Feb. 3, 2025

Can a Tax Professional Save You Money?

Struggling with Taxes? When to Call in the Pros

Taxes! That dreaded time of year when we gather all our financial documents, try to decipher complicated forms, and hope we don't make any costly mistakes. While some people find satisfaction in tackling their taxes head-on, many others find the process overwhelming and stressful. If you fall into the latter category, you might be wondering if it's time to bring in professional help. Can a Tax Professional Save You Money?

Check out the full podcast episode:

As Christians, we are called to be good stewards of our resources, and that includes managing our finances responsibly (Proverbs 27:23-24). Sometimes, seeking professional guidance is the wisest course of action, allowing us to focus on our God-given priorities while ensuring our tax obligations are met accurately and efficiently.

In this blog post, we'll explore some common tax struggles faced by individuals and small businesses, the benefits of hiring a tax professional, and the warning signs that it might be time to seek expert assistance.

Common Tax Struggles

Many individuals and small businesses face challenges when it comes to taxes. Tax laws are complex and constantly changing ¹, making it challenging to stay informed and ensure compliance. Let's take a look at some common tax struggles you might encounter.

Individuals

Keeping up with paperwork: It can be difficult to keep track of all the necessary documents, such as W-2s, 1099s, and receipts. Beyond the standard forms, it's important to keep records of other items that might be relevant for deductions or credits, such as charitable contribution receipts, records of medical expenses, and documentation of home office expenses².
Understanding tax laws: Tax laws are complex and constantly changing, making it challenging to stay informed and ensure compliance¹.
Claiming deductions and credits: Many taxpayers miss out on potential savings because they are unaware of or don't fully understand the deductions and credits they are eligible for³.
Dealing with life changes: Major life events, such as marriage, divorce, the birth or adoption of a child, or receiving an inheritance, can significantly impact your tax situation. For example, getting married often allows you to file jointly and potentially access lower tax rates and higher deductions. However, there are situations where marriage could increase your tax liability⁴.

Small Businesses

Small businesses face unique tax challenges due to their varied structures, income sources, and expenses. Some common struggles include:

Failing to file or send the proper forms or payments: Depending on your business structure and industry, you may be required to file various forms, such as payroll taxes, estimated income tax, and sales tax. Some of these have quarterly deadlines, while others are annual. It's crucial to understand your filing obligations and ensure timely and accurate submissions⁵.
Underestimating and underreporting income: If you're self-employed or have a pass-through entity, you'll likely need to make estimated tax payments throughout the year. Underestimating or underreporting your income can lead to penalties⁵.
Mixing business and personal expenses: It's essential to keep your business and personal finances separate. This means having a dedicated business bank account and credit card and maintaining detailed records to support any deductions you claim for business use of personal assets, such as a vehicle or home office⁵.
Poor record-keeping and organization: Maintaining accurate and organized financial records is crucial for tax purposes. Failing to do so can lead to missed deductions, increased accounting fees, and potential problems during an audit⁵.

In addition to these specific challenges, both individuals and small businesses need to be aware of the potential for penalties for underpayment of taxes. These penalties can be significant, so it's crucial to ensure accurate reporting and timely payments⁵.

Types of Tax Professionals

If you decide to seek professional help, it's important to understand the different types of tax professionals available:

Certified Public Accountants (CPAs): CPAs are licensed professionals who have met rigorous education and experience requirements. They can provide a wide range of tax services, including tax preparation, planning, and audit representation. CPAs have unlimited representation rights on any tax matters, meaning they can represent clients before the IRS even if they did not prepare the tax return⁶.
Enrolled Agents (EAs): EAs are federally authorized tax practitioners who have demonstrated expertise in tax matters. They can represent taxpayers before the IRS in audits, collections, and appeals⁶.
Tax Attorneys: Tax attorneys are lawyers who specialize in tax law. They can provide legal advice and representation in complex tax matters⁶.
Tax Preparers: This is a broad term that encompasses anyone who is paid to prepare tax returns. Some tax preparers may have no formal credentials, while others may participate in the IRS's Annual Filing Season Program (AFSP) to enhance their knowledge and credibility. The AFSP is designed to help non-credentialed tax professionals stay informed about tax law and distinguish themselves from other preparers⁶.

