Filing taxes can be a hassle.
If you’re an individual and only need to fill out a W-2, you can likely handle that yourself. But when your return is more complex, you might find it’s worth hiring a professional — someone who can save you not only time and stress but also money. A CPA can help you build a successful tax strategy and can also represent you should you get audited by the IRS.
Many tax preparers at “pop up” tax return shops are trained on tax software to help taxpayers file their returns. They aren’t required to have a degree or understand tax law like a CPA. Below are some reasons to consider using a CPA to assist you with your tax returns.
1. You have a small business or side hustle
If you own your own business, there are many possible tax write-offs, and a professional has the expertise to help you navigate them.
Likewise, if you’re doing significant work in the gig economy, driving Uber, selling products on sites like Etsy, or racing horses, for example, you might need help with your 1099s.
2. The IRS contacts you
Even if the IRS reaches out asking for something as simple as substantiation of expenses related to a car you bought, you should contact a professional. It could be a simple request from the IRS, but, if you handle it incorrectly, it can turn into a big deal very quickly.
You don’t want to give the IRS the wrong or irrelevant information. A good CPA or tax professional understands the language of the IRS.
3. You’re planning for your kids to go to college
If you have a child heading to college and you’re planning on filling out the Free Application for Federal Student Aid (FAFSA), assistance could be helpful.
You want to make sure you don’t have unwanted assets or income in your child’s name, for example. There are financial issues that can actually hurt your student in terms of collecting financial aid, although these same issues might actually be good for tax planning. A CPA can help you balance the pros and cons of your decisions.
So if your child has a 529 plan or Coverdell ESA, or even if they’re a part-owner of your business, it could benefit you to hear from someone who speaks the language of FAFSA.
4. You own a rental property
A return on a real estate investment can get tricky, and a professional can help you figure out what kinds of deductions you may be entitled to.
5. You’re self-directing your retirement
Your Roth IRA or 401(k) is not limited to traditional investments in stocks, bonds and mutual funds. You can also use retirement vehicles to invest in alternatives such as bitcoin and real estate. That’s self-directing.
Filing your return on these investments can get tricky and it might be useful to seek help.
There is so much a good CPA can do to increase your refund or have a more strategic tax return.
If you need advice on a solid tax strategy, please call Anthony W. Imbimbo for a complimentary consultation. Anthony W. Imbimbo, CPA is a tax expert with over 35 years’ experience. Call him today at 619-497-1040.