Dreading tax season? Numbers not your forte? Don't worry, you're not alone.
But even if your tax situation seems simple, there are times when hiring an accountant can save you time and money and lower your financial stress.
From navigating complex tax codes to maximizing your return, a professional can make a big difference.
Here are 14 signs you should hire an accountant for your taxes:
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You don’t have the time
Taxes take time to prepare. According to the IRS, individual taxpayers spend around 13 hours and $240 to prepare a single return. That jumps to 82 hours and $2,900 for small businesses.
If you simply don’t have the time for that, hiring a tax pro might be the right move — just make sure you hire someone with the right qualifications.
You’re being audited
Being audited is arguably the scariest thing that can happen to a person or business when it comes to the IRS. While audits might be rare for most of us, they often require professional accounting assistance.
Audits involve meticulous paperwork, tight deadlines, and heightened stress where every detail is crucial — that includes years of comprehensive records. These are excellent reasons to hire an accountant.
Taxes are more complicated for self-employed people because you don’t receive a simple W-2 at the end of the year.
That includes paying a self-employment tax in addition to the regular income tax. You’ll also need to figure out profits and losses.
Hiring an accountant can save you time otherwise better spent on your business. They may also be able to save you money through write-offs you’re unaware of.
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You got married
If you got married since you last filed taxes, congratulations! But it also means your filing status has changed.
The IRS recommends newlyweds do a few things on their checklist to make sure filings are accurate. That includes changing their withholdings on their employer or employers’ W-4 forms. An accountant can help with this.
You had a baby or adopted
New parents have plenty to be excited about, but the cost of raising a child and how their taxes are impacted probably aren’t among them.
There’s good news, though. The IRS has a few tax breaks that can help: the Child Tax Credit, the Child and Dependent Care Credit, the Adoption Tax Credit, and the Earned Income Tax Credit. If all of those sound like too much to deal with, an accountant can help.
You got divorced
Divorce and separation impact your tax filing, particularly your filing status, and it depends on your situation at the end of the year.
For example, if you were separated but not legally separated or divorced by the year’s end, the IRS says you’ll be considered married when it comes to filing. The opposite is also true, and you’ll have to file as single. This is when hiring an accountant can come in handy.
You bought or sold a home
Buying and selling property can have many benefits — particularly in the form of deductions and exclusions.
According to the IRS, if you sold your home for a profit, you can exclude $250,000 from your income (if filing single) or $500,000 (filing jointly). But you have to qualify for that exclusion.
There may also be other deductions tucked away in the closing statement you miss out on if you don’t hire an accountant.
You have rental property or real estate investments
Hiring a tax pro is probably a good idea if you’re new to the real estate market — including owning rental property or other investing.
There are specific tax laws about property issues like depreciation, asset management, and deductions that require expertise you might not have. Tax pros can ensure you take advantage of credits and deductions and prevent costly filing errors.
You’ve got a bunch of financial accounts
The more complicated your financial situation, the wiser it is to hire an accountant.
Hiring a professional can simplify the process if managing multiple financial accounts and handling various tax forms feels overwhelming.
Sorting through investment income from several sources can be time-consuming and frustrating. A tax professional's expertise and specialized software can streamline the reporting process.
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You earn a lot
It’s common knowledge that the more you make, the more heavily the IRS taxes your income. The real tipping point comes at incomes over $231,250 for individuals, where you’ll face a whopping 35% income tax. That’s a big tax bill.
Strategic income structuring, especially for the self-employed, can leverage deductions and potentially lower your taxable income. A tax advisor can help sort this out for you and find tax breaks.
You think you’re paying too much in taxes
Nobody enjoys paying taxes, but there may be times when the amount you’re paying feels objectively wrong.
In those cases, it’s a good idea to seek guidance from a knowledgeable tax advisor who understands your specific circumstances, including business and local tax laws.
Together, you can explore legal avenues, such as leveraging tax deductions and credits, to reduce your tax liability.
You started a business
If you just started a business, it’s a good idea to have an accountant on board, especially for your first return.
Tax pros help you claim rightful deductions and avoid the wrong expense write-offs. There are also many tax credits to be mindful of, including things like the Work Opportunity Credit and the Disabled Access Credit.
Navigating the intricacies of business tax law can be daunting without professional insight.
You don’t understand business tax law
Managing your personal finances or even filing your own return is great, but that’s not the same as business tax expertise.
Navigating these complexities and myriad laws and regulations requires time and effort, which may distract you from your business. Hiring an expert lets you leverage their skills while taking a load off your back so you can focus on your company.
You work side gigs
It’s common for people to work side gigs these days. Maybe it’s a key part of your income, or you just need to supplement your income.
Whatever the reason, receiving Form 1099-MISC can make tax time more complicated. If you’re unfamiliar with it, companies use Form 1099 to track contractor payments.
Newcomers can fall into a trap where they haven’t made estimated tax payments or tracked deductible gig-related expenses. A tax professional can help.
Accounting is an intricate, complex process. If you don’t know what you’re doing, it can make tax season worse.
Whether you’re encountering financial complexities or major life changes, professional help can alleviate some of the stress everyone feels around filing time.
That’s especially true if the thought of crunching numbers and delving into deductions induces anxiety. It might be time to entrust the preparation to a professional.