5 Groups Who Need Professional Tax Help

Experts say these five groups should skip the software and take their taxes to a professional.
Financial Expert
Managing Editor

Given how simple it is to file a basic return with tax preparation software, paying someone to prepare your taxes may seem as timely today as a flip phone or dial-up modem.

Not so fast, say some finance experts. While tax software works well in some situations, it can never fully replace a human touch — particularly if your situation is a little different from the average taxpayer’s.

Here are five types of taxpayer that financial advisers say should skip the software this year and find a tax professional instead.

1. The fresh starters

Doug E. Lockwood, CFP, branch president and wealth partner at Hefty Wealth Partners in Auburn, Indiana, says that whenever he runs across someone who has had a change in their circumstances, he recommends they ask themselves, “Is this a life-changing event?” If they answer is yes, then it’s time to pay a visit to a tax professional.

While a whole host of situations can be considered life-changing, Lockwood provides a rundown of what he considers major events.

  • Marriage
  • Divorce
  • Disability
  • Retirement
  • Relocation
  • Self-employment
  • Children leaving for college

While these events don’t necessarily make filing taxes more difficult, they represent a time ripe for mistakes. People may not realize their new situation makes them eligible for certain tax benefits or, alternately, they may try claiming credits or deductions for which they no longer qualify.

2. The tax-curious

Cory Schmelzer, CFP, owner of San Diego Wealth Management, agrees that life-changing events are a top reason to see an enrolled agent or other qualified tax professional. He says seeing a pro is about more than merely avoiding mistakes. It’s also about strategizing and minimizing future tax obligations.

What’s more, you don’t have to wait until a life change to see a tax pro. Schmelzer recommends professional tax preparation for anyone who wants to explore their tax options and look at alternative scenarios.

“Doing your tax preparation needs to be something where you design and plan for the future,” he says.

Although some taxpayers may be able to do their own tax planning, the complex nature of the tax code makes it difficult, and not particularly enjoyable, for most people. However, a good tax preparer should be adept at running several scenarios and recommending how best to minimize tax liability in both the short and long run.

3. The trustees

According to Lockwood, another group that should definitely get professional help is anyone filing a return for an estate or trust.

The law requires a separate tax return from these entities, as their money may be taxable. You could do that by trying to file a Form 1041 on your own, but many taxpayers find the form baffling. Save the headache and let a pro do the heavy lifting instead.

4. The diversified investors

This fourth group may be the one most likely to seek out professional help, and for good reason. Tax rules for investments and assets can be difficult to understand and often come with income phase-outs or other catches.

For example, Schmelzer says that real estate investors may be able to deduct passive losses from rental properties. However, the law is very specific about who is eligible for this deduction, and it isn’t always clear to taxpayers. Rather than guess, those with rental properties may want to check in with a tax preparer.

Lockwood says individuals with stock options or those who may be subject to the alternative minimum tax should also get help.

“In complicated tax situations, a tax professional earns their weight in gold,” he says.

5. The technologically or mathematically challenged

Finally, if you find your iPhone confusing and have the office tech support number on speed dial, you may want to opt out of doing your own taxes. The same goes for those who struggle to understand their W-2s and other tax documentation. While software can make filing easy, it’s not going to catch your mistakes, particularly if you are inputting the wrong information.

“TurboTax is a program,” says Lockwood. “You put bad data in, you get bad data out.”

If you don’t fit neatly into any of the above groups, Schmelzer recommends considering the cost of professional tax preparation against its value when deciding how to file your taxes this year.

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Maryalene LaPonsie is a Michigan-based freelance writer specializing in education, personal finance and retirement topics. She is a weekly contributor to U.S. News & World Report, and her work has been featured on MoneyTalksNews, MSN, FOX Business, CBS News and elsewhere online. Prior to writing full-time, Maryalene spent 13 years working in the Michigan Legislature as a legislative staff member.