Does anyone use an accountant for personal taxes?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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2Scoops
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Does anyone use an accountant for personal taxes?

Post by 2Scoops »

I’m curious if anyone here uses an outside source for their personal taxes (not business)? if so, why do you choose to do that?

I started using a CPA back in 2003 at the suggestion of a friend. Long story short, what Turbo Tax showed was owing a modest amount and my friend suggested the CPA would validate it and it was worth the $75. I took his advice and I went from paying to a several thousand dollar return.

I stuck with this CPA for the last 17 years.

Last year I did a test and input my numbers in turbo tax’s free online tool and once again it was less than what my CPA put together.

I must be missing a step in Turbo Tax somehow. My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
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Re: Does anyone use an accountant for personal taxes?

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Topic moved to Personal Finance.
jebmke
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Re: Does anyone use an accountant for personal taxes?

Post by jebmke »

2Scoops wrote: Mon Nov 23, 2020 11:49 am I must be missing a step in Turbo Tax somehow.
You should be able to reconcile your Turbo Tax draft return with the one prepared by the CPA. Start by identifying the specific lines on the 1040 that are different and then work back to the inputs. The CPA can only work with the information you provide so this should not be difficult.

The only time I used a CPA was when I lived outside the US and had to file taxes in multiple countries. Even then, I made sure I understood each of the returns.
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runninginvestor
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Re: Does anyone use an accountant for personal taxes?

Post by runninginvestor »

Yes. But I started because I am physically unable to do ours. Pay <$200 for the peace of mind and the free estimated payments/questions/calculations throughout the year. I do look through before signing though and ask questions.
shess
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Re: Does anyone use an accountant for personal taxes?

Post by shess »

2Scoops wrote: Mon Nov 23, 2020 11:49 am I’m curious if anyone here uses an outside source for their personal taxes (not business)? if so, why do you choose to do that?

I started using a CPA back in 2003 at the suggestion of a friend. Long story short, what Turbo Tax showed was owing a modest amount and my friend suggested the CPA would validate it and it was worth the $75. I took his advice and I went from paying to a several thousand dollar return.

I stuck with this CPA for the last 17 years.
In college, I started writing software and selling it direct, so I use my dad's tax preparer (dad was a farmer and later ran a business, so the CPA was familiar with self-employment income). Years later after moving across the country I joined a startup and changed to a more-local CPA familiar with the problems involved with options and the like. All along I've kept myself very up-to-date on tax issues, so I could have done my own returns, but lacked confidence in being able to fully keep up with whatever new tax issue came up, seemingly every year. Eventually, I started buying TurboTax around Thanksgiving time, as a way to help guide collecting documentation to send in, and get an early view on my exposure.

Since then, pretty much every year my CPA has come in with a better result, and about every other year my time in TurboTax has caught an issue where either I sent a misleading piece of documentation, or a minor transcription error occurred. So IMHO the net result is about neutral. But now I have about 20 years of time with this CPA, so when I have a tax-related question, I can ring him up and we have to spend about 0 minutes bringing him up to speed on our situation, so these days I see his fee as more of a retainer to keep his expertise "on staff".

That said, I always thought I'd eventually reach a point where our situation didn't change year to year and we'd transition away from the CPA. Right now I'm holding out for "When the kids are out of college" as that point :-). The past couple years have been pretty stable in terms of my numbers versus his numbers, so we're probably getting close.
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N1CKV
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Re: Does anyone use an accountant for personal taxes?

Post by N1CKV »

*1234
Last edited by N1CKV on Mon Nov 23, 2020 1:14 pm, edited 1 time in total.
snapvestor
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Re: Does anyone use an accountant for personal taxes?

Post by snapvestor »

We use a CPA and have for about a decade now. As the complexity of our taxes has increased over the years even in the personal space, I do it for peace of mind and not having to deal with it i.e. my time.
PaunchyPirate
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Re: Does anyone use an accountant for personal taxes?

