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When to Consider a CPA?

Updated: Apr 6

How to know when hiring a CPA is the right decision—and worth the money—for you and your financial situation

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Disclaimer: The information provided is not intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Individuals are encouraged to seek specific advice from their personal tax or legal counsel.

Hate doing your taxes? Don’t know where to start? Have mega life changes that make your taxes uber confusing? Maybe it’s time to hire a Certified Public Accountant (CPA) to help you through the trenches of tax season. Or, maybe you just can’t decide if it’s finally time to hire a CPA.

If you’re unsure of whether or not hiring a CPA is worth it or if you can afford a CPA’s tax services, follow the below questions, tips and guidelines as you make your decision.

Before you dig into whether or not a CPA is right for you and your life situation, and you’re still on the fence, consider doing your taxes yourself. We can help you either way you choose to go. (See: Top 10 Tax Hacks for Your Busy Life)

What is a CPA?

Before we dig into the juicy details of hiring a CPA tax professional to file your taxes, let’s start off with the basics. What on earth is a CPA?!

A CPA has completed a five-year business degree, equivalent to a master’s degree, with at least 150 semester hours of education. On top of that big feat, they must pass the (very difficult) CPA Exam and have at least 120 hours of continuing education every three years. Each day, these smartypants practice financial and managerial accounting, tax planning and tax prep. You could say they live and breathe taxes. Let’s just say: these folks are more than able to provide tax advice on your hard-earned cash, should you choose to enlist their forces—after you do some due diligence on their credentials and experience, of course.

What are CPA services?

Now that we know what a CPA is, let’s dig into what a CPA does. They cover two very important tasks: tax planning and tax compliance.

Tax planning refers to strategically planning out your purchases, expenses cashouts or big life milestones, as they relate to your taxes. This practice helps you to think carefully about your decisions—not only if you do something, but when—to ensure you’ll pay the least amount in taxes. A CPA can help you navigate these decisions. After all, they practically have tax law tattooed to their foreheads!

Tax compliance is more of the actual work of filing your taxes—filling out all of the forms, preparing your return and reporting your already-made transactions.

Don’t get us wrong, tax prep software can be great on the tax compliance side. But it’s not so fabulous at tax planning. (See: Top 5 Tools for Taxes.) As you grow up and your life gets more complicated, you’ll need to put a lot more thought into planning ahead with your taxes. This is where having a CPA can come in clutch.

What to consider before hiring a CPA

Just so you know what you’re getting into, ask your CPA suitor for an estimate. Not all CPAs have the same fee structure, so make sure you can afford their help, before signing on as a new client.

Also, ask LOTS of questions to make sure (s)he’s the right fit for your needs. Perhaps you work at a startup or are self-employed—ask lots of questions about your specific life situation to determine if the CPA has the right experience for your tax sitch.

When to hire a CPA

It’s a good idea to begin working with a CPA when your tax situation gets complicated. If you just have a W-2 and some mortgage interest, working with a CPA might not really be necessary—an online service like TurboTax can become your new best friend! (See: Top 5 Tools for Taxes.) But for many people, tax situations are a lot more confusing and more difficult to manage.

When life gets busy, you may have a lot more flexibility in the interpretation of the tax code to your situation. If you feel like your relationship with your taxes is complicated, look no further than a CPA to come save the day.

We’ve rounded up some example situations that might truly benefit from the help of a tax professional:

  • If you’re going through a divorce and have children or other family financial complexity

  • If you have a larger investment portfolio (more than $200,000)

  • If you own a small business or corporation and have a limited liability partnership

  • If you have complex compensation from your employer- either stock options, periodic commissions etc

How to prepare for your CPA meeting

If you decide to hire a CPA, congrats! Your tax season is going to be far less painful! (Well, depending on your situation, but let’s assume you have a complicated tax submission.)

Did you know you can keep the cost down by doing some homework ahead of time? Yep! You can stay in your tax season budget by doing some of the heavy lifting ahead of your CPA meeting. This way, you can roll up your sleeves and get things prepared for your CPA—and you don’t have to pay him/her to do it for you! Another bonus? This preparation and organization work will help you to better understand the process, while digging more deeply into your personal finances. A win-win-win situation! If you want to get your prep work polished ahead of your meeting, go for it! (See: 10 Tax Hacks for Your Busy Life.)

Now, if you’d rather simply not think about your taxes one bit, you can always leave all of these items up to your CPA to complete for you. And, especially if a half a day’s worth of your time will cost far more than the cost of half of your CPA’s day, as the expression goes, “Time is Money!”

Ultimately, if you decide a CPA isn’t right for you, there are lots of tax tools and apps out there. (See: Top 5 Tools for Taxes.)


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