When software is enough
Single or married, W-2 income only, standard deduction, no rental property, no investments outside a 401(k) and a basic brokerage. TurboTax, H&R Block, FreeTaxUSA, or TaxAct will produce the same return a CPA would.
Cost: $0–$120 depending on software tier and state filing.
When a CPA pays for itself
- Self-employment or freelance income above ~$30k, Schedule C, quarterly estimates, S-corp election analysis.
- Multi-state filings, moving mid-year, working remotely from a different state, owning property in another state.
- Rental property, depreciation schedules, passive-loss rules, 1031 exchanges.
- Equity compensation, RSUs, ISOs, NSOs, ESPPs, and the AMT they can trigger.
- Estate or trust income, K-1s from inheritances or family entities.
- Foreign income or assets, FBAR, FATCA, foreign tax credit complexity.
- Major life events, divorce with QDRO, business sale, inheritance, large legal settlement.
What a CPA actually does
Reviews prior 3 years' returns for missed deductions or amendable issues. Builds a tax-projection model so you stop overpaying or underpaying estimates. Identifies entity-structure changes (S-corp election, Solo 401(k), HSA) that compound into thousands per year.
Files the current return correctly the first time. Represents you in the rare case of an audit. Provides written advice you can rely on for IRS purposes.
CPA vs Enrolled Agent vs tax preparer
- CPA: licensed by the state, can do tax, audit, and broader financial planning. Best for complex returns.
- Enrolled Agent (EA): federally licensed by the IRS, specializes in tax. Often less expensive than CPA, equally qualified for tax-only work.
- Unenrolled tax preparer: no professional license required. Avoid for anything more complex than a basic W-2 return.
Pricing benchmarks
- Basic 1040 with one Schedule C: $250–$500.
- Multi-state with a few investment 1099s: $400–$800.
- S-corp return + personal return: $1,500–$3,000.
- Trust or estate returns: $1,000+ depending on complexity.
What to bring to the first meeting
- Last 3 years of tax returns.
- All current-year W-2s, 1099s, K-1s, 1098s, brokerage statements.
- List of major life events (job change, marriage, kids, home purchase, business start).
- Estimated payments made and refunds applied from prior years.
- Any IRS or state correspondence received.
- Specific questions about deductions, entity structure, or planning concerns.
How to find a good one
Start with personal referrals from people whose financial situation resembles yours. Verify license status with the state board of accountancy.
Avoid CPAs whose practice is mostly audit (different specialty); look for tax-focused CPAs or EAs. Ask whether they work with clients in your specific situation (freelancers, real estate investors, equity comp, etc.), specialization matters.
