Doing your own taxes is easy, right? There’s no need to pay for a professional! That may be the case if you simply have a W-2 or 1099, but for more complicated tax situations, filing on your own could actually cost you money rather than saving it.
Not only could hiring a professional save you time (time which you can spend on other important tasks, like running a business), but it could reduce the risk of IRS penalties—and expensive tax debt.
So, whether you’re a small business owner or you have foreign bank accounts, here’s when it could make sense to hire a tax professional over trying “DIY” taxes.
1. You Have Your Own Business
No matter the size of your business, being your own boss means your tax returns are a little more complicated. Not only are there often multiple forms to complete, but without proper guidance, you risk losing out on deductions you’re entitled to—or you might accidentally claim expenses you shouldn’t! With that in mind, here’s why it could pay to hire professional help.
- Bookkeeping Errors: From recording sales to documenting expenses, bookkeeping means handling a lot of financial data. Many business owners make costly bookkeeping mistakes with the DIY method. It’s usually cheaper to have it done right the first time.
- Incorrect Tax Forms: You should submit different tax return forms depending on your business. For example, partnerships must complete Form 1065, while single-member LLCs only complete Form 1040. Without professional help, you could file the wrong forms or submit an incomplete return, leading to penalties.
- Complex Payment Schedule: Rather than paying a lump sum by Tax Day, you’re often expected to pay quarterly estimated taxes. Figuring out these taxes (and staying on top of payments) is difficult when you go it alone.
- Expenses and Deductions: When completing self-employed tax returns, there’s a risk you’ll miss out on deductions which reduce the tax you pay, such as retirement contributions and self-employment tax deductions. And while there are expenses you might be able to claim, there’s a risk you’ll accidentally put through ineligible expenses, such as certain business meals.
Whether you’re a small business owner, a freelancer, or a shareholder with complex business interests, hiring a tax professional substantially reduces the risk of tax filing errors and IRS penalties.
2. You Invest in Cryptocurrency
The IRS treats cryptocurrency like property. As such, the rules around cryptocurrency taxation are complex and constantly shifting. Here’s why you should strongly consider hiring a crypto tax professional to help with crypto tax returns.
- Complicated Tax Forms: You must report all digital assets, such as NFTs and crypto, with your tax return. The forms and calculations involved can be complex and even one oversight can lead to IRS penalties, which is why you should seek help regarding how crypto is taxed.
- Evolving Rules: Cryptocurrency taxation rules are constantly in flux. Without a professional’s guidance, there’s a risk you’ll act on outdated rules and either underpay or overpay your taxes.
- New Accounting Requirements: Since January 2025, the IRS is imposing new requirements for crypto accounting, and making the transition can be confusing. From recording your transfers to disclosing your transactions, you should seek support to ensure you comply with the new rules.
- Increased Scrutiny: With the implementation of Form 1099-DA, there’s less room for error than ever before.
If you don’t report cryptocurrency correctly, or if you accidentally leave out key details, you could face a cryptocurrency tax audit. But not only can a tax professional help reduce the risk of an audit, they can help you face any IRS questions or negotiations with confidence.
3. You Have Foreign Assets
Whether it’s a foreign account, foreign shareholdings, or property overseas, you must disclose certain assets and accounts held abroad. The rules are highly complex, though, and often involve international law—here’s why professional support matters.
- Complex Disclosure Requirements: There are different rules for disclosing various types of foreign assets. Accidentally overlooking the disclosure requirements for your business or personal interests could lead to significant financial penalties.
- Challenging Tax Forms: It’s not always easy to understand whether you should submit an FBAR, FATCA, or both when completing your tax return. There are many other offshore disclosure forms to consider, as well. To avoid penalties and IRS scrutiny, consider seeking professional help.
- Steep Tax Penalties: The IRS is not shy about imposing serious penalties on anyone who they believe has failed to disclose offshore holdings and accounts. But not only can a tax professional help you negotiate IRS penalties, they can help you avoid penalties in the first place.
From submitting voluntary disclosures to handling IRS audits into foreign accounts, a tax professional can provide the support you need to manage offshore taxation issues.
Do I Really Need a Tax Professional?
Still not sold on the idea of hiring a tax professional over DIY taxes? This is understandable, especially if you think your tax return is fairly straightforward. However, no matter your tax situation, here’s why it’s always worth seeking professional advice before Tax Day.
- Reduce Risk: Even if your IRS income tax return seems—at least at first glance—simple, there’s always the risk of a filing error, whether it’s underreporting income or missing a deadline. A tax professional can give you the reassurance you need to approach Tax Day with confidence.
- Tax Savings Strategies: From claiming expenses to reducing your overall taxable income, there are many strategies you might use to limit the taxes you pay at local, state, or federal level. Tax professionals ensure you don’t miss out on tax savings opportunities because they’ll explore them in detail with you.
- Tax Debt Support: Sometimes you can’t pay your taxes or you’ve found yourself in tax debt. This situation can be overwhelming if you don’t have experienced support on your side. A tax professional will empower you to manage the debt so you have the peace of mind you deserve.
- IRS Negotiations: IRS negotiations are inherently complex. If you find the idea of handling negotiations with the IRS daunting, a tax professional can step in and act for you. Our attorneys are highly experienced in representing clients in IRS negotiations—and we’re passionate about ensuring your legal rights are protected at all times.
Need Tax Support? Contact Gordon Law!
Need help filing your taxes this year? Don’t stress any longer. Instead, contact the Gordon Law tax attorneys for help. Our team can support you through every step of the tax filing process, whether it’s reporting your income, reducing your tax liabilities, or ensuring you meet the relevant filing deadlines. And if you’re worried about your ability to pay tax on time, we’ll explain your legal options and guide you through the IRS negotiations.
At Gordon Law, we make taxes simple. Learn how to file with ease and avoid IRS penalties by calling our team or scheduling a consultation online.