Post by PaunchyPirate »

You really just need to compare your results to those from the accountant. Line-by-line to determine why there is a difference. Once that is known, you can decide how to proceed. I've done my own taxes using TurboTax for many years. I've never been audited and I don't have a concern that I've done them incorrectly.
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Re: Does anyone use an accountant for personal taxes?

Post by bloom2708 »

I already have to track and gather all relevant information.

One year I paid a CPA to do our taxes. Hoping I might get a bigger refund. I still had to do line by line/document by document verification and checking.

I found several issues and shortcuts they took. $300 down the tubes for that one year.

I use taxact.com. I go slow. I double check. I take multiple passes at more complicated areas. I run all the checks. I find value doing it myself, but I know that others might think $250 or $300 or $350 is well worth it.
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Re: Does anyone use an accountant for personal taxes?

Post by Jack FFR1846 »

Yes. I've attempted to do my own taxes many times and failed miserably. As an engineer, I'm more than capable to follow clear instructions. The IRS instructions don't contain a single clear anything. I tried a few years ago to do my son's taxes when he only made $151 for the year. Both federal and state were wrong as both sent notes saying "we corrected your return, here's your refund".

I've clearly had the taxes gene omitted from me. Both grandfather and father did taxes for a living and my sister worked in the office for a bit.

I will say that turbo tax and credit karma do make it easy and I have my kids use those. I'm not even considering it for me. Ever.
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Cruise
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Re: Does anyone use an accountant for personal taxes?

Post by Cruise »

My wife and I have used a CPA for the past 38 years or so. She used to be the tax manager of a big 5 firm, then left and has continued privately with her HNW clientele (we must be on the lower end of this scale).

Out CPA is expensive, and after my retirement I considered doing TurboTax. Then I had a few thoughts: Would I find it interesting? Would I be competent? What is the Opportunity Cost? All my questions were answered in the direction of keeping my expensive CPA on retainer. A few times a year I call with questions, the answer to which she quickly provides. Last questions a week ago: (1) How much should I donate to my DAF this year to maximize our tax benefit? (2) A question about real estate investing.

EDIT: I should say that about a two decades ago I asked her a question about investing options, the answer to which was based on her common sense. The result of this conversation has provided peace of mind that will continue until we pass on. No way TurboTax or any other program provides this value.

Simple, quick, worthwhile. I'll be lost when this long-term human asset retires.
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flaccidsteele
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Re: Does anyone use an accountant for personal taxes?

Post by flaccidsteele »

2Scoops wrote: Mon Nov 23, 2020 11:49 am I’m curious if anyone here uses an outside source for their personal taxes (not business)? if so, why do you choose to do that?
As a Canadian I use a cross-border accountant to file taxes with the IRS and CRA

Why?

Simple. I’d rather spend my time doing other things
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Admiral
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Re: Does anyone use an accountant for personal taxes?

Post by Admiral »

Yes. (Though I also have a sole proprietorship, Sked C etc, as well as W2 income. He does all returns.)

The reason is the same reason I use lawyers, architects, skilled tradespeople, etc. I prefer to hire professionals to do professional work, I don't mind paying for it, I'd rather not think about it and focus on other things, and I also like having an advocate between me and the IRS.

The fees are deductible as well (though I realize this is not the case for a personal return for someone without a business.)

For ONLY a personal return without a lot of itemization, I would still use an accountant, but would not pay a lot. Perhaps a few hundred bucks just so save me the time/hassle.
dcd72
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Re: Does anyone use an accountant for personal taxes?

Post by dcd72 »

I am a partner in a firm with offices in 13 states. My personal taxes are a nightmare.
supalong52
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Re: Does anyone use an accountant for personal taxes?

Post by supalong52 »

dcd72 wrote: Mon Nov 23, 2020 1:28 pm I am a partner in a firm with offices in 13 states. My personal taxes are a nightmare.
I was also a partner in a similarly-sized firm. I tried to hire an accountant, but she couldn't even handle calculating quarterly estimated taxes. I fired her and just decided to figure it out myself. It wasn't too bad, what with the firm doing aggregate returns in most of the states, and leaving me with just CA, NY and MA. Our tax situation is simpler now and my prior experience has empowered me to just do it myself. Doesn't take that long.
Swansea
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Re: Does anyone use an accountant for personal taxes?

