When It is Time to Get an Accountant

By Bob Walsmith Jr.
2022 President
Santa Barbara Association of Realtors

When you buy a home, your taxes may get more complicated. Plus, you may be one of many people who worked from home part of the past two years because of COVID-19 and wonder if you can deduct some of your home office-related expenses. Or you may have moved out of state or tapped into your 401(k) for supplemental income.

Do you need a CPA? Or will a regular accountant do?

There are different types of tax experts. Not all accountants are CPAs. If you’re thinking that someone at H&R Block or your buddy who studied accounting in college is the same as an independent CPA, don’t count on it. 

•         An accountant is someone who studied accounting.

•         CPAs are accountants who passed a rigorous examination and must comply with stringent continuing education requirements from their state board on a regular basis. The designation usually requires a degree. Not every CPA specializes in taxes.

•         An enrolled agent, or EA, is a tax specialist who has been certified by the IRS. Being an EA doesn’t require a degree like a CPA does. But it does verify they know the tax law.

•         A tax preparer at pop-ups like H&R Block is trained on tax software to help taxpayers file their returns. They aren’t required to be CPAs or EAs, but some are very knowledgeable about tax rules.

•         Only CPAs and EAs can legally represent you if the IRS challenges your return.

There’s nothing wrong with visiting a pop-up preparer if your return isn’t all that complicated. It’s when you start generating other income — perhaps you launch a business or own rental property — that it makes sense to ask for a little extra help.

If you’ve bought a home, taxes can get more complex. That opens you up to special credits and deductions and requires more record-keeping. If you miss out on deductions, it can cost more than hiring an accountant would have.

When It’s a Good Idea to Hire a Tax Pro

When you buy your first house. Many of the expenses related to buying a home and having a mortgage are deductible. But only if you have enough deductions to itemize.

When you move to a new state. There’s a good chance you’ll have to file two state returns for the year you move. And each state is a little bit different in terms of state tax owed — zero in some states, a flat amount in others, and graded by income bracket in most.

When you become a landlord. That means new records to keep and a new tax form, Schedule E, to complete.

When you buy a vacation property. Especially if you rent it. And especially if it’s in a different state.

When you work from home and are self-employed. Potential money-saving deductions can vary widely depending on the type of business and how much space the office takes in your home.

How Much Do Accountants Cost?

Pricing is variable, so it’s best to check directly with the options you’re considering for the most up-to-date information.

You can definitely DIY in all these tax scenarios and save the fees, but with CPAs and EAs, the extra cost may be worth it. Especially if you run your own business or you own more than one home.

An accountant can help you analyze your spending choices and even act as a consultant. Best of all, they’ll be by your side if the tax man ever comes after you. That alone could be priceless if the time comes.

Oh, and one last tip: If you decide you want to hire a CPA or an EA, it’s best not to wait until the last minute. You may not find one who can file the return before the deadline. However, extensions may be available.

As always, if you need a recommendation of someone to take care of your taxes for you, give your local trusted Realtor a call and let them help you!

Bob Walsmith Jr. is a native to Southern California and a Realtor® with Berkshire Hathaway HomeServices California Properties in Santa Barbara. During his work with the Santa Barbara Association of Realtors, Bob has served on the CORE Committee, Education Committee, been Chair of the Budget & Finance Committee, and the Multiple Listing Service Committee. He also is on the Board of Directors of the Alpha Resource Center of Santa Barbara. Bob lives in Goleta with his beautiful wife Julie. When not working, Bob enjoys playing golf, fine wine, fine dining, and walking our beautiful coastline. Bob can be reached at 805.720.5362 and/or [email protected]