Should Millennials Hire A CPA?
By Caitlin Andrews- Millennial Milk
The deadline to file your taxes is fast approaching. Whether you like it or not, the IRS has set a due date for you and your fellow Americans to file your taxes.
Are you still trying to decide if you should hire an accountant or save the money and file it yourself?
I get it. I’m as frugal as they come. When it comes to saving a buck, I’ll do just about any DIY project you can throw at me. When our washing machine broke, we didn’t call in a professional. My husband and I scoured forums and Youtube videos to figure out what was wrong. We knew nothing about repairing washing machines, but after a bit of research we were able to fix it ourselves with a $9 replacement part. Chalk it up to either frugality or stubbornness, but we fixed that washer.
Tax returns are not a washing machine. If we had screwed up fixing the washing machine we would have been in the same boat we started in. The machine would still be broken and we would have to hire someone to fix it. If we screw up filing our taxes, it could cost us time and money.
Problems with Your Tax Return
Improperly filling out your tax return can raise red flags that cause the IRS to review it. You’ll have to go through the annoyance of amending your return. This means a delay in your refund if you’re expecting one.
If you do fill out the form correctly, you could still be missing beneficial deductions that a tax professional may know about. This is particularly true if you are self employed or work as a freelancer and have business deductions.
At this point, you’re probably thinking that I want you to hire a CPA.
If your taxes are simple, say for example that you’re single and have one W2 and a student loan, then your best bet is probably to just file them yourself and save the money.
Reasons to Consider Hiring a CPA
The more complex your situation is, the more you should consider hiring a CPA. Here are a few circumstances where you may want to consider hiring a professional to file your taxes:
- You have a rental property
- You own a business, are self-employed, or freelance
- You have a 529 College Savings plan
- You have a Schedule K-1
- You own foreign ETFs, mutual funds or stocks of foreign companies
- You are selling property
- You’re terrified of making a mistake on your tax return and can afford a CPA for your own piece of mind
My taxes have gotten more complex than they were when I was waitressing in high school and only receiving a single W2 to file. My husband and I have a CPA that does our taxes for us. It makes more sense for us than filing our taxes by ourselves.
Benefits of Hiring a CPA
- Time. When my husband and I sit down with our accountant to file our taxes she answers all of our questions, fills everything out, and double checks her work in a fraction of the time it would take me to attempt to do the same thing.
- Cost. Yes, a CPA will cost you money. They’re professionals. They’ve gone through a lot of schooling and certification to make it where they are. Much like you deserve to be paid for your work, they deserve to be paid for theirs. A good CPA is worth the money, though. They can help you take advantage of deductions and get you the best possible return.
- Expertise. Unlike you, who attempts to become a tax expert once a year, your CPA is actually an expert. Take advantage of their expertise. Ask questions and listen to their advice. A good CPA will be able to help you with future tax planning.
- Stress. If you’re anything like me, the thought of doing your taxes by yourself is stress inducing. I can’t imagine tackling it on my own. Hiring a CPA alleviates the fear that I missed something or messed up.
Benefits of Filing Your Own Taxes:
- Learning Experience. Doing your own taxes will help you understand how the tax system works. Getting hands on with your taxes will also help you with future tax planning.
- Save Money. If your taxes are easy enough, you can file them on your own without having to pay for a CPA. You might not even need to pay for software like TurboTax. The added cost of a CPA could be unnecessary if your return is fairly simple.
- Control. Whereas hiring a CPA might be a stress reliever for some, others find that doing their taxes themselves is less stressful. You have complete control of what’s filed on your tax return and you don’t have to worry about someone else making a mistake on your behalf. CPAs are professionals, but they’re still people. People make mistakes.
Pro Tip: If your parents have a CPA, check if they offer a discount for their clients’ children. Many of them do.
When it comes to deciding if you should hire a CPA, there is no one-size-fits-all answer. You need to look at your personal situation and decide if it’s worth it to you to bring on a professional.