Post by Swansea »

I started using a CPA about 3 years ago after I twice made mistakes and IRS corrected them. Surprisingly, they increased my refund.
Last year I used TT again, results were about the same as the CPA who charges $400 state and federal.
Will go it with TT this year and see what happens.
LFS1234
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Re: Does anyone use an accountant for personal taxes?

Post by LFS1234 »

shess wrote: Mon Nov 23, 2020 12:09 pm ....I have about 20 years of time with this CPA, so when I have a tax-related question, I can ring him up and we have to spend about 0 minutes bringing him up to speed on our situation, so these days I see his fee as more of a retainer to keep his expertise "on staff".
This.

Also, if/when you are audited, you can have the accountant deal with the tax authorities, rather than dealing with them directly. This provides a useful layer of insulation - you're not there putting your foot in your mouth, and in case unanticipated issues arise, it gives you time to figure out the most appropriate response. Also, you are entitled to rely on the professional judgement of your CPA, so if a mistake was made, it should be easy to get any penalties waived.

With the advent of sub-S corporations and the proliferation of flow-through entities, the effect of business tax issues on personal tax returns has become increasingly significant, so it often makes sense to use the same tax professionals for your personal tax returns that you use for your business tax returns.

I have had a CPA prepare my tax returns for about 35 years now, ever since I set up my first business while in my early 20s. My first accountant was instrumental not only in preparing returns, but also in making sure that we were making all the necessary filings - 940s, 941s, unemployment tax returns, sales tax returns, etc. When you're starting out with anything new, you don't know what you don't know. Once we determined all the filing requirements, I typically ended up preparing the relatively simple filings myself (sales tax and employment tax returns), while always having the accountants prepare the income tax returns. Once you and your accountant have an established working relationship, you can get very quick and efficient answers to questions, as well as quick second opinions to key financial decisions.

For someone with relatively simple returns (W2 income, interest and dividends) I can see the attraction of using Turbotax. For anything more complicated than that, my personal preference would be to pay an accountant. I pay mine around $2K - $3K/year, and I am very happy to pay those bills. The access to quick efficient counsel alone is worth it, as is the insulation in case of an audit. All in all, I think my accountants have saved me some money in the form of reduced taxes, but even if this were not the case, the time savings and peace of mind makes them a bargain.
260chrisb
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Re: Does anyone use an accountant for personal taxes?

Post by 260chrisb »

Sure do and have for nearly 30 years. It's affordable, I get a lot of info and help, and I know it's done right. I've always considered it money well spent.
J295
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Re: Does anyone use an accountant for personal taxes?

Post by J295 »

We used an account for quite a while when I was a partner in my firm, then eight years ago upon early retirement started doing our own with TT which included some self-employment income and nothing too terribly complicated.

The challenge is when I have a question I can research it and usually feel about 90% comfort level that I found the right answer, but not entirely certain. At that point where does one go except here, and usually the questions are something that I can’t get answered here with the certainty I desire.

I found a workaround, which is being charged hourly by an accountant that I know from a leadership group, who also does work for my parents and who used to work for a mutual client. Absent that connection, it would be really hard to find someone who would take me on even for a fee for just one off questions.

We are only 61, but now I’m noodling around about getting a relationship with an accountant to start doing tax returns and just being there for my wife and family in the event I have an early death. Still tbd.
shess
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Re: Does anyone use an accountant for personal taxes?

Post by shess »

LFS1234 wrote: Mon Nov 23, 2020 1:37 pm
shess wrote: Mon Nov 23, 2020 12:09 pm ....I have about 20 years of time with this CPA, so when I have a tax-related question, I can ring him up and we have to spend about 0 minutes bringing him up to speed on our situation, so these days I see his fee as more of a retainer to keep his expertise "on staff".
This.

