If you’ve received a notice of audit from the IRS, you might be wondering if this is something you should be handling on your own. How do you know when to hire a tax professional? This is a valid question, and the answer will depend on several factors – the nature and complexity of your tax situation, the kind of audit you’re facing, and your familiarity with the tax code. At Creative Tax Solutions, we often come across this question and have insight to help you decide when to bring in a professional.
Handling Audits on Your Own
You certainly can represent yourself during a tax audit, and for simpler tax situations, such as individual filing errors or basic deductions, this might be sufficient. Self-representation is also an option if you’re facing a mail audit, where you simply need to provide the requested documentation.
However, the tax code can be intricate and perplexing, especially if you’re dealing with complicated tax situations like business expenses, foreign income, or rental properties. If you are uncomfortable or unfamiliar with these areas, you might unknowingly make a mistake that results in additional liabilities and penalties.
Hiring a Tax Professional
For complex tax scenarios or extensive audits, the guidance and expertise of a tax professional can be invaluable. A Certified Public Accountant (CPA), tax attorney, or Enrolled Agent (EA) are qualified to represent you before the IRS. There are several reasons why you might consider hiring a tax professional:
Tax professionals have years of training in the tax code and keep current with continuous changes in tax laws. This expertise ensures that your tax matters are handled correctly and in accordance with current legislation.
Time and stress
Interpreting tax laws, gathering documents, and responding to IRS inquiries takes time and can be stressful. A tax professional can take these tasks off your plate, giving you peace of mind and freeing up your time.
Professionals are skilled at spotting overlooked deductions and credits, potentially reducing your liability.
CPAs, EAs, or tax attorneys can represent you in IRS proceedings, offering assistance at every stage. They can negotiate on your behalf and guide you through appeals if necessary. For example, we at Creative Tax Solutions have experienced EAs who can help you through the audit process.
If you’re accused of tax fraud or if your audit could result in legal implications, hiring a tax attorney is crucial. They can offer legal advice, protect your rights, and negotiate settlements on your behalf.
Making the Right Decision
Choosing self-representation or hiring a professional ultimately depends on the complexity of your tax situation, the nature of the audit, and your confidence in dealing with tax matters. If you’re unsure, you may want to consult with a tax professional. They can provide an initial assessment and advise you on the best course of action.
IRS audits can be overwhelming, but they don’t have to be. A knowledgeable tax professional can be a powerful ally who ensures your interests are protected during an audit. Whether you choose to go at it alone or decide to hire a professional like our team at Creative Tax Solutions, make sure you’re comfortable with your decision and prepared for the process.