A paid tax preparer can provide you with expert advice and save you time, but doing your own taxes with the help of software will save you money, the complexity of your finances, your tax competence, your schedule, the cost. CPAs, on the other hand, tend to be more business-focused. Many have accounting experience and knowledge of tax matters beyond their personal return. If you're a small business owner or need help planning your long-term taxes, you'll probably want to talk to a CPA.
But if you're considering hiring a professional for the first time and just need someone who's versed in tax reporting and compliance, you may be able to save a few dollars by hiring an enrolled agent who isn't a CPA. CPAs are approved by the federal government to represent you in all matters before the IRS. People who specialize in tax preparation also tend to help you with tax and financial planning, accounting needs, and most other financial tasks you may have. Consult a CPA to identify the credits and deductions you qualify for in order to increase your tax refund and help lower your tax bill.
Slightly less than half of electronically filed tax returns prepare themselves; paid tax preparers fill out the rest. A tax professional will also advise you on future cancellations and deductions, or changes you can make to your company to reduce your future tax payments. If you're thinking about the best way to file your taxes for next year, you might be tempted to opt for TurboTax or one of the other tax preparation software offerings available on the market. You can also learn about changes in tax law or how to file taxes for a new type of business that you didn't have before.
If you've been doing your taxes year after year and it hasn't changed much in your financial or personal situation, you're likely to be able to process your next tax return. As a general rule, the more complicated your tax situation, the more advantageous it will be for you to hire a tax professional. They're very familiar with the most obscure tax form (or at least know where to find it), they understand recent changes in the tax code, and they know how to solve unexpected problems. While software is an economical and efficient way to address tax compliance, it is severely limited when it comes to tax planning.
Of course, proofreading your books before filing your taxes could increase the tax preparer's fee, but it will most likely be less expensive both in time and money than filing an inaccurate return with the IRS. Tax planning is essentially about planning transactions before they occur and making thoughtful decisions that minimize the total amount of taxes you owe. However, the rates for tax professionals vary widely, depending on the preparer's qualifications, the complexity of your return, the type of software used by the tax preparer, and the geographical location. Tax professionals can help you determine your tax base if it doesn't appear otherwise in your investment documents.
After all, the tax implications of the funds you enter through your company can be more complex than income taxes when you only have income from one employer.
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