Also, if/when you are audited, you can have the accountant deal with the tax authorities, rather than dealing with them directly. This provides a useful layer of insulation - you're not there putting your foot in your mouth, and in case unanticipated issues arise, it gives you time to figure out the most appropriate response. Also, you are entitled to rely on the professional judgement of your CPA, so if a mistake was made, it should be easy to get any penalties waived.
A few years back, the IRS sent me a nastygram about a $1k underpayment, it was actually kind of threatening (included words like "lien" and stuff). I couldn't figure out WTF they were talking about, so forwarded it to my CPA. He said "They're wrong" and sent them a letter. It cost me like $100 to fix a $1k problem which didn't exist, but otherwise I'd have probably just paid the $1k rather than try to figure it out. (To be clear, my actual tax payments for that year made $1k a literal rounding error, so I was kind of amused about the threatening language. Sure, put a lien against me, idiots.)

Anyhow, that jogged my mind about another point: *I* might be fully capable of managing our taxes, but my wife has *zero* interest in it. So if I die or am incapacitated, would I prefer my wife to throw our financial info at the first rando she finds in an Internet search, or someone who has a history with our family and at least pretends to be on a first-name basis with me?
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JoeRetire
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Re: Does anyone use an accountant for personal taxes?

Post by JoeRetire »

2Scoops wrote: Mon Nov 23, 2020 11:49 am I’m curious if anyone here uses an outside source for their personal taxes (not business)?
I did one year, when I wasn't sure if I had prepared my taxes correctly (I was getting more back than I expected).
The accountant looked it over and confirmed that I had done everything correctly.

Other than that, since I started working in my teens, I have always done my own taxes. In recent years I used Turbo Tax. Before that it was always just on paper.
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Xrayman69
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Re: Does anyone use an accountant for personal taxes?

Post by Xrayman69 »

snapvestor wrote: Mon Nov 23, 2020 12:53 pm We use a CPA and have for about a decade now. As the complexity of our taxes has increased over the years even in the personal space, I do it for peace of mind and not having to deal with it i.e. my time.
Have used the same CPA for over 15 years and happily pay the fee every year. Dump the pile of paperwork on their desk and they have the prior years for comparison. The CPA provides a synopsis and summary of changes along with the portfolio. Spouse and I review it sign it and continue about our daily lives.

We could “probably “ do it ourselves but at what cost of time, effort, anxiety, arguing and risk of errors and having to do it over. We did our own early in our lives and compared to the CPA and found that the time we invested even during the most simple of returns was too great considering opportunity cost in which the hours/days could have been directed at more lucrative and efficient activities within our sphere of expertise.
TheoBanana
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Re: Does anyone use an accountant for personal taxes?

Post by TheoBanana »

2Scoops wrote: Mon Nov 23, 2020 11:49 am I’m curious if anyone here uses an outside source for their personal taxes (not business)? if so, why do you choose to do that?
I have been using a CPA (the same one) since 1999. Super happy to outsource that particular task.
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beernutz
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Re: Does anyone use an accountant for personal taxes?

Post by beernutz »

I used TaxCut or something like it for more than 20 years but 3 years ago decided to pass the baton to a local CPA. We went to him for advice on whether my wife should take a buyout and decided to let him do our taxes. It was definitely sticker shock as that first year was $500 and it is now close to $600 but I still think it is worth the money for the peace of mind I get.

Disclaimer: I worked for a Big 8 firm doing auditing right out of college in the 80s and obtained my CPA certificate. I still hate doing taxes.
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Topic Author
2Scoops
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Re: Does anyone use an accountant for personal taxes?

Post by 2Scoops »

Lots of great replies and I appreciate the input. TBH - I was totally expecting a “don’t waste your money” or “it’s so easy to do yourself” vibe from the forum.

Mine is about $250 for the family so not a bank breaker.
J295
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Re: Does anyone use an accountant for personal taxes?

Post by J295 »

2Scoops wrote: Mon Nov 23, 2020 2:45 pm Lots of great replies and I appreciate the input. TBH - I was totally expecting a “don’t waste your money” or “it’s so easy to do yourself” vibe from the forum.

