Deciding whether to hire a tax preparer depends on your financial complexity, income sources, and comfort with tax regulations. While DIY tax software works for simple returns, professional tax help—whether from a CPA, enrolled agent, or certified tax preparer—can save you money and reduce audit risk if you own a business, have multiple income streams, or face complex tax situations. This guide helps you determine when professional tax preparation is worth the investment and how to choose the right type of tax professional for your needs.
Should You Hire a Tax Preparer?
Hiring a professional to do your taxes, particularly a certified public accountant (CPA), who specializes in tax, can cost significantly more than preparing your own tax return. However, the benefits of working with a tax professional may offset their fee.
Review the following criteria to see if hiring a professional might make sense for you.
Do you have multiple income streams?
How much you owe in income tax largely depends on your total income. Each income stream comes with its own paperwork.
For instance:
- Form W-2 from your employer to report your wages or salary for the year, as well as the total tax withheld—this includes Social Security and Medicare taxes and any income tax withholdings.
- Form 1099s apply to most miscellaneous income. If you’re an independent contractor or consultant, you should receive a Form 1099 from any company that paid you. You should also receive Form 1099s documenting any investment earnings.
- Form W-2G documents any gambling winnings.
Do you own a business?
How you pay taxes as a business owner depends on how your business is structured.
For instance, sole proprietors and single-owner LLCs simply file personal income tax returns using their Social Security numbers. The owners of S Corporations or C Corporations must pay personal income tax, plus the company must file an independent tax return.
Different business structures impact the paperwork, too, including which forms you need to file and the deadlines to do so.
An accountant can help you understand what you need to report and when. They can also help you evaluate whether your current business structure is tax efficient; sometimes, reclassifying your business can lower your tax bill.
Finally, businesses qualify for far more tax deductions than taxpayers filing as individuals or as families. While many expenses are tax deductible, the IRS has several rules that are narrow in scope.
It’s important you follow these guidelines closely to avoid potential issues if you ever face an audit.
How complex are your finances?
IRS rules around tax deductions and credits can be complicated; they are also subject to change from year to year. If any of the following apply to you, a tax professional may be able to help you minimize your tax liability, file the proper paperwork, and create a plan to minimize your taxes in the future.
- Are you repaying student loans?
- Are you contributing to a retirement account?
- Have you taken money out of a retirement account? (This is particularly important if you are younger than 59½.)
- Do you have significant out-of-pocket expenses tied to your job?
- Do you pay or receive alimony?
- Do you use the Health Insurance Marketplace for medical or dental insurance?
- Do you have a mortgage?
- Have you moved in the past year?
- Have you had a financial or medical emergency in the past year?
- Were you impacted by a natural disaster?
- Did you make (or lose) any money investing?
With so many variables affecting your potential tax liability, filing an accurate return can be challenging. Minimizing what you owe (or boosting your refund) can be even more complicated.
This is by no means an exhaustive list. However, these questions highlight some of the many areas where a tax preparer may be able to help you find and apply certain credits and deductions available.
Not all tax preparers are created equal
Choosing a tax preparer with specific credentials can help you get the best results. Certified public accountants (CPAs) are a great place to start, though it’s a good idea to look for a CPA that specializes in tax. You can also look for IRS Enrolled Agents.
Finally, consider location. Since taxes have a significant state and even local component, you may get better results if you find a tax preparer who understands state tax law as well as IRS guidelines.
Bogart Wealth Advisors are always happy to coordinate with other members of your financial team and may be able to help you decide whether a tax professional might make sense, based on your individual circumstances. Contact us to learn more.
FAQs
When is the best time to hire a tax preparer?
The best time to hire a tax preparer is now—regardless of when tax season is. While many people wait until January or February to find tax help, hiring a tax professional early in the year (or even mid-year) provides significant advantages. Early engagement allows your tax preparer to implement proactive tax strategies, adjust your withholding, maximize quarterly estimated payments, and identify year-end planning opportunities before it’s too late. If you’re specifically looking for tax season preparation, start your search in November or December to ensure availability, as the best tax professionals often book up by January. For business owners or those with complex finances, consider establishing a relationship with a tax professional who provides year-round support, not just April tax preparation. This ongoing relationship enables strategic planning that can save you thousands in taxes over time. The absolute worst time to hire a tax preparer is the week before the April 15 deadline—you’ll face limited availability, rushed work, higher emergency fees, and missed planning opportunities.
What should I ask when interviewing a tax preparer?
When interviewing a tax preparer, start with credential verification: ask for their Preparer Tax Identification Number (PTIN), which you can verify on the IRS website, and inquire about their specific credentials—CPA, Enrolled Agent, or Annual Filing Season Program participant. Ask about their experience with situations similar to yours: “How many clients do you have with [businesses/rental properties/stock options] like mine?” and “Have you handled [specific tax situation] before?” Discuss their fee structure upfront, asking whether they charge hourly, flat-rate per form, or based on complexity, and what services are included versus additional charges. Clarify their availability beyond tax season: “Will you represent me if I’m audited?” and “Can I contact you with tax questions throughout the year?” Ask about their review process and accuracy guarantees: “Who reviews my return before filing?” and “Do you carry errors and omissions insurance?” Finally, inquire about their approach to deductions and planning: “How aggressive or conservative are you with deductions?” and “Do you provide proactive tax planning recommendations?” Red flags include preparers who guarantee specific refund amounts before reviewing your documents, charge fees based on your refund percentage, are unwilling to sign your return, or cannot provide clear answers about their credentials and experience.
Can a tax preparer help with previous years' taxes?
Yes, a qualified tax preparer can absolutely help with previous years’ taxes through a process called filing amended returns or catching up on unfiled returns. If you need to correct errors on already-filed returns, a tax preparer can file Form 1040-X (Amended U.S. Individual Income Tax Return) for up to three years from the original filing date or two years from when you paid the tax, whichever is later. If you have unfiled tax returns from previous years, a tax preparer can help you prepare and file these back taxes, though you may face penalties and interest—however, getting compliant is always better than continued avoidance, and tax professionals can often negotiate penalty abatement or payment plans with the IRS. Tax preparers can also help if you’ve received IRS notices about previous years, missed deductions you’re entitled to claim, or need to document past income for loan applications or financial aid. This type of work often requires more time and expertise than current-year returns, so be prepared for higher fees—however, a CPA or Enrolled Agent with IRS representation rights can be invaluable if you’re facing back tax issues, audits, or collection actions. Many tax professionals actually specialize in resolving prior-year tax problems and can help you get back on track while minimizing penalties and negotiating with the IRS on your behalf.