Benefits of Hiring a Tax Professional

Hiring a tax professional can offer several benefits, some of which can have a direct impact on your financial well-being:

Expertise and Knowledge: Tax professionals have in-depth knowledge of tax laws and regulations. They can help you navigate complex tax situations and ensure compliance⁸.
Time Savings: A tax professional can handle the time-consuming tasks of tax preparation and filing, freeing up your time for other priorities. As the IRS reports, it takes nearly 20 hours to complete the average tax return with deductions. Imagine what you could do with that time instead¹!
Accuracy: Tax professionals can help you avoid costly mistakes and ensure your tax return is accurate⁹.
Maximizing Deductions and Credits: Tax professionals can identify potential deductions and credits that you might have overlooked, helping you minimize your tax liability. In fact, the potential savings from a previously missed deduction or credit could more than cover the cost of hiring a tax professional³.
Audit Representation: If you are audited by the IRS, a tax professional can represent you and guide you through the process⁹.
Peace of Mind: Knowing that your taxes are being handled by an expert can provide peace of mind and reduce stress, allowing you to focus on other important aspects of your life and business¹.
Year-Round Support: Tax professionals can provide assistance throughout the year, not just during tax season. They can help with tax planning, financial analysis, and keeping your financial records in order¹⁰.
Review of Previous Returns: A tax professional can review your previous tax returns to identify any potential missed deductions or credits. If they find any errors, they can help you file an amended return to claim any refunds you may be owed¹¹.

Warning Signs You Might Need Professional Tax Help

While many people can successfully manage their taxes on their own, there are certain situations where seeking professional help is particularly beneficial. Here are some signs that it might be time to call in the pros:

Your business is growing: As your business grows, your tax situation becomes more complex, with potentially higher revenue, more expenses, and a wider range of deductions and credits to consider¹⁰.
You have multiple sources of income: Juggling income from various sources, such as a salary, self-employment income, investments, or rental properties, can make tax preparation more challenging¹².
You're dealing with a major life change: Life events like marriage, divorce, the birth or adoption of a child, or receiving an inheritance can have significant tax implications. A tax professional can help you understand how these changes affect your tax liability and ensure you're taking advantage of any available benefits¹³.
You're facing an IRS audit: An audit requires careful handling and knowledge of IRS procedures. A tax professional can represent you during an audit, provide the necessary documentation, and help you navigate the process with confidence¹⁴.
You're feeling overwhelmed: If the thought of doing your taxes fills you with dread, it's a good sign that you might need help. A tax professional can take the burden off your shoulders and provide peace of mind¹².

How to Choose the Right Tax Professional

When choosing a tax professional, consider the following factors:

Qualifications: Look for a CPA, EA, or tax attorney with the necessary credentials and experience¹⁵.
Specialization: If you have specific tax needs, such as international taxation or estate planning, find a professional who specializes in that area¹⁶.
Reputation: Check online reviews and ask for referrals from trusted sources¹⁷.
Fees: Understand how the preparer charges for their services and get a clear estimate upfront¹⁷.
Communication: Choose a preparer who communicates clearly and is accessible throughout the year¹⁸.
Complexity and Budget: The complexity of your tax situation and your budget will also play a role in your decision. If you have a straightforward tax return, you may not need to hire the most expensive tax attorney. Conversely, if your finances are complex, you'll want to find a professional with the expertise to handle your specific needs¹⁶.

Costs of Hiring a Tax Professional

The cost of hiring a tax professional can vary depending on several factors, including the complexity of your tax situation, the type of professional you choose, and the services you require.

Service Type	Typical Cost	Examples
Individual Tax Preparation (Simple)	$500+	An individual with only W-2 income and few deductions.
Individual Tax Preparation (Complex)	$1,500+	An individual with multiple sources of income, investments, and itemized deductions.
Small Business Tax Preparation	$1,500 - $5,000+	A small business with employees, inventory, and multiple state filings.
Hourly Rate (CPA/EA)	$150 - $400+	Consultation on a specific tax issue or ongoing tax planning.
Hourly Rate (Tax Attorney)	$200 - $550+	Legal advice on a complex tax matter or representation in tax court.

