9 Signs That Indicate You Can Benefit From Hiring An Accountant

­­­­­­A lot of individuals use TurboTax until their finances reach a certain level of complexity. If it took you several hours to prepare your tax returns this year, it is probably time to hire an accountant to handle your personal or business taxes.

TurboTax and other related programs are great for those who have a fairly simple tax situation. They operate well for individuals with businesses, simplified income streams, options, real estate transactions or grants. But tax-filing software may not help you to reduce taxes in a more complicated setting. If your tax return is complicated, this increases the chances of making mistakes. A certified public accountant (CPA) will most likely identify opportunities to lower your taxes.

Listed below are 9 triggers that indicate that you can benefit from hiring an accountant:

  1. Your annual income exceeds $200,000

As the table below shows, the chances of being audited rise considerably if your earnings exceed $200,000.

Income Level Chances of an audit (%)

  • Below $200,000  0.9%
  • Above $200,000 3.7%
  • Above $1 million 12.5%

(From Kiplingers)

  1. You get K-1s

You normally get a K-1 if you are a shareholder in an S-corporation or a partner in a business. Several exchange-traded funds (ETFs) even issue K-1s. Some K-1s are fairly simple to incorporate in your tax return, but TurboTax can only handle a few of them.

  1. You may fall under the Alternative Minimum Tax (or AMT)

A lot of our clients are required to pay Alternative Minimum Tax (AMT). The most common factors that triggers AMT include living in a state like New York and California where income tax is high, an employee incurring massive business expenses, selling qualified small business stock, investment advice fees and exercising incentive stock options( ISOs). For the most part, paying AMT complicates your taxes. The President’s Advisory Panel on Federal Tax Reform says this is the reason why over three quarters of those people who pay AMT hired an expert to prepare their tax returns.

  1. You receive significant income from a foreign source

This happens to more people than you can imagine including owners of foreign mutual funds, ETFs or stocks of foreign companies.

  1. You are the owner of a business, you have rental properties or you are self-employed

An accountant can assist you to identify opportunities to reduce taxes by depreciating real estate or business assets.

  1. You are thinking of selling some real estate

An accountant can assist you to employ a like-kind exchange in order to reduce the taxes levied on the gain of a property that you intend to sell.

  1. You are saving money for your kids

An accountant can provide valuable guidance when you are deciding on the vehicles that you can use for tax-free or tax-deferred savings. Whether you are thinking about getting a 529 plan to save for college or making a trust for your kids.

  1. You intend to make a sizable gift

This not a straightforward transaction as one might imagine. An accountant can advise you on the tax advantages of the various options. This includes how you can use your retirement plan to finance it or utilize a donor-advised fund.

  1. You expect a significant capital tax gain

An accountant can assist you to plan and ensure that the gain is taxed using long-term rates. In addition, he or she can help you to identify other methods of minimizing taxes such as using tax-loss harvesting or Qualified Small Business Tax Credit.

If you are still spending countless hours preparing your taxes and need our assistance, please reach us at 631-403-4283 or email us at oharaea@optonline.net for a FREE consultation.  


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9 Signs That Indicate You Can Benefit From Hiring An Accountant
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9 Signs That Indicate You Can Benefit From Hiring An Accountant
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A lot of individuals use TurboTax until their finances reach a certain level of complexity. If it took you several hours to prepare your tax returns this year, it is probably time to hire an accountant to handle your personal or business taxes.
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O"Hara & Company CPA
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By |2018-03-12T10:14:37+00:00February 23rd, 2018|Business Services, CPA-Blog|Comments Off on 9 Signs That Indicate You Can Benefit From Hiring An Accountant