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5 Signs That It’s Time to Hire Professional Tax Help

By U.S. News & World Report

Knowing when to seek out a professional’s help when filing your taxes can be tricky. First of all, it’s not exactly cheap. The average fee for professional help with preparing and submitting individual tax returns ranges from $176 to $457, depending on the complexity and forms filed, according to the National Society of Accountants. With a growing number of affordable and relatively easy-to-use tax software options on the market, it’s never been easier to take the do-it-yourself route. In fact, some 30 million taxpayers filed their taxes from their home computer in 2016, a 3.85 percent increase year over year, according to Internal Revenue Service data.

But there are times when a good accountant can be worth her weight in gold. How do you know when it’s better to tap an accountant for help? Here are a few signs that you need to call in the tax pros.

[See: Answers to 7 Burning Tax Questions.]

1. You earn $200,000 or more. The odds of getting audited are not quite as high as you might think. Just a sliver of individual income tax returns were audited in 2015 (0.8 percent), according to the latest IRS data. But the likelihood that you’ll be audited rises with your income level. For example, taxpayers who earned between $200,000 and $1 million were audited at a rate of 1.8 percent, while people earning $1 million or more were audited at a whopping 9.6 percent rate.

2. You’ve recently started freelancing or become self-employed. A freelancer’s first year in business is always one of the trickiest times. There is a huge learning curve when it comes to filing taxes as an entrepreneur versus filing taxes as a standard employee. You have to predict how much you’ll need to pay in taxes well ahead of time and come up with a plan to set taxes aside throughout the year. There are other complications, too. If you’re using a home office, it can be hard to determine which expenses are deductible on your return. Freelancers who work multiple gigs throughout the year will have to be sure that their earnings match up exactly with the payments reported by their clients. If your reported income doesn’t jibe with the payments your clients report to the IRS, you could find yourself in a pickle. An accountant with experience working with freelancers or entrepreneurs can be invaluable in helping you navigate new territory unscathed.

[See: 10 Smart Ways to Spend Your Tax Refund.]

3. You got a huge tax bill last year. If you owed a lot more to Uncle Sam than you think you should have last year, but you can’t figure out why, it’s not a bad idea to contact an accountant to help you backtrack. An experienced accountant, or even a standard tax preparer, can take a look at your tax return to find the cause of errors or discrepancies. You are able to file an amended tax return from two to three years after the date you filed your original return.

4. You had a major household or income change in the last tax year. Life changes can seriously throw your tax strategy out of whack. If your household changed in size during the tax year for which you’re filing (for example, you had a child, got married or got divorced) or you experienced a major change in income (a big promotion, unexpected bonus or job loss) filing taxes can be a nightmare. An accountant will be sure that you’re reporting your taxes correctly and help you come up with a strategy if — in the worst case scenario — you wind up owing more taxes than you anticipated. Ideally, you should seek help from a pro well in advance of any major life changes, so that they can help you plan ahead.

5. You receive part of your income from rental properties. Investing in a rental property can be an excellent way to earn passive income and boost your net worth. But it can also seriously complicate your tax picture. You may expect to pay more taxes since you’re bringing in more income, but bringing an experienced accountant on board can help you minimize your taxes. You might be able to deduct things like repairs to the home or even part of your purchase price.

[See: 7 Most-Missed Tax Deductions and Credits.]

Tip: Know the difference between a tax preparer and a CPA. A tax preparer or enrolled agent is someone who can simply file your taxes for you without offering ongoing support. Think of them as the human form of basic tax software. You may feel a bit better having spoken to a human when filing your taxes, but they likely won’t go much deeper than that (on the plus side, they tend to charge less than CPAs).

A certified public accountant, on the other hand, can offer support year-round, answering questions that crop up before it’s time to file and, of course, supporting you when it’s time to file your taxes. A CPA’s experience can vary. Be sure to find a CPA who has experience with the types of services you need. If you run a small business, find a CPA who works with small business owners. If you’re an individual, make sure you’re working with a CPA experienced in handling individual tax returns, and so on.

More from U.S. News

8 Ways You Can Prepare Now for Next Year’s Taxes

A Checklist for Last-Minute Tax Filing

14 Important Personal Finance Dates to Mark on Your Calendar

5 Signs That It’s Time to Hire Professional Tax Help originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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