True, but my rationale for hiring a tax preparer has been that if the IRS has any questions (or worse), the preparer deals with it, not me (at least not directly). This has happened only a couple of times in my life, but each time the preparer spent a number of hours at no extra cost to me dealing with the IRS. Whether the preparer charges for additional time spent may depend whether the preparer offers that sort of guarantee and what the issue is that caught the IRS's attention. That said, as my finances continue to become simpler--no longer any rental property or business income--I will probably do my taxes myself in the coming years.
Tax software or CPA for filling taxes
- Thread starter MRHARDROCKCAFE
- Start date
True, but my rationale for hiring a tax preparer has been that if the IRS has any questions (or worse), the preparer deals with it, not me (at least not directly). This has happened only a couple of times in my life, but each time the preparer spent a number of hours at no extra cost to me dealing with the IRS. Whether the preparer charges for additional time spent may depend whether the preparer offers that sort of guarantee and what the issue is that caught the IRS's attention. That said, as my finances continue to become simpler--no longer any rental property or business income--I will probably do my taxes myself in the coming years.
TheWizard
Thinks s/he gets paid by the post
I agree with Sunset on who cares about my money.
If you start doing your own income taxes in college or shortly after, then it's rather simple to learn about additional things like home mortgage deductions etc as you encounter them.
Bottom line perhaps is how complex your return grows to be.
Mine was never that complex and especially now in retirement...
OP
OP
MRHARDROCKCAFE
Dryer sheet wannabe
Thank you!!! All great information!!
Find AARP in your area. I'm an AARP tax counselor, new this year. Free. 100% free. You don't have to be a senior. They use Taxslayer software and are up to date with all rules. I've done over 70 filings this year. Retirement, home businesses, full-time employees from students to fully retired folks. I got tired of paying $650 for basically data entry and knowing current tax law. It's not that hard.
OP
OP
MRHARDROCKCAFE
Dryer sheet wannabe
You just have to be a member and they will look at your taxes for free?
Unfortunately, this won't work for OP. He has rental properties so his Federal return is out of scope for Tax-Aide and VITA sites.
OP
OP
MRHARDROCKCAFE
Dryer sheet wannabe
OP?
You do not have to be a member of AARP to get your taxes done at Tax-Aide. Your return just has to fall within the scope of the program. Our scope limitations are things like: no depreciation (i.e. no renting of houses, just land); no trading in stock options or crypto; no farm returns; no returns with additional medicare tax (high earned income); or NIIT (high investment income); etc.
The IRS sponsors the Tax-Aide program through a funding grant and they are the ones that control the scope of service we are allowed to offer.
You don't have to be a member. We will prepare taxes for anyone who makes an appointment. Bring SS card and ID and all tax forms. Many people bring their 2022 filing. I had one guy with 11 W2s, who worked for a union. Clients from 18-year-olds, graduate students with trust funds, retirees with a stack of 1099Rs. Certain situations are out of scope like farmers with expenses. Those are very complicated with lots of subsidies. Or small businesses with employees (out of scope).
Edit: Thanks Cathy63. You're the one who suggested I do this
. Learned so much!
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Original Poster
OP
OP
MRHARDROCKCAFE
Dryer sheet wannabe
ok. That is what I thought. This will not work in this group
OP
OP
MRHARDROCKCAFE
Dryer sheet wannabe
OP!!! Thank you!!! Yes all must look at the original post before adding.
gauss
Thinks s/he gets paid by the post
- Joined
- Aug 17, 2011
- Messages
- 3,615
The problem with non-professionals using tax software, is that you really need to know what the answer is before using the software so that you can "drive the software" to get the correct answer.
If you have a reference return prepared by a trusted professional from the year before, and nothing has changed, then this should be possible.
To just blindly use the sofware without knowing what the answer should be is begging for a wrong return. Many wrong returns favor the IRS over the taxpayers. This is especially acute when using State income tax software.
If you want to get a good reference return, try going to a volunteer tax site for one year. The folks will get lots of training, and every return is reviewed by a 2nd person.
The problem with folks blindly using the tax software, is that they don't know what they don't know. They think everything is fine.
People are always very happy when they come to our volunteer tax site for the first time, and I point out all the additional credits and such that were not claimed in prior years.
A typical example in my State:
"What what? You mean I can get a refundable $1,700 Property Tax credit? I don't pay property taxes -- I rent....." Yep. Not all examples are that large, but this should illustrate my point.
