Do I need a CPA?
CPAs are highly educated and trained professionals. Good CPAs should be charging fees commensurate with their training and education. Accordingly, you should consider using a CPA if you have specific needs, are self-employed, own a business, have unusual tax items, or have a need to seek tax advice throughout the year. You probably do not need a CPA if you have W-2 income, own a home, and have modest investments.
On the other hand, some people want nothing to do with preparing income taxes and feel more comfortable knowing that their tax returns are being prepared in a professional manner by competent individuals who will be familiar with their tax situation year after year.
Case Study
To save money, Rick and Beth decided to use the tax preparation services of a large national tax preparation company rather than the CPA who had been preparing their taxes. They collected their material and went to visit the local store. The preparer did not know them and prepared the individual tax return based on the documents that Rick and Beth provided. As it turned out, a significant source of income was left off the return and Rick and Beth ended up incurring large interest and penalties due to the understatement on their tax return. Because the tax preparer was not familiar with the taxpayers previous returns, was not familiar with Rick and Beth’s income and lifestyle, and relied solely on inputting data into a tax preparation program, the preparer missed that the reported income on the tax return was wrong.