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TurboTax or an Accountant?
Old 12-31-2013, 02:27 PM   #1
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TurboTax or an Accountant?

I have always used a free version of TurboTax that I receive based on a relationship that I have with a particular financial institution. I have always taken the standard deduction. I have a decent sized investment portfolio and until recently I was not a home owner. I liked doing my taxes myself, in part because the bill was $0 (TT offers 1 free fed filing, and I would paper file state myself for free), but also because I felt like I was more knowledgeable of the issues involved because I worked on the return myself.

Well, this year I became a homeowner. This is the first year that it makes sense for me to itemize my deductions. Now I know that in regard to my home, property taxes and mortgage interest is deductible. However, I understand that some costs associated with obtaining the mortgage are deductible too (like points). I looked at the HUD-1 form provided by the mortgage lender that provides the mortgage fee information and I am kind of overwhelmed. I am not sure which of the many items listed on the HUD-1 form are deductible.

Here is my quandary. I have found that 90 percent of the work involved in preparing tax filings is getting all of the documentation and facts together. Actually filling out the tax return has not been too bad. However, since I am now a homeowner, and I have this new mortgage, should I have an accountant file my returns? If so, I don't want to go to an HandR Block type of place, so how do I find a low cost qualified accountant/tax preparer?

Thank you.
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Old 12-31-2013, 02:33 PM   #2
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since I am now a homeowner, and I have this new mortgage, should I have an accountant file my returns?
Doing your taxes on TT should not be too much different than last years IMHO. TT will ask you Q's about mortage interest and taxes and take it all into account, if memory serves correct.

Save your cash and let the accountant have one less customer.
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Old 12-31-2013, 02:34 PM   #3
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Since you are obviously comfortable with using tax software to file your return, I don't see the need for paying an "expert" to do your taxes. TurboTax should walk you through everything you need to take advantage of all the deductions you can itemize, even those one-off deductions associated with buying a home and taking out a mortgage.
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Old 12-31-2013, 02:39 PM   #4
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Your mortgage company will send an IRS form with all of the interest paid in 2013, including any deductible points. enter that amount into Turbotax when filling out the Schedule A itemized deductions.

Property taxes should be similarly easy. Just take the pro-rated property tax amount from the HUD form and enter it into TurboTax. More here, under "deduction of real estate taxes":
Publication 530 (2013), Tax Information for Homeowners

I would at least give DIY a try before you go to a preparer. It's easier than you are thinking.
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Old 12-31-2013, 02:52 PM   #5
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Your mortgage company will send an IRS form with all of the interest paid in 2013, including any deductible points. enter that amount into Turbotax when filling out the Schedule A itemized deductions.

Property taxes should be similarly easy. Just take the pro-rated property tax amount from the HUD form and enter it into TurboTax. More here, under "deduction of real estate taxes":
Publication 530 (2013), Tax Information for Homeowners

I would at least give DIY a try before you go to a preparer. It's easier than you are thinking.
+1

The TT interview process will hit all the possible deductions. No need to remember or know what they all are or might be.
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Old 12-31-2013, 03:10 PM   #6
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I use TurboTax even for things like MLPs and royalty trusts. It isn't difficult, just painstaking.

I also use standard deduction which is easy. When/if I sell an MLP I will do it first in TT, and if I am not sure and satisfied, go to a CPA.

CPAs are all different. Some are very nervy, others quite conservative.

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Old 12-31-2013, 03:31 PM   #7
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Like others have said, adding a mortgage isn't a reason to hire an accountant vs continuing with TurboTax. The mortgage deduction is so common, TT handles it easily, along with any other potential deductions like state & prop tax, charitable contributions, medical expenses, etc. You'll get a 1098 IIRC from your lender showing mortgage interest among other things, from there it's very easy with TT.
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Old 12-31-2013, 03:43 PM   #8
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No doubt, OP, you are referring to the buyer's settlement sheet. Very little on that sheet is of interest to you for tax purposes. One thing to look at is how much you paid in pro rated real estate taxes to the seller.

A thorough search of Google and the tt forum will help you a great deal. There could be other items you need on the form. If you settled late in the year the amount of tax and interest may be quite small.
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Old 12-31-2013, 03:51 PM   #9
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The online deluxe version of Turbotax does not support a schedule D for your investments or a small business schedule c. That is the program that the investment companies usually give for free. Hopefully they used Premier this year.
Schedule A for homeowners deductions, charities and medical is simple enough There are even lists out on the web that give you a line item list of what is deductible from the HUD statement. Pretty much just real estate tax and interest and points.
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Old 12-31-2013, 04:10 PM   #10
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I've done my taxes with & without CPA/tax preparer. For many years DW & I have been a bit compulsive about understanding our own taxes ever since a good friend got messed up badly by a bad registered tax preparer. Over the years there have been a few issues that I really valued the CPA's input, particularly in understanding current areas of aggressive IRS interpretation/documentation/enforcement. Other years I got the feeling the CPA was charging me $$$ for just entering data I supplied into his tax software. IMHO- Better leading tax prep programs (IF kept current by downloading latest updates) are prob fine for most employed folks with basic understanding of IRS system & typical tax situations (e.g. W-2's, bank interest, brokerage statements, home mortgage, documented cash contributions to charities, etc.). In any case, don't forget to keep printed hard copies for your records.

BTW- Tax software can be very useful for running 'what if' scenarios like how much certain things might affect your current tax bills (e.g. changes in earned income, charitable contributions, IRA/HSA contributions, Roth conversions, etc).
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Old 12-31-2013, 04:22 PM   #11
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I have found that using the downloaded version of Turbo Tax Deluxe meets my needs. It doesn't give the handholding on investments that I guess Premier would do but it is find for my needs.

I know that some people are upset that the online version of Deluxe this year literally doesn't let you use the schedule for investments. On the Downloaded version you get the schedules for those things but not the handholding. I do have some concern that in future that might not have those schedules on the downloaded version. Something to watch out for next year.
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Old 12-31-2013, 04:48 PM   #12
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We have used an account for several years, but this year I plan to give turbo tax a try instead of or at least before going to the accountant. Two reasons for this...our tax situation is much simpler now that DH no longer owns a small business and last year I caught a fairly significant error on the form the accountant prepared. By fairly, significant, I mean an error that would have caused us to overpay by $1200 including penalties we did not owe. The reason stated for the error...oh I didn't enter xyz in the software. As you can guess even if I go the accountant route, I will be shopping for a new accountant. This was a CPA, so my advice is double and triple check.
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Old 12-31-2013, 05:15 PM   #13
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Since you are obviously comfortable with using tax software to file your return, I don't see the need for paying an "expert" to do your taxes. TurboTax should walk you through everything you need to take advantage of all the deductions you can itemize, even those one-off deductions associated with buying a home and taking out a mortgage.
Why the " " around expert?
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Old 12-31-2013, 05:21 PM   #14
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Why the " " around expert?
Because many "experts" lack expertise, and most many tax accountants do little more than run your numbers through software not that different from TurboTax.
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Old 12-31-2013, 05:38 PM   #15
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I would recommend Turbo Tax or an equivalent program. Also, beyond your taxes, as previously mentioned, using various scenarios can further educate yourself about the tax code.
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Old 12-31-2013, 09:57 PM   #16
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You should be fine with Turbo Tax. The first year will require some study to locate those eligible points, pre-paid interest, and your normal mortgage info. After that you just update the main numbers each year. TT handles the points all by itself when you transfer your tax info from one year to the next. So you'll only have to deal with points and prepaid interest the first year.
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Old 01-01-2014, 01:39 PM   #17
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A simple return just needs good software or one of the JH's or HRB's. More than a handful of K-1's, a small business, or other complexities should cause you to consult a CPA, at least one year. Many of the software packages do not ask you about certain state credits or deductions. They also cannot guide you on many tax elections. I find that tax practitioners' errors correlate with the sloppiness of client records. Anyone who is just using a tax practitioner for tax prep is wasting their money. Outside of busy season, you should meet with the practitioner and discuss financial or tax planning. Not every year but they can let you know when it is time to make an estate plan, set up an LLC, a pension plan, etc. They cannot provide legal advice and therefore cannot write the documents but they can give Competent Professional Advice.
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Old 01-01-2014, 04:54 PM   #18
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Foxfirev5,
I want to try Turbo Tax to compare the results, and to see how certain changes might affect the results, but so far I've resisted. I don't like the idea of loading all my financial information into this software. I'm assuming it all gets saved on their website.

I won't use Mint.com or variations of this financial software for the same reason.

Are others concerned about the security of using Turbo Tax?


JP
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Old 01-01-2014, 05:00 PM   #19
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Foxfirev5,
I want to try Turbo Tax to compare the results, and to see how certain changes might affect the results, but so far I've resisted. I don't like the idea of loading all my financial information into this software. I'm assuming it all gets saved on their website.

I won't use Mint.com or variations of this financial software for the same reason.

Are others concerned about the security of using Turbo Tax?


JP
Get the downloaded version and all the information resides on your computer. Then the only thing transmitted is your tax return...supposedly.
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Old 01-01-2014, 05:09 PM   #20
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Are others concerned about the security of using Turbo Tax?

JP
Generally no, but it's possible I'm wrong. Been known to happen before. I've never heard of it happening and if it did as happened with Target stores recently it would be a PR disaster for them. So I would think they're pretty careful about that.

We use the desktop version, not the "cloud" version. I think that even with the desktop version they gather aggregate info but not identifying data. I'd have to dig through the license agreement to find out.
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