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When to Hire a Tax Lawyer vs. a CPA

By Christopher Coble, Esq. | Last updated on

If you listen to the ads for all the free software and tax filing systems, you don't need a certified public accountant for all of your tax matters. But there are cases where a second set of eyes is not just recommended, but necessary for tax preparation. And not just from a CPA, but from an experienced tax attorney. As some experts have noted, accountants fill out the forms and help with tax returns, but it's the tax lawyers that set up the legal structures that affect your tax liability.

So how do you know when to visit a law firm instead of an accounting firm? Here are a few clues:

You Own a Business (or Are Self-Employed)

We've said it before, but it bears repeating: most business structures are too complicated for you or an accountant to figure out on your own. A good tax lawyer will be able to provide legal advice on everything from corporate structures to business deductions, as well as the tax liability for any and all employees you have. And if you've accepted venture funding or merged over the past year, you'll need a tax attorney's expertise.

This is especially true if you're self-employed or own a small business. Beyond the possible tax deductions for a home office, travel expenses, and work supplies, you may run into legal issues if you're freelancing or have a large variety of clients.

You've Had Significant Life Changes

Sure, you can click a box that says you purchased real estate, got married, got divorced, or changed jobs. But these decisions can have a ripple effect on your finances that tax software might not contemplate. Did you use some of your 401k to put a down payment on the home? Did you rollover your IRA when you changed jobs? Did you move some money or assets around as part of a prenup or postnup? Have you been working on estate planning? Or do you now have child support or spousal support payments when you didn't before?

All of these things can affect your tax liability and a tax attorney will know how to deal with them when tax season comes around.

You've Had (or May Have) Contact From the IRS

When the federal government comes knocking, you don't want to have to deal with them on your own. Whether you simply owe the IRS money, are being audited, or have been accused of a tax crime, you'll want an attorney on your side to communicate with the IRS, and, if necessary, point out the difference between a dishonest tax filing and an honest mistake.

State tax laws can vary depending on where you live, so you should contact an experienced tax attorney near you before you begin your tax planning.

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