Five reasons that you should hire an accountant for your taxes

Tax season is in full swing, and the Internal Revenue Service estimates that U.S. taxpayers will file around 164 million individual federal returns.

Many taxpayers will be deciding whether to use online tax preparation software - such as the options available through the popular IRS Free File program - or leave the task to experts. While a cheaper DIY approach is appealing, it’s not necessarily the best option for all tax situations.

Hiring an accountant may be the smart move, especially if their expertise helps avoid potentially costly oversights, said Brian Zink, CEO of No Upfront Tax Relief.

“Tax professionals help ensure your returns are filed accurately the first time, and don’t cause problems later on,” Zink told The Independent in an email.

Using online tax platforms and hiring an accountant aren’t mutually exclusive, though. Multiple major tax filing sites offer certified public accountants who can review your return or do it for you.

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The Independent spoke with several tax professionals to identify five signs that hiring a tax pro might be the right choice this year.

If you have a simple tax situation, such as income from one job and are claiming common deductions and credits, filing taxes without the help of an accountant can make sense.

But those with more complex situations benefit from a tax expert who can ask questions and spot less obvious issues, according to Zink.

“These scenarios can include business ownership, someone is self-employed, has rental property, stock or crypto sales, and multiple income sources,” he said. “Anyone [who] has recently experienced a major life change such as marriage or divorce is also a great example of when the returns move on from a simple filing.”

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A tax pro can help navigate these complicated situations, understand complex tax rules, and accurately report income, deductions and credits.

In a straightforward tax situation, taxpayers typically receive the documents needed to file their return, such as a W-2 from an employer or 1099-INT from a bank. Simply uploading the documents or plugging the data into the tax software could make sense.

However, hiring an accountant might make sense if tax forms are missing and you have to produce information to complete the return, said certified public accountant Logan Allec, founder of Choice Tax Relief.

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“Examples of self-produced information for tax purposes include business expenses on Schedule C or rental property expenses on Schedule E,” Allec told The Independent in an email.

Another scenario is when freelancers have gig work income but don’t meet the threshold to receive a 1099-NEC from a client or a 1099-K from a payment provider such as PayPal. In such cases, DIY-ing a tax return becomes time-consuming and riskier.

“The taxpayer has to produce these figures themselves, and it's these areas where mistakes or inconsistencies can trigger an audit,” Allec said.

While major tax filing software often offers accuracy guarantees, they typically apply only to the software’s calculations and guidance, not filer oversights.

Not all mistakes are easy to detect, which is a good reason to consider hiring a tax expert who understands your situation, says certified public accountant Rachel Richards, a product manager at tax optimization firm Gelt.

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“Most platforms rely entirely on user input,” Richards told The Independent in an email. “They plug numbers into forms, but they don’t understand your goals, spot income patterns, or adjust strategy year over year. They can’t flag what you don’t know to disclose.”

So, if a data entry error shows up on a return, software might not calculate everything correctly. As a result, the refund amount may be incorrect, a tax bill with penalties and interest may emerge or the filer might receive an audit letter.

An accountant helps avoid mistakes on this year’s return and correct issues on past ones.

Even if you can complete a tax return accurately, it’s not a guarantee that the return will include all eligible tax credits and deductions, nor does it mean that there’s a year-round tax strategy in place to reduce tax liability.

Businesses and self-employed taxpayers benefit from an accountant’s advice for choosing a business structure, calculating estimated taxes and identifying all deductible expenses.

However, others can also save with an expert’s guidance, especially in areas commonly overlooked, such as charitable donations and investment strategies.

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“For example, donating appreciated stock instead of simply writing a check [is a tax-saving strategy],” Richards said. “You will receive the full charitable contribution deduction, but you will avoid paying the capital gains tax on the appreciation in the value of the stock.”

So, if the goal is to minimize a tax bill, hiring an accountant could be worth the fee.

Hiring a tax pro can also pay off when their expertise helps you avoid future headaches with the IRS, says Stephen A. Weisberg, attorney and owner of The W Tax Group.

“A tax expert can identify reporting errors, compliance issues, and areas at risk for audit before a return is filed instead of after the IRS gets involved,” Weisberg told The Independent in an email. “From my perspective, identifying problems at the front end is always cheaper and less stressful than dealing with notices, audits or collections later.”

If audit or collections issues come up, a tax pro can make dealing with the IRS less stressful. Besides offering representation in audits, they can help clarify the situation, negotiate tax debt and minimize penalties.

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