When you actually need a CPA

Part of Financial 101 — free, plain-language reference guides. Not personalised advice. Download the one-page Order of Operations checklist.

The honest starting point

Most people with a W-2, a mortgage, some index funds, and a 401(k) can file their own return with software in an afternoon and get the same answer a professional would. Paying someone to type your numbers into the same software is not what a CPA is for. What a CPA is for is judgment: situations where the rules have options, the options have consequences, and the consequences compound.

When it is worth it

Self-employment or a business. Entity choice, quarterly estimates, what counts as a deductible expense, retirement plans for the self-employed, and the self-employment tax that catches first-year freelancers by surprise. This is the single most common reason to hire one, and the side-business reader on this site is exactly who it applies to.

Equity compensation. Stock options, RSUs, ESPPs. The timing decisions are genuinely complicated and the mistakes are expensive and often irreversible.

Rental property. Depreciation, passive-loss rules, eventual sale.

Roth conversions and retirement withdrawal planning. Filling low brackets in the years between retiring and Social Security can be worth a great deal, and the arithmetic is fiddly. See the retirement guide.

A one-off event. An inheritance, a home sale with a large gain, a windfall, moving between states mid-year, a divorce. One consultation before the event usually beats any amount of cleanup after.

A letter from the IRS. Do not handle it alone.

How they are paid

Hourly, or a flat fee per return or engagement. That is the entire model, and it is why a CPA is a cleaner relationship than most of the financial-advice industry: nothing is sold, nothing scales with your assets, and the incentive is simply to do the work well and be hired next year. (Some large firms also offer wealth management; if yours does, the planner guide applies to that side of the house.)

Ask for the fee structure up front. A good CPA will quote a range once they know your situation. Complexity, not income, drives the price.

CPA, EA, or software

A CPA is state-licensed, broadly trained in accounting, and can represent you before the IRS. An enrolled agent is federally licensed specifically in tax, can also represent you, and is often less expensive for pure tax work. Both are fine for most people; the EA is frequently the better-value choice for a straightforward-but-not-trivial return. Storefront tax chains employ preparers with widely varying qualifications; ask about credentials. And for the genuinely simple return, software is correct and cheap.

Working with one

Come organised: prior-year return, every tax form, a summary of anything unusual, and your questions written down. Ask them what you could be doing differently, not just what you owe — the planning conversation is where the value is, and it usually happens in the autumn, not in April. Keep the relationship even in a year you file yourself; a quick check-in before a big decision is cheap and the alternative is guessing.

What a CPA is not

An investment adviser, unless separately licensed. A guarantee against an audit. Someone who will notice a problem you did not mention. The quality of the advice tracks the quality of what you tell them.

Checklist

Situation matched against the “worth it” list · Credentials confirmed (CPA or EA) · Fee structure quoted before work starts · Autumn planning conversation booked, not just April filing · Records organised in one place · Any IRS correspondence forwarded immediately.

Related: How financial planners get paid · Retirement planning · Financial 101