Mine is about $250 for the family so not a bank breaker.
$250 seems super reasonable. We live in a modest middle America city and when I asked one of my acquaintances a few weeks ago if he had a young person at his former firm I could contact for some simple things he said they had a $600 minimum fee.
khangaroo
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Re: Does anyone use an accountant for personal taxes?

Post by khangaroo »

My wife is a CPA, so yes :wink:
bi0hazard
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Re: Does anyone use an accountant for personal taxes?

Post by bi0hazard »

My CPA was charging more and more, and I called it quits at $650. I recommend turbo tax live. Online/video conferencing with CPA whenever, and fees are way lower. My taxes are pretty complex. Returns are guaranteed.
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Re: Does anyone use an accountant for personal taxes?

Post by flaccidsteele »

Admiral wrote: Mon Nov 23, 2020 1:20 pm I also like having an advocate between me and the IRS.
LFS1234 wrote: Mon Nov 23, 2020 1:37 pm Also, if/when you are audited, you can have the accountant deal with the tax authorities, rather than dealing with them directly. This provides a useful layer of insulation - you're not there putting your foot in your mouth, and in case unanticipated issues arise, it gives you time to figure out the most appropriate response. Also, you are entitled to rely on the professional judgement of your CPA, so if a mistake was made, it should be easy to get any penalties waived.
...
The access to quick efficient counsel alone is worth it, as is the insulation in case of an audit. All in all, I think my accountants have saved me some money in the form of reduced taxes, but even if this were not the case, the time savings and peace of mind makes them a bargain.
+100 ^ these reasons
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FelixTheCat
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Re: Does anyone use an accountant for personal taxes?

Post by FelixTheCat »

I used to use a CPA. The CPA at work told me to enter the same data in TurboTax to compare. TurboTax had the same result at a lot cheaper price.
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MarkNYC
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Re: Does anyone use an accountant for personal taxes?

Post by MarkNYC »

Admiral wrote: Mon Nov 23, 2020 1:20 pm Yes. (Though I also have a sole proprietorship, Sked C etc, as well as W2 income. He does all returns.)...

The fees are deductible as well (though I realize this is not the case for a personal return for someone without a business.)
For an individual tax return that contains a sole proprietorship (Schedule C), only a portion of the tax preparation fee is properly deductible on Schedule C as a business expense. The portion would depend on the size and complexity of Schedule C in relation to the size and complexity of the entire federal/state tax returns. The portion of the fee not directly related to the preparation of Schedule C used to be deductible on Schedule A as a miscellaneous itemized deduction - but no longer.

Some accountants aggressively (and incorrectly) deduct the entire tax return preparation fee on Schedule C. For this to hold up under audit, you likely would have to convince the IRS auditor that all of the tax preparation fee was for preparing Schedule C, and that the accountant prepared all of the rest of the federal and state tax forms and schedules for free.
BedHead2020
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Re: Does anyone use an accountant for personal taxes?

Post by BedHead2020 »

For me, a good CPA is someone with whom we can partner in order to plan ahead, for the optimum tax benefit in upcoming years. This can prove to be way more valuable than just using tax software which, by its nature, is designed to just do the best it can with what has already happened.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

I would only hire a CPA (or tax lawyer) if I was being audited and just didn't want to deal with the process.

My personal taxes are relatively simple, and I enjoy preparing them, so I don't know why I would spend more than the cost of basic software and outsource a hobby that I find fun.

if I had a business? Sure, I could see outsourcing that, because it would be more effort and time consuming, though i have prepared my own Sch E's in the past.

It's confusing to me when people say their accountant finds all these extra credits and deductions - because to me, a lot of these are pretty straightforward, there are exceptions but the 1040 without a Sch A or Sch C or Sch E, to me, does not have a multitude of variables.

When you start adding all the schedules and flow thru entities, sure, that's a lot of moving parts and would make a lot of sense for outsourcing.

I don't know that I'd really want a tax preparer who is going to be more aggressive with tax prep than I would be though.

Aside from a more complex tax situation, I could certainly see myself outsourcing my personal taxes if I ever reach the point where it is no longer fun.
neverpanic
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Re: Does anyone use an accountant for personal taxes?

