When Using a Tax Preparer or CPA Makes Sense
The software at E-file.com works great for most tax returns and in most cases taxpayers can save themselves money by preparing their own tax return. However, if you have a particularly complicated return, it may be wise to consider retaining a professional tax preparer or CPA to work on it. You may want to use a tax preparer if you meet any of the following criteria:
1. You make more than $200,000 per year.
Your chances of being audited increase significantly if you earn more than $200,000 per year. A good tax preparer should help you to recognize tax-saving opportunities. They should also have the experience and knowledge to help identify items that may trigger an audit. Further, in case you are audited, they can help you through the process and be an intermediary with the IRS.
2. You are a partner in a business or shareholder in an S corporation.
Those who have partnership income or income from an S corp should receive a Form K-1 to indicate their taxable portion of the income. Simple K-1s may be easy to include in your tax return, but complicated versions may warrant use of a tax preparer.
3. You have income from foreign sources.
Those who own foreign ETFs, stocks of foreign companies, and certain mutual funds, may have foreign source income. These situations can be complicated. A tax preparer can help you with this income and identify additional credits, exemptions, or deductions.
4. You might be subject to the Alternative Minimum Tax (AMT).
Various events can trigger the AMT, including the payment of high income state taxes or significant business expenses. You may also be subject to the AMT if you used incentive stock options (ISOs) or sold small business stock. If you are subject to AMT, or have had to pay it in the past, using a tax preparer may be a good idea.
5. You are considering a large gift or sale in the near future.
A preparer can help you with the tax implications of making large gifts or selling real estate. Gifts can be a great tax savings when used effectively, and real estate sales can create large tax burdens. It this case, it may be wise to work with someone on how to minimize the tax in both situations.
6. You are self-employed, own your own business, or have rental properties.
Each of these situations may present unique tax implications. A tax preparer should help you to find credits and deductions based on the specialized services or products that your business provides. You can often save on tax obligations by working with a good tax professional or CPA.
Many Americans can and should be capable of doing their own taxes with the assistance of E-file.com's tax software, however, hiring a tax professional can be worthwhile when their return involves more complicated tax situations.