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