Do I need a CPA

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Bandu79
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Do I need a CPA

Post by Bandu79 »

42 M, married with two kids. Annual Gross Income is $300K. I have always used TurboTax or H&R Block and never spent more than $300 for tax preparation. This year, I changed my job, sold and bought a home, relocated to a new state. Should I get a CPA’s help for tax preparation? I believe the cost could be north of $1000. Is it worth it?

Thanks
dukeblue219
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Re: Do I need a CPA

Post by dukeblue219 »

Up to you, but none of that sounds like it would add more than 10 minutes to the usual point-and-click of TurboTax. Has anything given you trouble on TT before?
student
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Re: Do I need a CPA

Post by student »

I agree with the above poster. Perhaps you should try to do it yourself and see whether you enter difficulties...
Lalamimi
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Re: Do I need a CPA

Post by Lalamimi »

I used one in 2018 under similar circumstances. Figured out I did all the work. Used TT ever since, and most years prior to that. Just have all your papers in front of you and go through every question, particularly on the sale and purchase closing statements. I caught in 2020 we had purchased new roof and windows - credits. Might not have if used CPA.
squirm
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Re: Do I need a CPA

Post by squirm »

Nope, your taxes sound easy.
delamer
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Re: Do I need a CPA

Post by delamer »

We sold our primary home last year and TurboTax handled it just fine.

But we moved within one state, so didn’t have to deal with returns for multiple states.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
SubPar
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Re: Do I need a CPA

Post by SubPar »

Add me to the "nope, don't need it" column.
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Stinky
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Re: Do I need a CPA

Post by Stinky »

No CPA needed.

If you run into snags, you’ve got a lot of smart, well informed folks on the Forum who can help you out. And they “work” for free!
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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dodecahedron
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Re: Do I need a CPA

Post by dodecahedron »

Probably not, but what are the old and new states? And is the date you switched residency entirely clear?
jebmke
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Re: Do I need a CPA

Post by jebmke »

dodecahedron wrote: Thu Oct 21, 2021 5:36 pm Probably not, but what are the old and new states? And is the date you switched residency entirely clear?
that was my thought as well; if a reasonably clean cut, doable by the taxpayer but not a 10 minute exercise as suggested above to do two state part year tax returns.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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neurosphere
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Re: Do I need a CPA

Post by neurosphere »

jebmke wrote: Thu Oct 21, 2021 5:39 pm
dodecahedron wrote: Thu Oct 21, 2021 5:36 pm Probably not, but what are the old and new states? And is the date you switched residency entirely clear?
that was my thought as well; if a reasonably clean cut, doable by the taxpayer but not a 10 minute exercise as suggested above to do two state part year tax returns.
I second (third?) this. Despite being tax savvy, the first year I had to file in two states I was quite confused and it took me quite a while to ensure I was doing everything ok. I could either trust the software blindly (not for me) or learn/verify that my results were correct. It took me a long time to read the part-year resident instructions for both states to learn what was right, and make sure my results made sense. The interview questions in tax software are not always intuitive/straightforward.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
Trader Joe
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Re: Do I need a CPA

Post by Trader Joe »

Bandu79 wrote: Thu Oct 21, 2021 3:35 pm 42 M, married with two kids. Annual Gross Income is $300K. I have always used TurboTax or H&R Block and never spent more than $300 for tax preparation. This year, I changed my job, sold and bought a home, relocated to a new state. Should I get a CPA’s help for tax preparation? I believe the cost could be north of $1000. Is it worth it?

Thanks
No, I would not.
jebmke
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Re: Do I need a CPA

Post by jebmke »

neurosphere wrote: Thu Oct 21, 2021 5:44 pm
jebmke wrote: Thu Oct 21, 2021 5:39 pm
dodecahedron wrote: Thu Oct 21, 2021 5:36 pm Probably not, but what are the old and new states? And is the date you switched residency entirely clear?
that was my thought as well; if a reasonably clean cut, doable by the taxpayer but not a 10 minute exercise as suggested above to do two state part year tax returns.
I second (third?) this. Despite being tax savvy, the first year I had to file in two states I was quite confused and it took me quite a while to ensure I was doing everything ok. I could either trust the software blindly (not for me) or learn/verify that my results were correct. It took me a long time to read the part-year resident instructions for both states to learn what was right, and make sure my results made sense. The interview questions in tax software are not always intuitive/straightforward.
state returns are often where the tax software packages are weakest. They have to program so many states that often a lot of stuff takes manual intervention. With time and the state instruction booklets it is very doable but there can be a lot of quirks in individual state laws.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Raycpact
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Re: Do I need a CPA

Post by Raycpact »

Did you live and own home over 2 years? Did attorney file 1099s for house sale? Will kids investment income exceed 2200? Did you work remotely? Did you over contribute to 401k because of second employer? Did you max out social security and entitled to credit ?
hachiko
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Re: Do I need a CPA

Post by hachiko »

I agree, the major factor is going to be on the state side. I do state and local tax for a living, and use TurboTax for my personal returns. Even knowing exactly what I wanted to do, I couldn't get TurboTax to do it correctly. Things can start to get complicated really quickly. If I had to do it again, I would have hired someone who knew how to get things done correctly. Filing MFS involving a move to a community property state with different dates of change of residency - I'm still not even convinced I did it correctly but I tried my best :sharebeer
Made money. Lost money. Learned to stop counting.
SRenaeP
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Re: Do I need a CPA

Post by SRenaeP »

As an IRS volunteer tax preparer, I don't think you need a CPA. If you are uneasy with going it alone, at least one of the tax software companies offers taxpayer support for those doing DIY tax prep. It is an upcharge from the software itself but that could be the sweet spot in terms of time and money spent vs a CPA.
Last edited by SRenaeP on Fri Oct 22, 2021 11:35 am, edited 1 time in total.
557880yvi
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Re: Do I need a CPA

Post by 557880yvi »

I am a CPA - but not a tax preparer and have only ever worked in corporate/public. Have done my own taxes for years as well as helped friends and relatives. It sounds like you can use TT or whatever other product you prefer. Multiple states in one year, depending on the states can be a bit tricky and strongly recommend you educate yourself on the partial year tax for each state. This way you will know what the expected outcome should be (my faith in the online programs is not 100%).

You may want to consider talking to a CPA this one year however, as there are often things they can see in past returns and your current one that could save you at least enough to cover their fee.
carolinaman
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Re: Do I need a CPA

Post by carolinaman »

A CPA should not be necessary but given your income level, it might be a good idea to try one this year. They can help with all your issues of this year and may have some advice for years to come. You do not know what you do not know. There may be something the CPA can advise that provides long term tax savings. I think it is worth it for one year.
Retired Bill
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Re: Do I need a CPA

Post by Retired Bill »

I would echo some of the other comments that the most likely area of running into problems will be with the resident and non-resident state returns. If willing to read the instructions for the state returns can do just as good a job as most CPA's, but should spend as much or more time doing the state returns as oftentimes options involved that the mass market tax preparation software does not address. The result can be that the state returns are accurate for the option tax software defaults to or you selected, but may or may not be the lowest tax if a different choice was made. Usually this doesn't result in a materially tax difference, but never know unless you manually override the software to see which option results in the lowest overall tax liability As an example, although itemizing deduction for federal results in lowest federal tax liability, it may not result in the lowest combined federal and state tax liability for all federal-state combinations. Same with multi-state returns with options to file as resident, part-year resident, and nonresident, and how credits for taxes paid to other states other than the resident state handled when more than one state return involved.

Unless things have changed in the last few years, tax preparation software is developed to minimize the federal tax paid, and generally never developed to minimize the combined federal and state tax liability (except for some of the larger population states). As more states added to the mix, finding the lowest combined liability just takes more time to find. So keep this in mind when making your decision to seek help or not.
Big Dog
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Re: Do I need a CPA

Post by Big Dog »

No experience with H&R Block, but I've found T-Tax to do a pretty good job with two-state returns reflecting a move.
Flora
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Re: Do I need a CPA

Post by Flora »

Can you import your brokerage consolidated 1099 into your tax software so that you can split your investment income by date between the two states based on move date?

Does the old state include a residency questionnaire as part of the Non/Part-Year tax return (date registered vehicles, to vote, to hunt/fish in new state, dates visited old state after moving to new state, date sold home, date old job ended, date new job began, etc.)?
Topic Author
Bandu79
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Re: Do I need a CPA

Post by Bandu79 »

Thank you so much for this overwhelming responses. I will move forward with TT for my tax filing.
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