When to Hire a Tax Consultant

For individuals with complicated lives, major changes in their income or investment portfolios, or those with small businesses, hiring a tax professional is sometimes a necessity. If you are trying to decide whether a tax consultant is worth it, consider the following factors before making this important decision.

Why & When

The why and when to hire a tax consultant can be quite varied depending on your personal situation. Yet there are many common reasons and situations when you should consider the likely possibility that a tax consultant could save you significant amounts of time and/or money in regards to your tax liability.

Save Time

The hassle of completing your taxes by yourself can be one of the single biggest reasons many consumers and small business owners seek the help of a tax professional. Trying to ensure you have checked all the boxes, discovered all your possible tax credits, and done so in a timely manner is simply something many people are not prepared for.

Major Changes

If you have gotten divorced or married, begun caring for an elderly parent or disabled person, or received a major financial windfall, it is definitely time to get some professional advice. In these cases, you only have one chance to get it right and save yourself potentially thousands of dollars in taxes.

You Own a Small Business

If you have recently started a small business and revenue is growing, you probably have less time to complete administrative tasks. Your tax obligations, accounting, and legal issues should be the first tasks that you outsource to free up time. Having a professional save you from yourself in these instances is often a smart move. This can be especially true if you are facing an IRS Audit.

Major Purchases

Have you purchased a home, car, business, or made large investments in the previous tax year? These purchases often come with major tax implications. Make sure you qualify to write off expenses or take a necessary tax credit when needed.

How to Choose

Hiring a professional tax consultant can be a daunting task, especially since there are no nationally recognized agencies or organizations of tax professionals. However, there are several types of professional tax experts. Finding the right professional for your situation will take some research on your part.

National or Local Outlets

This includes companies like H&R Block, Liberty Tax, and local tax preparers that offer services to individuals and businesses at brick-and-mortar locations. These tax professionals can vary widely in their advice, experience, and expertise.

Enrolled Agent (EA)

In order to be designated as an Enrolled Agent, a person must pass the IRS exam or have worked at the IRS for at least five years. These professionals usually specialize in a certain area of tax law. Make sure your EA is qualified to meet your specific tax needs before hiring.

Certified Public Accountant (CPA)

The professional designation of “Certified Public Accountant” is something akin to the medical profession – there are literally hundreds of specialties for accountants. Make sure your CPA is specialized in taxes so you gain the most benefit. A CPA can be a great overall strategist when it comes to dealing with taxes, as well as complicated financial issues for individuals and businesses.

The Pros

The true professionals of tax preparation and general consultation are Certified Financial Planners (CFPs), Accredited Tax Accountants (ATAs), Accredited Tax Preparers (ATPs), and tax attorneys who specialize in tax code, legislation, and legal code. These types of professionals are often hired to help handle complex tax situations.

If you do not have the time or expertise to do it yourself, you should consider hiring a professional tax consultant.

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