When You Need Professional Tax Help

Big life changes, unexpected bills, and changes to the tax code can catch people off guard.

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Every year, the Internal Revenue Service processes over 142 million tax returns. Of that number, approximately 109 million taxpayers received a refund in 2010, with the average refund check totaling just over $3,000, according to IRS data.

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The number of consumers who filed their own taxes electronically jumped to 34.8 million in 2010 up from 32.8 million in 2009, a year-over-year gain of 8.2 percent in electronic do-it-yourself tax preparation.

But not everyone has the time, talent or temperament for DIY tax preparation. Consumers facing major life-changes or those who are chronic procrastinators should consider a tax intervention, according to tax experts, financial planners and professional organizers.

Consider professional help if you fall into one of the following situations:

Delayed Reaction

Registered letters from the IRS, lien notices and other signs of delinquent taxes are obvious red flags. “You need professional help with taxes--either a tax preparer, CPA, or Certified Financial Planner practitioner—if you have procrastinated for more than one year (as in, you did not file at all). You can clear the slate with a professional and set up a system so that doesn't happen again,” said Ellen Siegel, a certified financial planner and owner of Ellen R. Siegel & Associates in Miami.

Negative Surprise

If tax season hits your net worth with a large tax bill, and you’re unprepared for the consequences, consider professional help. “If you did not have enough money set aside to cover your current tax obligation, and this fact caught you by surprise, you need a [professional] system,” Siegel said.

Life Changes

Marriage, divorce, retirement and other milestone changes could demand expert tax advice, according to Mark Steber, chief tax officer at Jackson Hewitt Tax Service. “Complexity [of a tax return] is not determined by income,” Steber said. Life-changes that can complicate a tax return include relocation, dependent care arrangements, and education expenses. Loss of steady income also creates a special set of challenges for unemployed tax filers. “They don’t just sit at home,” Steber said, adding that laid-off workers are likely to earn side income, start new businesses or go back to school. Those options create additional tax consequences that may require expert help.

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Time Crunch

The tax code is complex and constantly changing. To guide tax payers through the process, the IRS offers a variety of tools, fact sheets and webinars at www.irs.gov. Several tax preparation websites also offer helpful summaries of important tax law changes. If you have the time to study and digest tax code changes, save money by preparing your own tax returns. But if you can’t follow through on the commitment, professional help might be the better option.

Offline Issues

Tax preparation software and online tax services are useful for DIY tax returns. But if you have questions, complexities and issues that are not easily solved by online solutions, consider hiring a professional. “If you’re not fitting into the boxes, it makes good sense to go to a certified public accountant or a tax attorney,” said Myra Salzer, a financial expert and author of Living Richly.

Sharon Harvey-Rosenberg is a member of Wise Bread’s top personal finance blog network. She is the author of "Frugal Duchess: How to Live Well and Save Money” and a contributing author to "10,001 Ways to Live Large on a Small Budget."