Post by neverpanic »

2Scoops wrote: Mon Nov 23, 2020 11:49 am I took his advice and I went from paying to a several thousand dollar return.

My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
If you hate paying $250 to save several thousand dollars, there's nothing I can say that will make any sense.
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tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

neverpanic wrote: Mon Nov 23, 2020 10:22 pm
2Scoops wrote: Mon Nov 23, 2020 11:49 am I took his advice and I went from paying to a several thousand dollar return.

My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
If you hate paying $250 to save several thousand dollars, there's nothing I can say that will make any sense.
How can $250 generate thousands? What tax credit could the CPA possibly find that you can't find on your own that causes that type of variance?
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2Scoops
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Re: Does anyone use an accountant for personal taxes?

Post by 2Scoops »

tj wrote: Mon Nov 23, 2020 10:29 pm
neverpanic wrote: Mon Nov 23, 2020 10:22 pm
2Scoops wrote: Mon Nov 23, 2020 11:49 am I took his advice and I went from paying to a several thousand dollar return.

My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
If you hate paying $250 to save several thousand dollars, there's nothing I can say that will make any sense.
How can $250 generate thousands? What tax credit could the CPA possibly find that you can't find on your own that causes that type of variance?
Yeah, that was kind of the point of this thread. Is the $250 really saving me money that I couldn’t get on my own? My guess is not but whether I can execute it properly is a different conversation.
jebmke
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Re: Does anyone use an accountant for personal taxes?

Post by jebmke »

I think the answer lies in where the difference is between your return and the CPAs. There are not many lines on the 1040. What did you find when you compared them?
When you discover that you are riding a dead horse, the best strategy is to dismount.
Shallowpockets
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Re: Does anyone use an accountant for personal taxes?

Post by Shallowpockets »

Isn’t using a CPA for personal taxes akin to using a financial advisor?
As stated often this thread, people are doing it for the convenience, time, and hassle free nature of using a third party. Seems the same could be applied to a CPA for taxes.
And, if you have to review or compare the CPA prepared return, what is the point?
All the same arguments for a CPA as for a FA are exhibited here.
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Re: Does anyone use an accountant for personal taxes?

Post by jebmke »

Shallowpockets wrote: Tue Nov 24, 2020 8:06 am Isn’t using a CPA for personal taxes akin to using a financial advisor?
As stated often this thread, people are doing it for the convenience, time, and hassle free nature of using a third party. Seems the same could be applied to a CPA for taxes.
And, if you have to review or compare the CPA prepared return, what is the point?
All the same arguments for a CPA as for a FA are exhibited here.
Not quite. If you have a more complex situation, a CPA might have knowledge of reporting requirements or opportunities that you might not otherwise know about. In a review, you might see something the CPA did that you don’t understand — but at that point, it behooves you to have the accountant explain the entry.

I used to sign corporate statutory accounts in many countries but would never have been able to draw them up. My knowledge was limited to US GAAP accounting. Still, I never signed without reviewing and seeking explanation of adjustments with which I was not familiar.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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Re: Does anyone use an accountant for personal taxes?

Post by MikeG62 »

2Scoops wrote: Mon Nov 23, 2020 11:49 am I’m curious if anyone here uses an outside source for their personal taxes (not business)? if so, why do you choose to do that?

I started using a CPA back in 2003 at the suggestion of a friend. Long story short, what Turbo Tax showed was owing a modest amount and my friend suggested the CPA would validate it and it was worth the $75. I took his advice and I went from paying to a several thousand dollar return.

I stuck with this CPA for the last 17 years.

Last year I did a test and input my numbers in turbo tax’s free online tool and once again it was less than what my CPA put together.

I must be missing a step in Turbo Tax somehow. My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
Similar thread here from 2019:

viewtopic.php?f=2&t=273595

I'll repeat here what I said in that thread...

Retired finance guy (started my career in public accounting (and passed the CPA exam) as a financial accountant and not tax accountant). I am familiar enough the tax rules and as a result have always done my own taxes.

