When Do You Need a Tax Attorney?

Taxes are one of those annoying parts of life that we all have to deal with eventually, but that doesn’t mean they’re the same experience for everybody. For some people, taxes are simple – you fill them out, you pay what’s owed, and maybe you get a nice refund every year. For many people with interesting financial situations, however, taxes can be a troubling mire of hidden clauses and outrageous fees. When do you need to hire or consult with a tax attorney? Well, the answer to that question has multiple heads and depends on a number of things.

The first thing to figure out when trying to decide to work with a tax attorney or not is whether an accountant could do the same job. Accountants handle numbers and can balance books and work with your finances to figure out your tax situation. Hiring an attorney to do an accountant’s job could be viewed as an interesting decision, as attorneys are typically much more expensive and will take up more of your time throughout the entire tax process. Accountants, however, aren’t necessarily going to be equipped with the same knowledge of complicated tax laws, estate laws, and all the other legal aspects of tax and finances.

While hiring an attorney for your tax preparation might seem like overkill at first glance, the truth is that there are a number of advantages to working with an attorney. For one thing, a professional tax attorney can look over your numbers and determine exactly what you should be paying. In other words, they can help you avoid paying unnecessary fees, help you take advantage of credits and benefits you didn’t know you qualified for, and help you get away with a higher refund. While you might be thinking: “Can’t an accountant do all that anyway for less money?” The answer is: not necessarily.

Working with a tax attorney can also help you avoid predatory tax prep companies, which are only trying to rope you into paying a substantial fee, and then performing low-level accounting work to give you the most basic tax preparation there is. When working with a qualified tax attorney, there are no loopholes, or time wasted. An attorney will ensure that every minute you put into your tax preparation is dollars that you’ll see more of at the end of the tax process.

Obviously, another advantage of working with a tax attorney is their understanding of tax law. We’ve mentioned this a couple of times, but we want to drive home the point that taxes can be extremely complicated. Every state has unique tax laws, which include the legality of some practices changing from border to border, county to county, even city to city. What was legal at your one business may be a felony in a new state or province, and benefits you might’ve qualified for in one location might not exist at a new one. Even if you’ve been managing your business in Florida for decades, every year brings the possibility of new tax laws, business regulations, or some other stipulation you haven’t heard about. Working with a tax attorney on your tax prep is the safest way to go about doing your taxes, as it lessens the possibility of your making a mistake that could negatively affect your life to less than one percent.

Now, we’ve mentioned there are scenarios where having a tax attorney to consult is much more advantageous than having an accountant. Now we want to go over a few of those situations while highlighting key examples of what an attorney can do better.

1. Taxable Estates

If you have a taxable estate that exceeds $11.58 million, we want to say congratulations, first of all, and then acknowledge the fact that that estate is taxable when you die. To avoid paying the most taxes possible on that estate, an attorney can assist with estate-planning to lower that tax liability to the lowest possible amount. In other words, a tax attorney can help ensure your family and children get more money when you finally bite the dust.

2. Starting Your Own Business

Every decision you make when starting your own business can affect the money you make and the taxes you pay. Did you know that as a self-employed person, you can receive tax credits for your electricity, internet bills, and even the rent you pay every month? It’s because these are technically business expenses, as your home is your office. Do you know who did know that? Pretty much every tax attorney – and they can work with you to determine whether it’s best to be an LLC or a sole proprietorship when you finally set up your own business.

3. Complicated Financial Situation

If you’ve gone through a divorce or separation and have questions about how paying alimony or child support will affect the taxes you pay, an attorney can assist you. Personal issues aren’t the only things that can lead to troubled financial situations, however. Maybe there was some sort of medical emergency in your family, or you’ve been working several jobs that all pay in cryptocurrency, or you’ve been working for a company overseas and have questions about how your money is taxed since it’s being mailed directly to you in cash. No matter your situation, a tax attorney can help sort through the muddled mess of your financial situation and ensure that everything you do is legal and correct.