5 things that trigger your tax planning going from online-only to a tax professional

Nearly half of Americans use tax software to file their taxes.1 For most people, especially those with a single income source, filing taxes through an online platform without the help of a tax pro is just fine. 

However, life events like getting married or divorced, having a child, starting a business or side hustle, receiving an inheritance, or approaching retirement can take online filing from simple to strenuous. While online tax prep platforms can be helpful, they can’t always provide the personalized support and guidance a professional can offer when taxes get tough. This might lead you to ask: 

Do I need an accountant, or do I need a CPA?  

Can I do this on my own, or do I need help filing my taxes? 

Should I stop doing my own taxes? 

While the experience is different for each individual (or couple) filing taxes, a number of common triggers can help identify when it might be more advantageous to hire a tax professional

Signs it's time to switch to a tax professional

From significant life changes or sudden financial complexities, you might benefit from switching from filing your taxes online to working with a tax professional. Here are four signs (plus an important bonus) it could be time to make the change.

1. Changing family situation  

Updates to your family circumstances can significantly impact your taxes. For example, getting married can move you into a different tax bracket, so your income may no longer be taxed at the same rate as when you were single. While online tools can process your taxes with general ease, you might not know whether filing jointly or separately makes more sense for you. A tax professional can evaluate your finances and provide advice on what might work best for you and your partner.  

On the other hand, if you're going through a divorce, a tax professional can help you navigate the tax complexities of dividing assets and how alimony can affect your taxable income. 

Having a child can result in new tax credits and benefits while bringing about new tax considerations like education savings  strategies which, depending on what state you live in can lead to big tax savings opportunities. There are also deductions and credits foster and adoptive parents should know about. A tax professional can assist evolving families navigate taxation complexities and also help them get the maximum they are entitled to.  

2. Receiving an inheritance 

Between 30% and 40% of households eventually receive an inheritance.2 An inheritance can include property, valuables, money or other assets, such as life insurance policies or retirement accounts.  

Inheritances can have varying tax implications depending on their type, often leading people to wonder whether they need an accountant or tax professional to help. And with good reason. Inheriting a property can result in capital gains tax and expenses like property tax or maintenance fees. Inheriting valuables or other assets can also result in capital gains tax, while receiving money as an inheritance can result in income tax or estate tax implications.  

If you receive an inheritance, consulting with a tax professional can help ensure your new assets are correctly accounted for in your tax return. 

3. Changing or adding an income source 

Alterations to your income sources can complicate filing your taxes. Whether you receive a raise at work or on a second job, you might find yourself in a higher tax bracket, increasing your tax liability.  

Freelance professionals are also responsible for self-employment taxes. A tax professional can help you report income and deductions correctly as well as determine if you need to make quarterly estimated tax payments to avoid penalties. 

Rental properties are another alternative income source that needs to be accounted for properly when it comes to doing your taxes. The average American host made over $44,000 in host earnings on Airbnb in 2021, showing that this could significantly increase your income.3 However, if you occasionally stay at the property, you may be unable to deduct rental expenses from your rental income. If you need help filing taxes with rental properties, a tax professional can be a great resource. 

4. Nearing retirement  

As retirement approaches, you will need to make decisions about retirement savings plans such as IRAs and 401(k)s. Each plan has different tax treatments impacting your tax liability. A tax professional can guide you through the process of evaluating your retirement savings plan and recommend a withdrawal strategy that offers the best tax benefits.  

Working with a tax professional can also provide access to timely advice regarding available tax benefits and breaks. These can include increased standard deductions, different filing thresholds, Social Security tax exemptions, and elderly or disabled tax credits. They will also be aware of any state tax benefits offered to seniors based on age thresholds.  

Bonus tip: How a tax professional can help your new business 

Starting a business is exciting but also comes with additional tax responsibilities. A variety of deductions and credits are available to business owners that aren’t common knowledge and filing a tax return for a business is quite different from filing a personal return. 

This is where a tax professional can be invaluable. They can help identify all your eligible deductions, allowing you to minimize your tax burden and maximize your profits. They can also help you keep track of important tax deadlines. 

Don’t wait until it is too late to ask whether you need help for your small business. Make meeting with a tax professional a priority to ensure you meet corporate tax obligations without skipping over potential tax benefits. 

Even the best DIY tax preppers need help sometimes 

When complicated family situations or significant changes in your income or assets leave you thinking “I need help with my taxes,” a tax professional can provide valuable guidance and peace of mind. Online tools and software programs might address the basics, but you could also overlook a number of different aspects in the process.  

Why do you need an accountant? One of the most important reasons to keep in mind is that by working with one, you can save money in the long run by avoiding costly mistakes. They’ll be able to advise you regarding rules and regulations you might overlook or be unaware of when going it on your own. This is especially true as life takes turns and your circumstances, and your taxable situation, change with time.  

1How Much Americans Pay to File Their Taxes,” The College Investor, Sept 18, 2022

2Inheritances or the Distribution of Wealth,” Bureau of Labor Statistics, January 2011

3Average Host Revenue By Country,” AllTheRooms, Accessed March 27, 2022

This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.? 

?SMRU #5500492.1 exp. 3/15/2025 

Disclosure

Cynthia Guldy is an agent of and licensed to sell insurance through New York Life Insurance Company and may be licensed with various other independent unaffiliated insurance companies in the states of AR (AR Insurance License #1593580), AZ, CA (CA Insurance License #1843795), CO, FL, IL, KS, MD, MN, MO, NC, NM, NV, SC, TN, TX, UT, WA, and WY. No insurance business may be conducted outside the states referenced.

Cynthia Guldy is a Registered Representative of and offers securities products & services through NYLIFE Securities LLC, Member FINRA/SIPC, a licensed insurance agency, and a wholly-owned subsidiary of New York Life Insurance Company, 4188 Palm Dr, Denver, NC, 28037, 970-674-3556. In this regard, this communication is strictly intended for individuals residing in the states of AR, CO, IL, KS, MN, NC, NM, TN, UT, WA, and WY. No offers may be made or accepted from any resident outside the specific states referenced.

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Neither New York Life Insurance Company nor its agents or affiliates provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.