Keep in mind that these are just estimates, and the actual cost may be higher or lower depending on your specific needs¹⁹.

Testimonials and Case Studies

Many people have benefited from hiring a tax professional. Here are a few examples:

A small business owner saved $7,200 in tax refunds after their CPA identified overlooked expenses²¹.
A taxpayer facing an IRS audit was successfully represented by their tax professional, resulting in a reduced tax liability²².
An expatriate living abroad found peace of mind knowing that their complex tax situation was being handled by an expert²³.

These testimonials highlight the value of professional tax assistance in various situations.

Conclusion

Taxes can be a source of stress and confusion, but you don't have to navigate them alone. If you're struggling with your taxes, consider seeking help from a qualified tax professional. They can provide the expertise, guidance, and support you need to ensure compliance, maximize your savings, and achieve peace of mind.

As Christians, we are called to be wise stewards of our resources, and sometimes that means investing in professional help to manage our finances effectively. By seeking wise counsel and delegating tasks that are beyond our expertise, we can free up our time and mental energy to focus on our God-given priorities, such as our families, our ministries, and our communities. Just as we might seek advice from a pastor or a financial advisor, consulting a tax professional can be a way to honor God with our finances and live out our faith in a practical way¹.

Works cited

Why Hire a Tax Professional? - Find a Tax Pro, accessed January 26, 2025, https://connect.nsacct.org/findataxpro/consumer/whyhire
Avoid These Common Tax Mistakes - FINRED - USALearning, accessed January 26, 2025, https://finred.usalearning.gov/Money/TaxMistakes
The Pros and Cons of Hiring a Tax Professional | Bench Accounting, accessed January 26, 2025, https://www.bench.co/blog/tax-tips/hiring-tax-professional-pros-cons
8 Common Life Events That Affect Your Taxes - TurboTax Tax Tips & Videos - Intuit, accessed January 26, 2025, https://turbotax.intuit.com/tax-tips/tax-deductions-and-credits/8-common-life-events-that-affect-your-taxes/L2Vs3f1Ka
Top 5 Tax Mistakes Small Businesses Make - Accion Opportunity Fund, accessed January 26, 2025, https://aofund.org/resource/top-5-tax-mistakes-small-businesses-make/
What are the Different Types of Tax Professionals? - TaxSlayer Pro, accessed January 26, 2025, https://www.taxslayerpro.com/blog/post/different-types-of-tax-professionals
A Guide to the 4 Types of Tax Preparers - Harness Wealth, accessed January 26, 2025, https://www.harnesswealth.com/articles/different-types-of-tax-professionals/
4 Reasons for Hiring a Tax Professional | AAA Club Alliance, accessed January 26, 2025, https://cluballiance.aaa.com/the-extra-mile/advice/budget/reasons-for-hiring-tax-professional
Why Hiring a Professional Tax Preparer Is Inevitable This Tax Season? - CapActix, accessed January 26, 2025, https://www.capactix.com/why-hiring-a-professional-tax-preparer-is-inevitable-this-tax-season/
When Should You Hire an Accountant for Taxes? 6 Signs It's Time. - CFO2U, accessed January 26, 2025, https://cfo2u.com/taxes/when-should-you-hire-an-accountant/
When to Hire a Tax Professional - PersonalFinanceLab, accessed January 26, 2025, https://www.personalfinancelab.com/finance-knowledge/personal-finance/when-to-hire-a-tax-professional/
Should You Hire a Tax Professional This Year? - How to Money, accessed January 26, 2025, https://www.howtomoney.com/hire-a-tax-professional/
Should I Hire a CPA or Tax Accountant Near Me? - TurboTax, accessed January 26, 2025, https://turbotax.intuit.com/tax-tips/tax-pro/should-i-hire-a-cpa/L1Qx7Be5J
Signs Your Tax Return Is Complex Enough to Require Professional Tax Prep, accessed January 26, 2025, https://taxprocpa.com/blog/signs-your-tax-return-complex-enough-to-require-professional-tax-prep/
10 Tips for Choosing a Tax Preparer | Cable and Consumer Services - Fairfax County, accessed January 26, 2025, https://www.fairfaxcounty.gov/cableconsumer/csd/10-tips-choosing-tax-preparer
Navigating the Maze: A Comprehensive Guide to Selecting the Ideal Tax Preparer, accessed January 26, 2025, https://www.taxdefensenetwork.com/blog/navigating-the-maze-a-comprehensive-guide-to-selecting-the-ideal-tax-preparer/
BBB Tip: How to choose a tax preparer in the US, accessed January 26, 2025, https://www.bbb.org/all/taxtips/us/how-to-choose-a-tax-preparer-us
How to Find the Best Tax Preparer Near You - NerdWallet, accessed January 26, 2025, https://www.nerdwallet.com/article/taxes/how-to-find-best-tax-preparer-near
www.harnesswealth.com, accessed January 26, 2025, https://www.harnesswealth.com/articles/average-fees-for-tax-advisors/#:~:text=It's%20also%20common%20for%20tax,or%20more%20per%20tax%20return.
Average Fees for Tax Advisors in 2025 - Harness Wealth, accessed January 26, 2025, https://www.harnesswealth.com/articles/average-fees-for-tax-advisors/
Testimonials - What Our Clients Say - Straight Talk CPA, accessed January 26, 2025, https://www.straighttalkcpas.com/testimonials
Advanced Tax Solutions Reviews & Client Testimonials, accessed January 26, 2025, https://advancedtaxsolutions.com/best-solutions-to-tax-problems
Expat Tax Preparation Testimonials - Tax Samaritan, accessed January 26, 2025, https://www.taxsamaritan.com/about-tax-samaritan/expat-tax-preparation-testimonials/
5 Benefits of Hiring a Tax Accountant, accessed January 26, 2025, https://gurianco.com/5-benefits-of-hiring-a-tax-accountant/

