When is it worth hiring an accountant to do your taxes?

by Anna Baluch
Share
More
When is it worth hiring an accountant to do your taxes?

Filing taxes can be time-consuming and tedious. That’s where an accountant comes in. An accountant can take care of your taxes so you don’t have to. But it’ll cost you. According to the National Society of Accountants, you can expect to pay them an average of $273 if you itemize your deductions, $176 if you do not and as much as $1,563 if your tax situation involves an estate.

Is hiring an accountant to do your taxes worth it? It depends. If you’re an individual filing a a single W2 form, it may not be worth it. However, if any of the following situations apply to you, paying for tax preparation likely makes sense.

1. You own a business or have a side hustle

If you’re a business owner, you may be eligible for a number of tax write-offs. An accountant can inform you of which ones you can take and help you save big on taxes. Also, if you have a side hustle like selling things on Etsy or driving for Uber, you’ll receive a 1099 and be on the hook for your own taxes. With an accountant’s guidance, you’ll know how much you owe.

2. You own a rental property

To maximize your profit as a landlord, you should take advantage of every available tax deduction. An accountant can inform you which deductions apply to you. In most cases, you’ll be able to deduct things like depreciation, repairs, real estate taxes and insurance premiums.

3. You earn a high income

Most the taxpayers who get audited earn more than $500,000 per year. If your income falls within this range, an accountant may be a good idea. They can make sure your taxes are filed correctly and reduce your risk of an audit down the road.

4. Your family situation has changed

If you went through a family change like a divorce or death during 2019, you may need help with your taxes. This is particularly true if your ex or deceased spouse handled your taxes in the past.

Also, if your divorce isn’t finalized, an accountant can take care of your tax situation and file your taxes jointly, potentially saving you and your soon-to-be ex on taxes.

5. You’ve received an inheritance

Receiving an inheritance can be great. But it can also complicate your tax situation. You may owe estate tax, inheritance tax or capital gains tax. With an accountant’s expertise, you can find out how much you have to pay. You can also reduce your future tax liability.

6. You’ve been contacted by the IRS

There are a number of reasons you may get a letter from the IRS. It may inform you of a mistake on your tax return, an under- or overpayment on your taxes, or tell you about new taxes you owe. Regardless of why the IRS contacts you, it’s a good idea to hire an accountant. If you handle the situation incorrectly, you may face plenty of fees and headaches in the future.

Want more money moves in your inbox? Sign up for the Easy Money newsletter.

Image: Vitaly Taranov (Unsplash)