This time of year, just about everyone has questions about their tax return. Who can I claim as a dependent? Does healthcare reform impact my taxes? What truly qualifies as a ‘write-off’? The list goes on and on, and unless you’re prepared to spend countless hours on Google (only to realize that one question often times only leads to another), you will want to get the input of an experienced CPA. Only an experienced CPA will know what questions to ask you, which takes the pressure off of you trying to determine what the right questions are. This proactive approach and experience is the number one reason why you should have a CPA prepare your tax return, but there are many other reasons as well.
Individuals would not know what questions to ask unless they had a thorough understanding of some of the more complicated/sensitive topics, such as the Affordable Care Act, net investment income tax, the alternative minimum tax (AMT), and long-term capital gains tax rates, just to name a few. Having a thorough understanding of these topics assists CPAs to minimize your tax burden. As an example, the Affordable Care Act expanded the definition of ‘independent contractor’, which affects certain tax responsibilities and requires additional reporting requirements. CPAs have extensive familiarity with these IRS guidelines and may be able to help you reduce or avoid the additional tax by showing employers how to properly classify independent contractors used in their business.
However, helping you with your tax return goes beyond simply completing the form and getting the largest refund or lowest liability. CPAs help clients utilize their tax returns to better understand their finances and ultimately, how this information can assist them in formulating a plan to reach financial goals.
While there are a multitude of tax preparation companies and software out there, some of which may be encouraging you to ‘get your billions back’, an experienced CPA is someone you can fully trust in having the knowledge and expertise necessary in completing an optimal error-free return. And in the event of an IRS audit, a CPA can even represent you so that you can avoid the anxiety of what, to you, would probably be unchartered territory! The Pennsylvania Institute of CPAs produced an informative summary list, Top 10 Reasons a CPA Should Prepare Your Tax Return that will help you determine if you need a CPA during tax season.