When to hire a CPA for our team

[Greg Cook]

My partner (also my fiance) have been vetting CPAs for the last month. After getting many proposals we are not sure the money we spend on them will be worth the money they will save us this year due to such a small portfolio. We have 2 properties, both out-of-state and in separate states. One does not receive income due to her mother living in it and the other rents for $1400/month. We will also have to file our foreign income, as we have a rental property in Portugal. We plan to have at least one more property by the end of the year bringing us to 4 total (3 Stateside, 1 Portugal). Are we naive to think we can do this with a little research?

[Michael Plaks]

@Greg Cook

I see two questions: when and why. When? Ideally, not now, as in August. For 2021 taxes, it's too late because most of the established tax firms are full by now and not taking new clients. Your choices will be limited. For 2022 taxes, it is too early because tax people are in the peak of the tax season and do not have time for interviewing until After October 15th.

Why? You are asking the wrong question here, I'm afraid. You are trying to measure it in dollars. As in - will my CPA save me more money than I will have to pay for their services? But saved money compared to what? Looks like compared to you doing it yourself. Then let me rephrase your question: how badly can I screw it up if I do it myself? 

If this is how you see things, then probably try doing it yourself. Because, quite often your CPA's work will not directly translate into tax savings compared to DIY. Unless you really mess it up, or unless your situation deals with big numbers and high complexity. You're not necessarily paying your CPA for savings. You're paying to have it done correctly which accomplishes three things not measured in dollars:

- peace of mind knowing it's done right

- mitigating IRS audit risk

- preserving your time for more productive and enjoyable things than learning about taxes

On that note, "a little research" won't be enough. Your situation is fairly complicated, requiring understanding not just regular real estate taxation but also state taxation and International taxation.

Finally, the biggest value of working with a tax accountant is in proactive tax planning, not in tax preparation for the prior year.