Quick overview

A tax professional brings technical knowledge, representation rights and year‑round planning to reduce audit risk, spot overlooked deductions, and resolve notices from the IRS or state tax authorities (IRS guidance: Power of Attorney and representation). Hiring early—before filing or immediately after a notice—typically produces the best results.

Key signs you should hire a tax professional

  • You receive an IRS or state tax notice, audit letter, or lien (hire immediately; a tax pro can file Form 2848 or represent you) [IRS: Power of Attorney].
  • You have self‑employment, gig, rental, or multi‑state income that changes how you report taxes. See our guide on self‑employment taxes for details.
  • You sold real estate, had large capital gains, or closed complex investments that trigger special rules.
  • You inherited assets, are settling an estate, or face potential estate tax issues—these often need combined tax and estate planning expertise.
  • You own a business, file payroll or excise taxes, or have significant year‑over‑year losses.
  • You made errors on past returns or need to file amended returns (timing affects the statute of limitations). See our article on the statute of limitations for audit risk.
  • You have international income, foreign accounts, or cross‑border tax concerns (FBAR, FATCA reporting).
  • Your life changed significantly—marriage, divorce, adoption, or retirement—creating new filing choices.

Who to hire and when

  • Enrolled Agent (EA): Federally licensed; good for audits, representation before the IRS, and complex returns. (EAs specialize in tax.)
  • Certified Public Accountant (CPA): Best for tax planning tied to broader accounting, business needs or financial statements.
  • Tax attorney: Choose for tax litigation, criminal exposure, complex estate tax planning, or when legal privilege matters.

Hire before you file when you expect complex deductions, credits, or business filings. Hire immediately if you receive any IRS or state notice.

What a tax professional can do (and practical expectations)

  • Review your tax position, identify missed credits or improper deductions, and recommend corrections.
  • Represent you before the IRS or state agency (filing POA, negotiating penalties, or arranging installment agreements). See IRS resources on audits and representation.
  • Prepare amended returns and advise on whether to claim credits or apply for relief (e.g., Offer in Compromise or penalty abatement).
  • Provide year‑round planning—quarterly estimated tax planning, entity selection, and retirement or succession planning.

Documents to have ready: prior 3 years of returns, W‑2s/1099s, bank statements, business income/expense records, closing statements, trust/estate documents, and any IRS correspondence.

Cost vs. value

Fees vary by preparer type, region and complexity. Simple tax prep can be modest (flat fees), while hourly rates for CPAs or EAs commonly range from roughly $150–$450+ per hour for complex planning or representation; flat fees are common for standard returns. Compare credentials, reviews, and whether the preparer offers representation (not all preparers will represent you before the IRS). For guidance on choosing a preparer, see CFPB consumer tips.

Common mistakes people make

  • Waiting until an IRS notice escalates—earlier intervention reduces penalties and preserves options.
  • Hiring based on price alone instead of credentials and representation authority.
  • Assuming tax‑preparation software can replace nuanced planning or audit defense for complex situations.

How to choose a reputable tax professional

  • Verify credentials (CPA licensure, EA enrollment, or law license) and check state boards where applicable.
  • Ask about representation rights and whether they will sign Form 2848 if needed.
  • Request an engagement letter that outlines services, fees, and who will handle your case.
  • Check references and look for professional affiliations (AICPA, National Association of Enrolled Agents).

Quick next steps

  1. If you have an IRS notice: stop using online chatbots for representation and contact a qualified EA, CPA, or tax attorney immediately.
  2. If you expect complexity next year: schedule a mid‑year planning session to make moves that affect taxable income.
  3. Organize your records now—good documentation reduces cost and speeds resolution.

Resources and internal reading

Disclaimer

This article is educational and not personalized tax advice. For advice about your exact situation, consult a qualified tax professional licensed in your jurisdiction.