CPA versus Turbotax

[retire@40]

His CPA/tax guy had never heard of the 'hummer deduction'.  Once I made him aware of it, he had the cpa file revised returns for the last two years.  I think that saved him about $25k.

What did you do differently from the CPA to save him $25K?

 

[Nords]

Would it raise issues regarding audit risk for efiling?

Does it help you maximize the amount you can put in retirement plans?

All of the other questions are "No... not even close", but Turbotax did address these questions last year.

 

[retire@40]

All of the other questions are "No... not even close", but Turbotax did address these questions last year.

Of those two questions, the first one is meanigless anyway. For the second question, I never used Turbo Tax, but I would be very surprised if it realized ALL the retirement plan options one could maximize and the best approach to doing so, not just the Roth and Traditional IRAs.

 

[cute fuzzy bunny]

What did you do differently from the CPA to save him $25K?

Actually knew about the deduction.

I dont think anybody is contesting the value of a GOOD tax preparation expert if you arent interested or willing to do your own research or your tax situation is so complex that an expert is needed.

I think its almost impossible to FIND a GOOD tax preparation expert that will do a better job for a reasonable price.

I think past that, what you're looking at has less to do with taxes and more to do with FINANCIAL PLANNING. And I think that ones been beaten to death. If you find a GOOD one, and you're willing to PAY A LOT OF MONEY to them for their advice, and you are UNWILLING to do your own legwork and research, then you should get one. And a tax guy. Two of them in fact.

 

[tryan]

I've had a CPA do my taxes for the last 15 years.  Couple of reasons:

1)  Want to increase my chances of NOT being audited.  Every year this guy explains how to smooth the return so it doesn't flag an audit.

2) If I hit the audit lottery, I want a CPA in my corner.  I believe most wealthy people should expect to be audited at sometime in your life.  Turbotax isn't help much when the G7's are asking questions trying to justify the gov expense of the audit.

Yes I've been farmed out to the "new hire" but I meet with the same CPA and we review the return in detail before the final numbers are crunched (input in his tax SW).

He also takes my calls 2-3 times per year with questions and what-if scenarios ... pretty good deal.

$320 personal return.  $1050 for a corporate return.

 

[Martha]

All of the other questions are "No... not even close", but Turbotax did address these questions last year.

Interesting. What did TT do on the IRAs? Did it calculate things like amounts you could contribute to a spousal IRA? Evaluate a ROTH vs. traditional IRA? What did it say about audit risk and efiling? Just curious, so if you can't remember that's ok.

Of those two questions, the first one is meanigless anyway. For the second question, I never used Turbo Tax, but I would be very surprised if it realized ALL the retirement plan options one could maximize and the best approach to doing so, not just the Roth and Traditional IRAs.

I disagree on the meaninglessness of efiling and audit risk. I know that efiling wil catch a lot of inadvertent errors and give you a chance to correct them without penalty. But efiling also allows the IRS to do a lot more cross checking than it can with paper filing. What risks you want to favor is your choice.

With respect to maximizing retirement options--what do you think TT would miss?

 

[Nords]

Interesting.  What did TT do on the IRAs?  Did it calculate things like amounts you could contribute to a spousal IRA?  Evaluate a ROTH vs. traditional IRA?  What did it say about audit risk and efiling?  Just curious, so if you can't remember that's ok.

I remember it asked questions about contributions, let you know if you blew a limit, and made recommendations on the following years' IRA contributions. It probably had more features-- everyone claims to have an IRA evaluator-- but I'll know more in the next couple months.

I know that efiling wil catch a lot of inadvertent errors and give you a chance to correct them without penalty. But efiling also allows the IRS to do a lot more cross checking than it can with paper filing. What risks you want to favor is your choice.

Since our returns don't push the limits, I'd rather have the IRS catch an electronic mistake. I can also schedule the ACH payment for the 15th via EFTPS instead of mailing in a paper check at the last minute.

I'm more concerned that they're going to screw up (or lose!) the paper version and efiling is a lot less hassle than printing, addressing, & mailing.

Some years TurboTax did efiling, other years (multi-page Schedules D) it said the return had to be mailed.

 

[retire@40]

Actually knew about the deduction.

Hard to believe anyone could miss a motor vehicle deduction after going through the business disbursements for the year, especially one that large, whether paid in full with one business check or financed. Just hard to believe he got no deduction at all before you showed up.

 

[retire@40]

With respect to maximizing retirement options--what do you think TT would miss?

I would be curious to see if it would give you answers on the most efficient retirement contribution options. For example, maxing out on matching 401(k) then maxing out Roth IRAs, then going back to the 401(k).

Or for self-employed, partners, or members of an LLC, or shareholders in closely-held C and S corporations, giving you answers on mandatory contributions and selecting the best plan (and reasons why) among solo-401(k), SEP-IRA, SIMPLEs, etc while making cost considerations for mandatory additional contributions for any qualified employees and identifying issues relating to things like controlled companies and the such.

