Top 6 Reasons to Hire a CPA Firm this Tax Season
Will 2019 be the year when you take control of your financial present and future? If you are like so many others, you've probably been winging your finances and hoping for the best. But if you're finally ready to grab ahold of the reins rather than simply going along for the ride, it may be time to hire a CPA firm. Here are the top 6 reasons why you should hire a CPA starting this tax year:
Reason 1 to Hire a CPA Firm: New Tax Laws
One of the biggest reasons why both individuals and owners of small businesses should consider hiring a CPA is that this will be the first filing season under the Tax Cuts and Jobs Act, which was passed by Congress on December 20, 2017. Although this overhaul was meant to simplify the tax code, according to the CPA Journal, "the changes enacted are anything but simple." The IRS has also issued new forms, including a postcard Form 1040 that may look easy at first glance. But, according to Accounting Today, one "look at the new schedules accompanying the form will soon disabuse you of that notion." Yikes.
The following are just a few of the many changes included in the act:
For single and separate filers, the standard deduction has roughly doubled to $12,000.
For married couples filing jointly, the standard deduction will be $24,000.
The act eliminates most itemized deductions.
There is now a $10,000 limit on the amount of state and local taxes (SALT) that you can deduct.
Reason 2 to Hire a CPA Firm: To Deal with Any Possible Effects of the Government Shutdown on the IRS
With the longest government shutdown in history occurring at the same time as the new Tax Cuts and Jobs Act is being implemented, 2019 may turn into the perfect storm for taxpayers. On December 22, 2018, the IRS was one of the federal agencies that was partially closed during the beginning days of the shutdown, with only 12 percent of its staff working. And those employees were mostly dealing with security and technology for the IRS.
Unfortunately for taxpayers with questions, the IRS's contingency plan for a shutdown includes furloughs for the personnel needed to answer such phone calls. So if you have a question about filling out your return, your chances of ringing up the IRS office and getting an answer are probably very slim. This is not the first time a government shutdown has affected taxpayers in this manner. During the October 2013 shutdown, for example, many taxpayers with questions or issues reported that they could not get in contact with IRS personnel.
Additionally, most if not all IRS employees recalled during the government shutdown will be working without pay -- so there is a chance that morale and motivation will be low. Lingering problems are likely to remain long after the government shutdown ends as IRS personnel scramble to make up for lost time.
Further complicating matters? Some new regulations are still in limbo, according to CNBC, including a 20 percent qualified business income deduction for pass-through entities. So all-in-all, this could be a particularly tough year to try to file your taxes on your own.
Reason 3 to Hire a CPA Firm: You've Taken on a Side Hustle
Have you started taking on freelance work on the side or bought investment properties? Or, perhaps, you've opened a small business. If so, a CPA can help you develop a sound financial strategy for your small or side business and show you ways to maximize your business tax deductions. An accountant can also advise you on choosing the best structure for your business (i.e., sole proprietorship, LLC, corporation or partnership).
Reason 4 to Hire a CPA Firm: Big Life Changes
If you have recently experienced any big life changes, you may need the expertise of a CPA to help you deal with any tax implications and to also plan for the future. For example, if you've welcomed a new baby into your family, a CPA can advise you on the right college savings account to open for your wee one.
A CPA can also advise you on the tax consequences of less pleasant situations. If you're facing a life-threatening illness, your CPA may recommend opening a living trust for your loved ones so that your estate won't have to go through a probate process.
A separation or a divorce is another reason to consult with a CPA, especially since the new legislation includes two significant changes in the way that alimony will be treated for tax purposes. These changes, which will only apply to any divorce or legal separation agreements executed after December 31, 2018, are:
For the paying spouse, alimony will no longer be tax deductible
For the receiving spouse, alimony does not need to be reported as income
And you will definitely want to seek the advice of a CPA if you have recently inherited a substantial amount of cash or property so that you can minimize the taxes you will have to pay on your windfall. Then you'll want to work with your accountant to devise a sound spending and investing plan for the future.
Reason 5 to Hire a CPA Firm: To Save Valuable Time
If you're a small business owner, you have to wear a lot of different hats during your workday -- salesperson, accountant and human resources, just to name a few. But each of these "roles" saps your time and energy away from the aspects of your business that you probably enjoy more, whether that's interacting with customers or creating new products.
Hiring a CPA to take care of your books and prepare your taxes will free up valuable time in your day. An accountant could also potentially save you a lot of money by setting up systems to keep track of your business transactions, provide you with insight on cash flow patterns and by making sure that your company is compliant with state or federal business laws.
Reason 6 to Hire a CPA Firm: In the Event You're Ever Audited
No one wants to think about being audited. But it can and does happen. And if it should happen to you or your company, it's good to have a professional representing your interests. This is where the difference between working with a CPA and an accountant will be most noticeable. CPAs are eligible to represent their clients before the IRS, while a non-CPA accountant is not.