As tax-season is well under way, you may be wondering if you should hire an accountant to help you with your taxes.
Here are some things to keep in mind:
When should I do my own taxes?
Unfortunately, taxes in the US can be extremely confusing. But if your situation is simple, a W-2 from your employer and maybe a 1099, and you plan on just taking the standard deduction, then most likely you don’t need to hire an accountant. You could use TurboTax, HR Block, or the IRS is now offering a service where you can file your federal taxes directly online for free and MA is one of the pilot states offering this feature.
Important Deadlines for 2024:
March 15, 2024 - Taxes are due for some business types (partnerships, multi-member LLCs, and S-Corporations).
April 15, 2024 - Tax day
Deadline to File Form 4868 and request an extension. Extensions are no big deal but may take some analysis to ensure you are compliant.
Deadline to make IRA and HSA contributions for 2023 tax year.
First quarter 2024 estimated tax payment due.
June 17, 2024 - Second quarter 2024 estimated tax payment due.
September 16, 2024 - Third quarter 2024 estimated tax payment due.
October 15, 2024 - Deadline to file your extended 2023 tax return.
December 31, 2024 - Required minimum distributions have to be taken for individuals age 73 or older by the end of 2024.
January 15, 2025 - Fourth quarter 2025 estimated tax payment due.
Benefits of Using An Accountant:
Once your situation becomes more complicated, I’d recommend hiring an accountant to help you. This can be due to marriage/divorce, having children, selling a property or business, granted large amount of stock compensation, inheritances, etc.
CPAs stay up to speed with the ever changing tax laws, offering you expertise and insight. Trust me - you do NOT want to read the IRS tax code…They can also provide insights and examples on nuanced situations to make sure you take advantage of available deductions and credits.
If you run your own business, and need help with book keeping, CPAs can certainly help, but may be expensive. You may be better off hiring a competent record-keeper for your business and then have a CPA review at the end of the year.
Finally, and most importantly, hiring an accountant can help save you time and give you the piece of mind that you are filing your taxes correctly. Some companies may even offer IRS audit services should you be selected.
Where To Find A Trusted Accountant?
As consumers, we have choices on who we work with and hire. Your options may seem endless. I’d recommend finding individuals who you can trust and enjoy working with. We have many CPA contacts for trusted accountants. Please reach out if you aren’t sure where to start.
Some accountants may act like a human TurboTax. No real “partnership”, you upload your documents and they send you the return to review/sign. A great CPA will be open to dialogue and offer recommendations going forward that may help you.
This link may be helpful to locate an accountant in your area: https://irs.treasury.gov/rpo/rpo.jsf
There are recent reports highlighting the severe shortage of accountants in our country. I’ve spoken with many CPAs who can’t find qualified people to hire. Most are overworked. Be respectful of their deadlines.
How Does The Relationship Work?
As a fellow CPA, I can admit we are a special breed. But a lot of this falls on your shoulders, as the client. Majority of people go the entire year without thinking about taxes. Then, they give all their documents to the CPA on April 1st and say, “great, when will this be done and how big is my refund?”
The problem with this is limited changes can be made at this point. CPAs essentially input your documents into their system and assess the outcome. Then they are solely judged on how much the clients owes or receives via a refund even when most of this is out of the accountants control…tough gig.
When is the best time to contact a CPA? Typically over the summer months, once the April 15th filing deadline is behind them. If you are proactive, you can ask your accountant for ideas/strategies that can help lower your taxes or make you more tax efficient.
How Much Does a CPA Cost?
Everyone’s situation is different. TurboTax or HR Block may offer services for under $100, if your situation is very straightforward. I’ve spoken with accountants who charge $250 for a return on the very low end but I foresee those days as being over. Hard to run a business if that’s what you are charging in my opinion, especially with the severe shortage highlighted above.
More companies/individuals are adopting a $500 minimum to complete your return. Very complex returns, with multiple depreciation schedules, you could be paying anywhere between $2,000 - $5,000 to have your return completed.
Should you inquire or need extra work or calculations performed, the CPA will likely charge you an hourly rate.
Don’t want to pay? I get it. But everyone is DIY until there is a problem…
Take-Aways:
Like anything, you need to assess your situation and see what you are comfortable doing. Even though I have my CPA license, I don’t do my own taxes as I don’t want to waste my time and I would rather work with a true expert, who focuses solely on taxes.
One of the key traits mentioned last week is being organized. Gathering all required documents around tax time can be very overwhelming. Create a list of documents you used last year, or ask your CPA if they have some sort of organizer they can share with you. If you go to an accountant with organized paperwork, they will forever be thankful and your return should be processed promptly.
Be respectful of cut-off dates. And understand that not every tax document is readily available in January.
If you aren’t happy with how your taxes went for 2023, please reach out to me so we can strategize for rest of 2024 and see what we can do to help.
Disclosure: This material is for general information only and is not intended to provide specific advice or recommendations for any individual.