Here's another one:
"What I can subtract $8,000 form my state taxable income? My old guy never did that." Yes -- your dividends from your Money Market funds at your brokerage contain US Obligations which are not taxable in most states.
I could go on.....
-gauss
If you have a reference return prepared by a trusted professional from the year before, and nothing has changed, then this should be possible.
To just blindly use the sofware without knowing what the answer should be is begging for a wrong return. Many wrong returns favor the IRS over the taxpayers. This is especially acute when using State income tax software.
If you want to get a good reference return, try going to a volunteer tax site for one year. The folks will get lots of training, and every return is reviewed by a 2nd person.
The problem with folks blindly using the tax software, is that they don't know what they don't know. They think everything is fine.
People are always very happy when they come to our volunteer tax site for the first time, and I point out all the additional credits and such that were not claimed in prior years.
A typical example in my State:
"What what? You mean I can get a refundable $1,700 Property Tax credit? I don't pay property taxes -- I rent....." Yep. Not all examples are that large, but this should illustrate my point.
Here's another one:
"What I can subtract $8,000 form my state taxable income? My old guy never did that." Yes -- your dividends from your Money Market funds at your brokerage contain US Obligations which are not taxable in most states.
I could go on.....
-gauss
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target2019
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Tax software is about $100. Add the value of additional labor time for data entry, questions, errors and so on. I estimate this will take you days (not hours) to complete. You also should monitor tax law changes year=to-year so that nothing important is missed.
Getting the first return 100% complete and accurate is of course difficult. But in subsequent years you'll pick up prep time savings.
If you have a CPA doing everything you mentioned, I wouldn't expect to save any money. You'll also lose access to the CPA's knowledge bank.
IMO there's no better way to learn the impact of taxes on your income than by filling out the tax forms yourself. The knowledge you gain will be repaid by subsequent changes toward more tax-efficient investing. I estimate my accounts are now worth least 10% more by my learning income tax consequences long ago, which is a huge return for a few hours of effort each year.
I have been using our CPA for 40+ years. He also happens to be a close friend from college but if he ever shutdown his business I would continue with a referral from him. I don't know where you'all live but here in NorCal the rate for a good tax CPA is $300+/hour so if you're paying $600 total then you're getting a bargain. We prep everything and deliver it as a package, usually 7-12 hours billing time. Average bill about $2500, depending on how much follow up is required. Average fed and state tax returns are 30-60 pages. I have a W-2 job as primary income, quite a few 1099 from brokerages and banks, two limited partnerships pre-IPO startups I invested in 10+ years ago that have yet to yield cash out but both have substantial market cap based on financing and the cash out may be huge, in the multi-7-figures so the annual K-1s get filed religiously. These were both early-round private investments around $50K and luckily both are doing very well and going public or cashing out is on their roadmaps. It was stipulated that these could go to zero and were highly risky at the time and the IPO or cash out was going to be a long tail in terms of timeframe so VCs were not part of this early offering. CPAs know how to file this and keep the records in the event of a cash-out, I'm a little dubious of TT or other self-service tax method at this time as they would not accompany to any audit that might occur if this were a large cash out.
My feeling is you get what you pay for.
My feeling is you get what you pay for.
TheWizard
Thinks s/he gets paid by the post
No.
FreeTaxUSA is around $15, including your state income tax return.
But yes, it helps if you have knowledge of relevant tax details going back a few years.
Also helps if your situation isn't too complicated.
YMMV...
Use TurboTax and purchase the $60 audit insurance offered right before you file. TurboTax will run interference with the IRS if there is an issue. I'm a trustee for a friend's special needs trust so I complete and file the trust tax return every year. I worked part-time a few seasons for H&R Block, I've volunteered with the AARP VITA program (excellent training), and I've done my own taxes for 50 years so I'm pretty familiar with the ins and outs of individual returns. I'm not as familiar with the ins and outs of the trust return so I always buy the insurance. It's a few bucks extra cost to the trust but I don't charge the trust for doing the trust's taxes or the beneficiary's taxes.
target2019
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Sometimes I read the room, and apply business, tax prep and other experience to my answer. I know what will and what won't work in a situation.
The situation is complicated enough that if OP goes off on his/her own, they'll need additional help. I use TurboTax, and have used ProSeries to prepare many returns in the past. OP needs additional help, like one finds on a TT forum. It's built into the software.
The $60 audit insurance also sounds like a very good add-on in this case.
But I don't see OP doing their taxes on their own as the best choice. $600 to a CPA to prepare and E-file the tax package is a bargain.
