Is Hiring a CPA Worth it? 5 Tips for Getting Your Money’s Worth

If you are on a budget (and who isn’t?), there are actions you can take to make working with a CPA more affordable:

  • Build a Relationship: If you are comfortable with your CPA, stick with them.   By working with the same CPA each year, they become familiar with your situation and can quickly spot discrepancies or big changes. One year, a volunteer preparer didn’t ask my aunt for her real estate property taxes because he didn’t see a mortgage statement.  A year-round CPA would have known to ask.
  • Be Organized: Generally CPAs charge by the hour.  If you have a lot of contributions to deduct, consider providing a simple spreadsheet with the donations listed along with documentation.  This could lower your bill considerably.  A client once provided a co-worker with a large box of bank statements with a belt tied around it – this is an expensive way to claim your donations!
  • Don’t Make Assumptions: A client knew he could gift each of his kids and grandchildren $13,000 without triggering any gift tax in 2010.  For 2011, he incorrectly assumed inflation had increased the gift tax exclusion to $13,500 and wasn’t expecting to pay for gift tax return preparation.
  • Consult your CPA in Making Decisions: In 2009, a client decided to buy two cars in one year.  He wanted the hybrid tax credit so he purchased a Toyota hybrid and a Smart Car.  What he didn’t know was that Toyota hybrid no longer qualified for the tax credit.  Had he consulted me, I could have advised him before the purchase and provided a list of cars that still qualified.  It was heartbreaking to let him know he wasn’t going to get the tax credit.
  • Don’t Lie to Your CPA: It’s like lying to your doctor, it only hurts you.  Sometimes clients can be embarrassed to share information like gambling earnings or certain medical expenses.  Your information is private and helps your CPA determine the best way to claim that expense or report those earnings.

So if you want to ease your stress, save money and work with someone who understands and keeps up with tax law, consider a CPA. If you are asking yourself if you should hire a CPA, I happen to think a CPA is a wise investment.

-Melanie Lauridsen, Technical Manager – Taxation, American Institute of CPAs