Ralph V. Estep, Jr.

Christian Financial Consulting

Ralph V. Estep, Jr. is a highly accomplished professional with a diverse background in finance, accounting, technology, and entrepreneurship. As the principal at Saggio Management Group, Inc., he has demonstrated exceptional leadership and expertise in various roles throughout his career.

Ralph's educational journey began at St. Mark's High School in Newark, Delaware before attending the University of Nebraska where he was an esteemed member of the Cornhusker Marching Band and had the privilege of performing at the Florida Citrus Bowl in Orlando.

Continuing his pursuit of knowledge and excellence, Ralph earned a Bachelor of Science Degree in Accounting from the University of Delaware. He further expanded his academic achievements by obtaining a Master's in Business Administration from Wilmington University.

Throughout his professional journey, Ralph has been recognized for his outstanding accomplishments and commitment to excellence. He is a member of prestigious organizations such as the Golden Key National Honor Society and Beta Gamma Sigma International Business Honor Society.

With an extensive range of professional designations including Licensed Public Accountant (LPA), Accredited Business Accountant (ABA), Accredited Tax Advisor (ATA), Accredited Tax Preparer (ATP), and Internal Revenue Service Registered Tax Preparer (RTRP), Ralph possesses comprehensive expertise in tax preparation and financial management.

Beyond his impressive qualifications, Ralph has actively engaged with various community programs as bo… Read More

Is Your Tax Preparer Cutting Corners?

Who’s Doing Your Taxes – and Can You Trust Them? Tax season can be a stressful time for many, filled with uncertainty and a sense of dread. It's tempting to simply hand over your financial documents to a tax preparer and hope for the be…

Who Can You Trust to Do Your Taxes?

Who Can You Trust With Your Taxes? Choosing the Right Tax Professional Tax season can be a time of stress and uncertainty, especially when it comes to entrusting someone with your financial information. As Christians, we want to make wise financial…