Here’s When You Should Hire a Tax Pro

Here’s When You Should Hire a Tax Pro


With the deadline for filing your 2015 taxes just weeks away, it’s time to organize your paperwork for Uncle Sam. The process can be daunting, which may be why more than 60 percent of taxpayers had professional help with their returns last year, according to the IRS.

However, hiring a qualified accountant doesn’t come cheap. Last year, taxpayers paid their preparers an average $273 to file an itemized 1040 Schedule A and state return. That number varied significantly by geography, however, with the cost of tax prep in some northeastern states averaging more than $300 and in some Midwestern states less than $200. By comparison, you can get a copy of TurboTax for $60-$100, depending on which version you purchase.

If you’re considering hiring professional help with your taxes, here’s what you need to know.

Related: Own a Home? Here Are 10 Tax Breaks for You

If you have very simple taxes, you can probably do them yourself. If you have straightforward income from a job with a W-2, few investments, and no mortgage or dependents, you’ll do just fine using tax prep software to file your taxes. “The trigger point for getting professional help with your taxes is different for everyone,” says David Walters, a certified financial planner and CPA with Palisades Hudson Financial Group’s Portland, Oregon, office. “Once you start feeling uncomfortable doing them, you should probably hire someone.”

Even filers with simple taxes could be miss lucrative tax credits, although using tax software makes it easier to spot the deductions to which you are entitled.

If you’re self-employed, are a high-earner, have diverse financial accounts, or had significant life changes like getting married, having children, it’s worth the investment to pay a tax professional for assistance. “If you have a spike in your wealth or income, or it just starts to get complicated or it feels risky to do your taxes yourself, that’s a good time to call a professional,” says Mike Campbell, a tax partner at BDO.

Experts recommend working with an accountant at least every few years to make sure that you’re not making any obvious errors. For taxpayers filing non-business returns, it took an average of eight hours to complete a 1040 last year, according to the IRS.

Related: 31 Tax Deductions You Don’t Want to Miss 

You’ll still be responsible for the content of your returns. Most tax pros (and tax software) require you to answer reams of questions about everything from health expenditures to charitable contributions, and to provide documentation backing up your claims. That means you’ll still likely spend at least a few hours working on your taxes. Your tax preparer will use that data to figure out what you can claim and how much you owe, but if you’ve provided incorrect info, you could be held responsible during an audit. So, before just signing and sending off your return be sure to review it to see if any mistakes jump out at you. “Your tax preparer is only as good as the taxpayer providing the information,” says Troy Lewis, a CPA in Draper, Utah.

Another benefit of using professional preparers is that they might be able to provide some advice on how to reduce your tax burden for next year. Audits aside, it’s important to get your tax returns right, because they’re used to verify income on everything from your mortgage to student loans.

Ask about credentials. Anyone can call himself a tax preparer, and more than half of all preparers are unenrolled, meaning that they’re not subject to IRS regulation. A 2014 report found that in 46 states there are more regulatory requirements for hairdressers than there are for tax preparers. At a minimum, you’ll want someone who can provide a Preparer Tax Identification Number, which is required by the IRS for anyone who assists in preparing federal tax returns.

For complicated returns, look for a tax preparer who is an enrolled agent, a certified public accountant, or an attorney. Preparers with those certifications must complete ongoing training and are the only ones permitted to represent their clients before the IRS in the case of an audit or other issue. Enrolled agents are licensed by the IRS, while CPAs are licensed by the state boards of accountancy, and attorneys are licensed by the state bar.

Related: The IRS Warns of a New Tax-Season Scam

Do a background check. It’s common for fraudsters to set up shop as tax preparers, gathering documents from unsuspecting clients and then disappearing—with all the victim’s info and without filling a return. Protect yourself, by carefully vetting your tax pro.

In addition to asking friends and family for referrals, check out online review sites like Angie’s List or Yelp to get a sense of what clients think of a particular preparer. Look for someone with experience handling clients with similar circumstances to yours, such as a specialty in small business owners or retirees. “It helps to find someone who is very familiar with the challenges you face,” says Gil Charney, a director at the Tax Institute at H&R Block.

Then, see if there have been any complaints about the preparer to the Better Business Bureau. Last year, the agency received more than 4,700 complaints against business that provide accounting and tax prep services, mostly due to mistakes on the returns that resulted in fines and fees.

Avoid a tax preparer who promises you a certain refund amount of whose fee structure is based on a percentage of your return, or a preparer who refuses to sign your return. “It’s incumbent upon the taxpayer to do their homework,” says Mark Steber, chief tax officer at Jackson Hewitt Tax Service. “The one thing you want is someone you can trust to do what’s right and to get it right to start with.”