When Should You Hire An Accountant To Help You With Your Income Taxes

by Hank Coleman

Meeting with an accountant - when should you hire an accountantDetermining when should you hire an accountant can be a hard decision to make. I know that I put off hiring an accountant. I thought that I could continue to do all of the work myself. I soon found out that I was missing the skills and time needed to do the job right.

Hiring an accountant or a tax professional can be a tough decision because chances are you are like me and have been doing your own taxes for quite a long time. However, hiring a professional can make a lot of sense in certain situations. The money they save you in taxes could potentially make up for their costs. You could receive a larger income tax refund in many cases by hiring an accountant to help you during tax time. Here are some reasons when should you hire an accountant to help you with your taxes.

When Should You Hire An Accountant – Several Instances

Here are a few instances where you may want to consider finding someone like an accountant to help you with your taxes.

Multiple Income Streams. When you start developing multiple income streams, that may be a great indication when you should hire an accountant. Multiple sources of income could trigger when it would be a good idea to hire a tax professional. When you are just working 9 to 5 and you only get a W-2 each year, your taxes are pretty simple to figure. But, if you start layering in investment income, real estate rental income, and a possibly a side business, your taxes can start to get very complicated in a short amount of time. Hiring a tax professional can help you streamline your taxes and make sure you have everything covered. They can also make sure that you are getting back everything that you deserve in your income tax refund.

When You Earn A Windfall. If you have come into money from an inheritance or other windfall like winning the lottery, there are a lot of potential tax implications. Before you do anything with the money, you need to call a tax professional to help you setup a plan. A common scenario is someone wins the lottery, but then goes bankrupt because they didn’t plan for taxes. A tax professional can also help you make sure that you keep as much of the money as possible.

Screwing Up Your Taxes. I am embarrassed to say that I have messed up my taxes a time or two. The worst case was when I received a letter back from the IRS that said they owed me more money than I had received with my income tax refund. Honestly, who gets a letter from the IRS that says they owe ME more money?!?! That’s when I knew that I should not file my own taxes. They are obviously too complicated. I’m obviously wasting money with credits and deductions that I could have been taking. That’s when I knew that I should hire an accountant to help me.

A Lifestyle Change. If you’re thinking about a big lifestyle change, you should consider getting tax advice from a professional. This could be retirement, starting a business, or even having your wife stay home with the baby. Whatever the scenario, it can be a good idea to get a tax professional so that you know what to expect and you’re not surprised a year later when you’re actually filling out your tax return. Many scenarios could involve you having to pay expected taxes rather than having taxes withheld, so make sure that you consult with someone who can help you plan accordingly.

If you choose to continue doing your taxes on your own, you can get many of the popular tax software programs such as Turbo Tax to check your work for you and double check that you are earning the right amount for your income tax refund. Get your biggest tax refund, guaranteed. Download TurboTax® for Mac now.

Related Posts Plugin for WordPress, Blogger...
Share the Love
Get Free Updates

About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and is currently pursuing his Certified Financial Planner credentials. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 498 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


Subscribe To Money Q&A

If you want to learn more about taking back control of your money please subscribe to Money Q&A’s RSS feed or via email to receive all the latest articles! You can also subscribe to our Free Weekly Newsletter.

{ 12 comments… read them below or add one }

John S @ Frugal Rules

Good post Hank! I did our taxes for at least 10 years and always enjoyed it. We ended up hiring a CPA last year as our business became more serious. There are now just too many moving pieces that I am not confident with handling on my own. It’s worth the cost to u to free up my time and to make sure they’re done right.
John S @ Frugal Rules recently posted..Frugal Friday: Blog Posts That Ruled This Week, More of the Same EditionMy Profile

Reply

Hank Coleman

You hit on a great point. It isn’t worth my time. My competitive advantage is not taxes. I can earn more in the amount of time it would take me to do them than it costs me to farm it out to a CPA.
Hank Coleman recently posted..What To Do Right Now Before You Lose Your WalletMy Profile

Reply

krantcents

I have used a CPA since the 70s! I started using one when I bought my first income property and found an even better one when I started some businesses. The advice is invaluable for a small amount of money. I have used the same guy for 27 years so my fee is very low and I can get questions answered over the phone during the year.
krantcents recently posted..A Simple Retirement Plan for You!My Profile

Reply

Hank Coleman

I’m definitely jealous. I wish I could find one that I’m totally happy with. I’m still test driving them and shopping around.

Reply

JT

Once I started getting into real estate investing and managing multiple properties, I hired an accountant. It is the best money that I have ever spent. Not because I was making mistakes in my taxes. In fact, I have found a couple mistakes myself in the past 10 years. But, I was spending over 40 hours of my time doing taxes and was tense for a full month each spring. It is quite a relief to hand over the task to someone else and simply look over the results.
JT recently posted..Lending Club Has Come to IndianaMy Profile

Reply

Hank Coleman

JT, you bring up a great point about the amount of time that we would put into doing our own taxes now that they have gotten more complicated. I don’t like spending a month or even a whole season getting tense about it too. Great points!
Hank Coleman recently posted..Ten Ways To Break Your Texting While Driving HabitMy Profile

Reply

Chris @ StockMonkeys.com

Accountants can be invaluable. I needed one to straighten out my taxes for backing out some IRA contributions. It was way beyond me in terms of tax code so a good accountant can be a life and time saver.
Chris @ StockMonkeys.com recently posted..How To Save On Water BillsMy Profile

Reply

Sarah Park

I have a friend who got a lot of problems with her tax due to not getting an accountant. She was misled by all the things she had to do that her paying of tax was greatly affected.
Sarah Park recently posted..How to Increase Online SalesMy Profile

Reply

Elizabeth @ Simple Finance

Fortunately for me, I have a professional doing my taxes – my dad! He’s a CPA and doesn’t charge me, although he does do mine very last (after all the paying clients), which means I’m often sending in my forms on April 15th.
Elizabeth @ Simple Finance recently posted..How to Prepare for Life After CollegeMy Profile

Reply

Doctor Stock

I’ve been doing my taxes for years… and last year, I hired an accountant. What a smart move. The reality for me was the tips and savings I got was worth the investment in fees to the accountant… and I didn’t have to do the work!
Doctor Stock recently posted..Canadian and US REITS – Out of Favour or Added Flavour?My Profile

Reply

Anita

I have always gone to an accountant to have my taxes done in the past. I thought about trying to do my own since they shouldn’t be too hard to do, but after reading this article and the comments, maybe I should keep having my accountant do them. Thanks for the post.

Reply

Choose Financial Advisors in Melbourne at Navacue

Great! This is really nice blog for businessmen. It helps when we should hire an accountant which can help you with your income taxes.

Reply

Leave a Comment

CommentLuv badge

{ 1 trackback }

Previous post:

Next post: