As with most financial decisions, there are pros and cons to this question. At what point does it become inefficient for healthcare professionals to prepare the tax return themselves, and advantageous to hire a CPA? The tipping point depends on various things such as stage of life, and of course, your own financial situation.
For example, if you have a simple, straightforward return without a lot of deductions or are not subject to the alternative minimum tax calculations, there aren’t a lot of benefits to hiring an accountant. If you don’t own a business, rental property, have investments, or anything else that would create a complex tax situation, you may want to invest in off-the-shelf tax software. Also, doing your own return is a great way to learn about your finances. As you prepare the forms, you might think about money differently, such as the value of charitable donations made throughout the year as tax deductions, the amount of withholding from your paycheck, etc. You also have the flexibility of preparing your return at your leisure.
Free file through the IRS and New York State (other states may vary)
If your adjusted gross income is less than $62,000, or if you are a taxpayer with very basic returns, you may be able to electronically file your Federal and New York State tax return using this free service.
Benefits of Hiring a Certified Public Accountant
Although it could be pricier, hiring a CPA may be well worth the investment. A CPA is most beneficial for people with complex returns. Individuals who pay high income taxes, are subject to the alternative minimum tax (AMT) or who have unusual circumstances appreciate the services of a CPA. Physicians, dentists, business owners, real estate investors, etc., typically fall into this category. These people also need strategic tax planning. Filing taxes is not always a clear cut process, and a CPA can provide value in the gray areas. They give advice on which tax strategies to take or not to take based on their knowledge of IRS rulings and past experience. A CPA can answer your questions year round, and not just during your annual consultation.
A CPA should also always represent you in an audit before the IRS and state tax authorities, so you do not have to handle it on your own. By hiring a CPA, and getting their best advice, you will minimize the chance of being selected for an audit.
At the end of the day, there is generally no right or wrong response to the question of whether to hire a tax professional or do your own taxes. If you have a simple return, you may save the tax preparation fee by doing it yourself. But if you have a complex return, the cost of hiring a CPA might be worth your peace of mind and potential tax savings.
A version of this article appears on the website of Grossman St. Amour CPAs PLLC.
The views, advice, and opinions expressed in this article are solely those of the original authors and do not necessarily reflect the view of Banker Healthcare Group, LLC its affiliates, or its employees.