. Maybe you worry that you’re missing important details or potential write-offs. Maybe you’ve had a change in personal or business finances and your taxes are getting too complicated. Or maybe you just want help from someone you trust so you don’t have to deal with the stress.

So how do you decide if hiring a CPA is the right move this year? 

Here are 4 common situations where you’d benefit from working with a CPA.

1. You’re spending too much time on taxes

How much is your time worth? 

Try to estimate how much an hour of your time is worth, then think back to how many hours you spent preparing your taxes last year. This will give you a good sense of how much it actually “cost” you to file your taxes. Now you can make a more informed decision about whether it’s worth it to partner with a professional on your tax prep and filing. 

This is particularly applicable if you’re self-employed or own a small business. Your time might be better spent on business development, building relationships, or billable hours. 

2. You’re worried that you’re not getting it right

Tax laws are complex and they change frequently. This makes it challenging to keep up with them on your own. 

There are two sides to this scenario:

  • You worry about getting audited
  • You worry that you’re missing deductions and paying more taxes than you need to

Either way, it might be wise to work with a CPA. 

A CPA can organize and prepare your taxes to minimize your audit risk. This isn’t a guarantee that you won’t get audited, but you’ll be better prepared if you do.

Also, a CPA will make sure you take advantage of all the tax benefits, credits, and deductions available to you. You might even learn about changes you can make for the next year to put yourself in a better tax situation.

3. Taxes cause household tension

Filing taxes can be a stressful and complicated undertaking. Finances can cause a lot of tension in a relationship. And if you’re married, filing joint taxes can exacerbate this tension. 

You and your spouse might decide it’s worth the investment to work with a CPA who can guide you through the process and help you get a clear picture of your financial and tax situation. By learning about your tax situation, exploring your financial options with an expert, and becoming more comfortable with your finances, you can improve your financial conversations, plan better for the future, and reduce financial tension.

4. Your tax situation has become more complex

There are many things that can impact your tax situation and make it more complex from year to year. Purchasing a home or rental property, starting a business, a change in your employment, or inheritances can all have significant effects on your taxes. 

These major life changes can make filing your taxes more challenging, especially when the changes are new and you’re still adjusting to the impact they have on your finances and taxes. 

Complex tax returns usually involve one of these situations: 

  • Rental income and expenses
  • Self-employment income and expenses
  • Income from multiple states
  • Real estate purchase or changes
  • Estate and trust considerations

In these scenarios, partnering with a CPA can help you explore all possible deductions and tax credits, ensure that you’re not missing any important details, and offer confidence that you’re correctly filing your taxes. 

Posted on March 7, 2016 and filed under Choosing a CPA, Filing Taxes.

When should I hire a CPA to file my taxes?

This year, you might find yourself wondering when you should stop filing your own taxes and work with a CPA. Maybe your taxes are getting too complicated. Maybe you’re always worried about missing things. Maybe it’s just causing unnecessary stress. 

But how do you know if it’s worth it? 

You might find there are some unexpected benefits to working with a tax professional for yourself, your business, or your family. So take a look at a few common situations that signal it might be time to hire a CPA. 

If you’re expecting a credit through the Affordable Care Act 

The Affordable Care Act brought new credit opportunities into the tax return landscape for 2014. But it also made filing your taxes more complicated. 

If you bought health insurance through the health insurance marketplace, you might receive a tax credit if you meet certain criteria. The marketplace system uses a projection of your anticipated tax situation to estimate your credit, but you won’t know your true eligibility or potential amount until you file your return.

Also, when you applied for insurance there were different options for how you’d like to receive your credit, whether you wanted your monthly premiums lowered or wanted to receive the funds along with your income tax return. Depending on what you selected, there are different implications for how to file your taxes. 

Overall, the credit adds five new tax forms to your filing process, which will likely make the task more challenging. 

If you’re spending too much time on your taxes

Every year, it’s a good exercise to assess how much time you spend on your taxes versus how much you think your time is worth. 

If you spend more than two consecutive weekends on your taxes, it might make good financial sense or improve your general well-being to free up that time and hand off your tax prep to a professional. 

This is especially true if you’re self-employed. Calculate your hourly rate against how much time you spend filing your taxes. Then get a quote from a few CPAs to compare. You might decided it’s more practical to use your limited time generating business or making more money rather than doing your tax work yourself. 

If finances cause tension in your household 

Finances can create a lot of friction in a relationship. If you’re married, filing joint taxes can often raise the tension. 

It could be that fine-combing through the details of your finances brings on additional stress. Or you might simply have a hard time working on a complex, math-related project together because of personality differences or conflicting opinions about how to interpret tax laws. 

Some spouses decide it’s better to sit down with a CPA who can guide them through the process, ask good questions, and help them understand their tax situation together. As you learn more about your financial options and become more comfortable with the process, you might find it also improves your financial conversations at home and eases your stress. 

If your tax situation is growing more complex 

Your tax situation can change considerably year to year. Maybe you purchased a rental property, started a new business, or received an inheritance. Big life changes make filing your taxes more challenging, especially when these changes are new and you’re still trying to understand how they impact your finances. 

Complex tax returns usually involve one of these situations: 

When you have more assets and tax considerations, you might be missing opportunities for credits. 

A CPA can help you understand the changes and ask good questions to make sure you explore all possible reductions. You might also learn about changes you should make for the next year to put yourself in a better tax situation. Ultimately, learning with a CPA by your side will make you feel more confident and comfortable managing your finances. 

These are just a few of the situations that might indicate when you could benefit from the help of a CPA. And there are likely more. So if you want to ease the stress of tax season or if you want to feel in control of your finances by better understanding your tax situation, talk to Tom’s team today.

Posted on January 14, 2015 and filed under Filing Taxes, Tax Preparation.

4 Tips for Your 2013 Tax Return

Tax tip number one: Get your taxes prepared now!

You should have all your statements and documents in hand by this time for activities in 2013. Your W2s were required to be mailed to you by mid-January. Most tax statements were issued on February 18th this year. Filing early puts you in a position to collect a refund quicker and make a payment plan if necessary. Filing taxes early also helps stave off an unscrupulous fraudster grabbing your refund before you do. There are plenty of tax fraud schemes as you may be aware. We found a great “Dirty Dozen” list of schemes from Daily Finance.

Tax tip number two: 2013 taxes are the first opportunity for same-sex married benefit options

The IRS and Minnesota have declared same-sex married couples can choose their filing status for joint, married or single filing status. Also ruled as acceptable is amended or original income tax returns from same-sex married couples for all open, prior tax years. For more information, see Minnesota Tax Information for Same-Sex Married Couples.

Tax Tip number three: Avoid a penalty and enroll in health insurance

Your 2013 won’t be affected if you are not carrying health coverage, but you will be asked if you have health coverage. Plan to have coverage by March 31st to avoid a 2014 penalty.

Tax Tip number four: Contribute to a tax-advantaged account

There are several options for these types of contributions. The great thing is you have until April 15th of 2014 to make the contributions that you can attribute to your 2013 return. Some examples of tax advantaged accounts are: 401(k), health savings accounts (HSAs), Roth, SEP accounts.

We have many tips to share based on your unique situations. 

Call for an appointment. We will review your needs and explore how we can minimize the taxes you owe and keep the most amount of your earnings in the bank. 

Already had your taxes completed this year? Leave a us a review – much appreciated!

Posted on February 26, 2014 and filed under Filing Taxes.