My father-in-law uses an accountant to do his taxes. Loves her. She's very aggressive in taking deductions. He sees this as wonderful. He's done consulting for a number of years, but for one company out of their office (never done anything from home). Yet his accountant has him convinced that he can take a home office deduction. I've talked to him about this and shown him the rules - it's clear he does not meet the criteria to take a home office deduction. Despite this he continues to take the deduction because his accountant has told him it's ok. I've pointed out the multi-year risk he'd face on audit, but none of that dissuades him.

SIL and BIL use the same accountant. Same thing for them - she claims all sorts of what I would consider highly aggressive/questionable deductions. Like my FIL, they think she is great.

I provide these examples to show that some accountants are super aggressive and their clients (most of whom don't know any better) think they are wonderful because they claim lots of garbage deductions and get them larger refunds - much larger than they'd ever get if filing on their own.

In a third example, a buddy of mine had used an accountant for years/decades. Single guy paying about what you pay to have his accountant prepare this taxes. I had a conversation with him a few years ago about trying TT (he's a bright guy). He gave it a shot (after his accountant had completed his returns). And wouldn't you know it, the result was exactly the same. He had been of the view his accountant was getting him a larger refund than he would get on his own. Found out that was not true. In his case, he used an accountant who did not take wildly aggressive positions to drive larger refunds.

So, OP the answer to your question may be "it depends on who you ask and what they know or don't know about taxes". I think accountants can add value for people who have no idea what they are doing and would likely make mistakes doing their own taxes, despite software like TT that make it virtually idiot proof. They also add value for people who have complex tax situations. Might be able to toss in folks who are just too busy to do it themselves too.

Most others would be fine doing their own taxes as software like TT make it quite easy. I can't imagine having had to do my return the last 20 years by hand (which I did for the first ten years of my career). The software makes life so much easier.
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bwalling
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Re: Does anyone use an accountant for personal taxes?

Post by bwalling »

Jack FFR1846 wrote: Mon Nov 23, 2020 1:08 pm Yes. I've attempted to do my own taxes many times and failed miserably. As an engineer, I'm more than capable to follow clear instructions. The IRS instructions don't contain a single clear anything.
Amen to that. I'm a software engineer, which is quite literally writing clear, concise, logical instructions. The IRS are the exact opposite.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

bwalling wrote: Tue Nov 24, 2020 8:38 am
Jack FFR1846 wrote: Mon Nov 23, 2020 1:08 pm Yes. I've attempted to do my own taxes many times and failed miserably. As an engineer, I'm more than capable to follow clear instructions. The IRS instructions don't contain a single clear anything.
Amen to that. I'm a software engineer, which is quite literally writing clear, concise, logical instructions. The IRS are the exact opposite.
Can you give an example of instructions that are unclear?
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

2Scoops wrote: Tue Nov 24, 2020 7:25 am
tj wrote: Mon Nov 23, 2020 10:29 pm
neverpanic wrote: Mon Nov 23, 2020 10:22 pm
2Scoops wrote: Mon Nov 23, 2020 11:49 am I took his advice and I went from paying to a several thousand dollar return.

My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
If you hate paying $250 to save several thousand dollars, there's nothing I can say that will make any sense.
How can $250 generate thousands? What tax credit could the CPA possibly find that you can't find on your own that causes that type of variance?
Yeah, that was kind of the point of this thread. Is the $250 really saving me money that I couldn’t get on my own? My guess is not but whether I can execute it properly is a different conversation.
I mean, you should be able to compare the return you did yourself from the following year where you got a large refund and see what is different....
deltaneutral83
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Re: Does anyone use an accountant for personal taxes?

