Doing your taxes isn’t always the easiest feat. You might not have much work to do, which means you’ll be able to easily. If you’re lucky, you might qualify for tax deductions and credits to lessen what you owe or increase what you’ll receive in a .
Doing yourby yourself can be a lot of work. It’s hard to know when to go at it alone and when to see an expert. Here are a few ways to tell if you need to get professional tax help.
1. You bought (or sold) a home
Real estate is a major life change, whether you bought into it or sold some of it. You might have to calculate capital gains if you sold some property. In other instances, you might have to itemize your deductions. If you’re unsure about your numbers — or where to find them — try talking to a pro.
2. You got married or your family grew
If you’ve tied the knot, had a baby or adopted one, you’ll need to update your tax filings. You might need to change your filing status to “married filing jointly,” which might net you a hefty bonus. Yes — extra money just for being married. Also, if you’ve gotten divorced, your tax filings will change as well. You should consider talking to a tax professional in either case.
Along with that, having children can earn you some. The child tax credit lets you claim up to $1,000 for every qualifying child — including adopted children. There’s also a separate adoption tax credit.
3. You started a business
Whether a side-hustle or a full-fledged company, working for yourself can be lucrative. But it could also mean different tax implications.
For one, how you classify your business, like an LLC or a sole proprietor, can determine how your taxes are handled. Self-employment tax is hefty, and many have to file quarterly taxes while those working for others only need to file annually. A tax pro will let you know how to prepare for taxes, putting money away, and every detail about how your business impacts your tax filings.
4. Your assets grew
Owning a property might be reason enough to find a professional. But if you have other assets, including investments, it could be time to find someone who knows what they’re talking about.
If a loved one passed away and left you something valuable, including money, you’re going to need to know how to handle it. Sometimes, estate lawyers can be helpful, but understanding how taxes play a role will be important.
5. You’re stressed about doing it wrong
Tax laws change every year, even if a change is minor. Sometimes we don’t have the right mindset to handle our taxes on our own that we could miss something vital. And if the IRS finds out we didn’t do it right, it could result in a penalty or you can get audited.
If you filed and underpaid what you owe, you could face up a 0.5% penalty, plus interest. If you don’t file at all and owe the government money, there’s a 5% penalty.
The added stress of making mistakes is reason enough to find someone to do it right the first time.
How to find a qualified tax professional
If you don’t qualify for, you can still enlist the services of a tax professional.
Tax season can bring in a slew of scammers who just pop up to earn your business and disappear after they’ve got it. Don’t fall for tax scams and instead, find the right person or group to help you get on track.
- National Association of Enrolled Agents — The NAEA lets you browse through more than 10,000 enrolled agents broken down by specialty, location and other criteria.
- American Institute of CPAs — The AICPA has over 429,000 members worldwide. Certified Public Accountants (or CPAs) are licensed to provide accounting services. There are different searches based on your needs.
- Internal Revenue Service — The IRS has a directory of tax preparers where you can search by location and credentials.
Qualified professionals should have no problem detailing their expertise, how long they’ve been in business and sharing their certifications. You might have reservations if:
- They don’t have a PTIN. Ask your potential tax pro to provide you with their preparer tax identification number (PTIN). If you prepare or assist taxes for money, you’re required to have a PTIN.
- They don’t e-file. The IRS also recommends electronically filing your tax return. Preparers who’ve handled 10 or more returns are required to e-file through the IRS. Be cautious if your preparer suggests an alternative.
- They request you to sign a blank return. If you sign a return without details, it means anyone can put whatever they want on your file. Also double-check to see where the money from your return is going. If your bank details aren’t listed, that’s a red flag.
While hiring professional help isn’t required, you might need extra help. If you’re going to enlist the help of an expert, make sure you do your homework first.