 

[Martha]

I would be curious to see if it would give you answers on the most efficient retirement contribution options. For example, maxing out on matching 401(k) then maxing out Roth IRAs, then going back to the 401(k).

I would be too. Unfortunately, I would be surprised if many tax preparers mentioned this. Again, it goes back to financial planning versus tax return preparation.

Or for self-employed, partners, or members of an LLC, or shareholders in closely-held C and S corporations, giving you answers on mandatory contributions and selecting the best plan (and reasons why) among solo-401(k), SEP-IRA, SIMPLEs, etc while making cost considerations for mandatory additional contributions for any qualified employees and identifying issues relating to things like controlled companies and the such.

This is a good point. If you have a business, financial/tax/succession planning advice is invaluable. It is also easy to mess up on your own. Especially if you have employees beyond yourself.

 

[Martha]

Since our returns don't push the limits, I'd rather have the IRS catch an electronic mistake. I can also schedule the ACH payment for the 15th via EFTPS instead of mailing in a paper check at the last minute.

I'm more concerned that they're going to screw up (or lose!) the paper version and efiling is a lot less hassle than printing, addressing, & mailing.

We have efiled since it was available. Nevertheless, it has taken months to convince the IRS that we actually filed tax returns for the past three years.

 

[cute fuzzy bunny]

Hard to believe anyone could miss a motor vehicle deduction after going through the business disbursements for the year, especially one that large, whether paid in full with one business check or financed. Just hard to believe he got no deduction at all before you showed up.

I didnt say he got no deduction at all. I said he didnt get the "hummer deduction". His CPA just took the basic business mileage and depreciation deduction. Until I printed out a few articles and the relevant tax code, his CPA had never even heard of it.

Believe it or not, it looks like at least some CPA's suck at what they do.

 

[cute fuzzy bunny]

Ick. I was going to e-file this year for the first time. I think I changed my mind.

 

[grumpy]

We have efiled since it was available. Nevertheless, it has taken months to convince the IRS that we actually filed tax returns for the past three years.

I ALWAYS mail in a paper return. I am not going to do anything to make it easier on the IRS!

Grumpy

 

[REWahoo]

I never noticed this before...

The IRS = Theirs

 

[Martha]

A few months ago I was whining on this forum because I could not prove I filed tax returns for the last three years. Because it is a violation of professional rules for lawyers not to file tax returns, every three years our firm requires our lawyers to prove they filed by filing form 8821 with the IRS. The IRS then sends confirmation of filing to our firm. Last summer, in response to the 8821, the IRS said I had not filed when in fact I had efiled for sometime. Fussed and fussed trying to resolve this.

Finally went a different route and I ordered a transcript from a different department in the IRS. They provided the transcripts for the last three years. I gave that to the department in charge of the 8821s and got my proof. WHAT A PAIN IN THE A**!

 

[Martha]

Ick. I was going to e-file this year for the first time. I think I changed my mind.

You do get a filing reciept. Don't lose it.

 

[cute fuzzy bunny]

Eh, up until now i was put off by having to pay someone something to do the e-file. I wont pay someone 50c to do something that makes THEIR life easier.

In the face of getting my return more thoroughly analyzed AND having to possibly jump through hoops to prove I filed a return, I think they're going to get another stack of paper from me this year again.

 

[retire@40]

I didnt say he got no deduction at all.  I said he didnt get the "hummer deduction".  His CPA just took the basic business mileage and depreciation deduction.  Until I printed out a few articles and the relevant tax code, his CPA had never even heard of it.

Believe it or not, it looks like at least some CPA's suck at what they do.

First of all, you keep saying "hummer deduction" but there's no such thing.  It's an option to take a full Sec 179 deduction on ANY vehicle that weighs over 6000 pounds used for business.

Second, you can't take a business mileage AND depreciation deduction.  That is such a basic concept, I'm sure that's not what the CPA actually did.

Third, if you had your relative take a Sec 179 deduction on the full cost of the vehicle in one year, it may have been a mistake and may have actually cost him more in taxes in the long run.

I hope you also explained to your relative the recapture rules regarding the expensing.

 

[cute fuzzy bunny]

You know something? You really ARE a noodge.

The deduction is VERY well known as "The Hummer Deduction".

I take it back. Never take your taxes to a CPA regardless of how complex they are or how cheap the CPA is. You'll be picked and needled with irrelevance until you run screaming from the office.

 

[Nords]

You know something?  You really ARE a noodge.

VARIANT FORMS: or nudzh or noodge
NOUN: Slang One who persistently pesters, annoys, or complains.
VERB: Inflected forms: nudged or nudzhed or noodged, nudg·ing or nudzh·ing or noodg·ing, nudg·es or nudzh·es or noodg·es

TRANSITIVE VERB: To annoy persistently; pester.
INTRANSITIVE VERB: To complain or carp persistently.
ETYMOLOGY: From Yiddish nudyen, to pester, bore, from Polish nudzi.

Hey, I only got 732 hits for the phrase "Hummer deduction". And apparently it has nothing at all to do with tax breaks for prostitutes?!?