Post by deltaneutral83 »

Everyone's situation is customized. A w2, no taxable brokerage account, and just an ordinary checking account; tax software can have it done in 30 minutes. High earner with several sources of income; paying a CPA $200 an hour to A) complete the tax return and B) a go between if you're ever audited might be the best money you've ever spent with a CPA who is intimately familiar with your taxes. I also don't look at money spent for services as a pride thing like many others do here. It's a trade off between money and time IMO. Moreover, for things of this caliber (tax preparation), one error can cost an egregious amount for many and CPA is a tougher designation than say, an auto mechanic. Off topic, but I'm kind of surprised at HNW/high earner BH's who do their own taxes but refuse to buy and sell their own car(s) from anyone other than a new car dealership. Always interesting to me to see the different views on the exchange of money for time, while factoring the complexity of the task at hand.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

deltaneutral83 wrote: Tue Nov 24, 2020 9:22 am Everyone's situation is customized. A w2, no taxable brokerage account, and just an ordinary checking account; tax software can have it done in 30 minutes. High earner with several sources of income; paying a CPA $200 an hour to A) complete the tax return and B) a go between if you're ever audited might be the best money you've ever spent with a CPA who is intimately familiar with your taxes. I also don't look at money spent for services as a pride thing like many others do here. It's a trade off between money and time IMO. Moreover, for things of this caliber (tax preparation), one error can cost an egregious amount for many and CPA is a tougher designation than say, an auto mechanic. Off topic, but I'm kind of surprised at HNW/high earner BH's who do their own taxes but refuse to buy and sell their own car(s) from anyone other than a new car dealership. Always interesting to me to see the different views on the exchange of money for time, while factoring the complexity of the task at hand.
I can't believe that a CPA would include audit representation in the preparation fees.
pennywise
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Re: Does anyone use an accountant for personal taxes?

Post by pennywise »

snapvestor wrote: Mon Nov 23, 2020 12:53 pm We use a CPA and have for about a decade now. As the complexity of our taxes has increased over the years even in the personal space, I do it for peace of mind and not having to deal with it i.e. my time.
+1

My husband did our taxes manually for many years, until we inherited a friend's estate. The settlement process meant more complicated returns and we also became landlords. Tax accounting for that including depreciation etc was more than we cared to manage. Now we are retired with various income streams, etc. I think we pay ~$400/year and it's well worth the cost.
sschoe2
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Re: Does anyone use an accountant for personal taxes?

Post by sschoe2 »

I started using Free Tax USA and before that Taxact and before that Turbotax. They all work just fine for me. Taxes are mostly transcription from the form to the software.
andypanda
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Re: Does anyone use an accountant for personal taxes?

Post by andypanda »

I/we have for the past 4 years. Let somebody else worry about our 20- or 30-page return, etc.

Starting in 1965 I did my own taxes with pen and paper. From 2007 to 2016 I also did my parents' taxes with pen and paper. I like numbers and seldom bothered to use a calculator.

I'm 70 now and I love spending $650 to $750 per year to have someone else do the data entry, juggle all those numbers and figure out all of those worksheets, multiple entries of dividend this, foreign tax that, excess something or other, and how much to write the check for to reach safe harbor. I tried paying quarterly estimated once and decided to just go straight to safe harbor from here on out. I don't even have to read one article about the new tax law changes.

Last spring when the co-owner called with the figures I was sitting in my boat fishing. Yeah, ask me if I miss tax season.
jebmke
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Re: Does anyone use an accountant for personal taxes?

Post by jebmke »

andypanda wrote: Tue Nov 24, 2020 10:48 am I tried paying quarterly estimated once and decided to just go straight to safe harbor from here on out.
The difference between the safe harbor amount and optimal amount for many people is not enough to worry about. With low interest rates, even if you overshoot, the opportunity cost is low.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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vitaflo
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Re: Does anyone use an accountant for personal taxes?

Post by vitaflo »

bwalling wrote: Tue Nov 24, 2020 8:38 am
Jack FFR1846 wrote: Mon Nov 23, 2020 1:08 pm Yes. I've attempted to do my own taxes many times and failed miserably. As an engineer, I'm more than capable to follow clear instructions. The IRS instructions don't contain a single clear anything.
Amen to that. I'm a software engineer, which is quite literally writing clear, concise, logical instructions. The IRS are the exact opposite.
As my accountant says, "there's a reason tax lawyers exist". Some of the rules can be interpreted multiple ways depending on how you read them. Although with the typical person with a W2 and maybe a retirement account, it's pretty cut and dry.
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