Who does your taxes?

[mistershankly]

I have tremendous gratitude for all of the great advice and insight posted here, and I figured there may be no better place to post my question... who does your taxes?

Personally, I have hired an accountant for the past 20 years but only because my parents hired an accountant ever since I could remember. I know, it's not the most reasonable thing to do since all of our other financial endeavors are exclusively and confidently handled by me and DW. Our financial picture is not too complicated (I have w-2 income, no mortage, one rental income property, one Vanguard brokerage account, and DW does infrequent freelance 1099-based work) but I wonder if hiring a CPA to do our taxes is really necessary. My main concern has been to not miss any entries in our filings to potentially benefit us... or even worse, to make entries and deductions that may harm us in the long run (even though I am fairly conservative as I prefer a good night's sleep with low audit potential over taking aggressive chances with our tax filings). The secondary benefit was that my CPA was a great source of financial counseling that made the annual fees and meeting well worth it. However, he recently retired and my latest experience with a CPA was lackluster at best.

So.... is there any rationale to seek the services of a CPA or is the Quicken and TurboTax route sufficient for most filings of relatively simple scenarios? Are there any good resources that you use for doing your own taxes?

I may be missing some information here that would help in answering my question so please feel free to ask, and I'll provide it. Thanks in advance!!

 

[NW-Bound]

... all of our other financial endeavors are exclusively and confidently handled by me and DW. Our financial picture is not too complicated (I have w-2 income, no mortage, one rental income property, one Vanguard brokerage account, and DW does infrequent freelance 1099-based work) but I wonder if hiring a CPA to do our taxes is really necessary...

Most people do not need to hire a CPA. You can just buy a tax software package, which costs around $20 and is often available even free, and try it out for 2014 taxes. You still have the prepared 2013 tax return for comparison to see if you miss anything.

My parents used to pay $120 to have their simple tax return prepared, until I offered to do it for them. For my own taxes, it would cost more than that, because of all my financial accounts and equity trades even though I consider myself an infrequent trader. Once I gather up all the info to give to a tax preparer, I might as well enter it into the program myself.

 

[RunningBum]

If you aren't doing anything different then Turbo Tax or one of the other tax programs should be fine. You can compare to past years to make sure you are claiming all the right things and that the numbers are inline with past years.

 

[athena53]

I may get a CPA for the first time this year.

Background: I'm a retired actuary, computer-friendly and comfortable with numbers and tax concepts. I've done my own my whole life (with software after TurboTax came out). I've handled interest, dividends, foreign tax credits from mutual funds, K-1s, capital gains, loss carry-forwards and just about every type of itemized deduction.

Then in 2013 I decided to get cheap and downloaded the version for State A (where I work) but not B (where I live) and tried to do State B using Excel. I missed several "gotchas" and forgot to attach State A's return with my State B filing so State B decided that my credit for taxes paid to State A should be zero. I got a bill for $9,000. A few weeks later, the Feds came after me because the download of my 2012 investment income from the brokerage firm was far less than what the brokerage reported to them. I suspect that the download got messed up because the brokerage firm merged with another in 2012. The amount the Feds had agreed with my paper statements.

We've finally agreed with State B that we owe $52. We've also kissed and made up with the Feds and filed revised State A for 2012; when that gets cleared up we'll revise State B.

I've come to the sad realization that it's too darn complicated for me even with software. It shouldn't be that complicated. And I'm going to have to buy the darn software anyway because I want to keep an eye on our 2015 liabilities so we can pay estimated taxes. I'm too much of a control freak to leave it all to the accountants.

 

[rodi]

I've been using turbotax for years. It's pretty easy. The hardest part is the same as what you do with an accountant - gathering all the necessary records.

 

[NW-Bound]

... in 2013 I decided to get cheap and downloaded the version for State A (where I work) but not B (where I live) and tried to do State B using Excel. I missed several "gotchas" and forgot to attach State A's return with my State B filing so State B decided that my credit for taxes paid to State A should be zero. I got a bill for $9,000. ...

In a complicated tax situation like you have, I wonder how you can be sure that the tax preparer or even a CPA is well-versed in tax laws in both State A and State B?

I am curious because such an expert would be expensive, and what he charges would be an incentive for me to learn the intricacies myself, particularly if I have to deal with it every year.

 

[Midpack]

Another TurboTax advocate, I've used it for years, even back when I had to pay for it (vs free from Vanguard). Just get the version you need for your tax needs, might be Premier with rental property.

https://turbotax.intuit.com/personal-taxes/compare.jsp

There are other members who might recommend TaxAct, H&R Block or another.

 

[mistershankly]

The hardest part is the same as what you do with an accountant - gathering all the necessary records.

This is what tipped me off to potentially doing things myself. I gathered and organized everything as completely as possible, and it seemed like I was simply handing over the paperwork to the CPA to fill in the IRS forms.

 

[Midpack]

This is what tipped me off to potentially doing things myself. I gathered and organized everything as completely as possible, and it seemed like I was simply handing over the paperwork to the CPA to fill in the IRS forms.

Yep. And if you use TurboTax, it uses an intelligent "interview" methodology that's probably a lot like a CPA. It's easy and efficient (only pursues questions as necessary).

You might be able to download TurboTax for free, or at a deep discount, if you have accounts at Vanguard. You could try it, and still use a CPA if you weren't comfortable with TT.

 

[brett]

I have a CPA prepare our returns and assist with tax planning. Our returns will be getting much simpler next year so we may complete them ourselves.

 

[fh2000]

I used TurboTax for 10 years now. This year Turbotax moved Schedule D to Permier version with $20 dollar price increase.

I always buy it from Costco. They have $15 discount starting today. I just ordered Premier version from Costco website. Cost to me: $61.29 including tax.

 

[2017ish]

We used a CPA firm for about 5 years, when we had rental property, and two incomes (in two different states). I spent more time reviewing and debating things with the CPAs than it took me to do the taxes myself; thus, I got rid of them and have done our own for 20 years, even with juggling the two states.... (Turbotax for feds, but often did the two states by hand in the 90s.... Then went full turbotax).

FWIW, although I'm not a tax lawyer, I seriously considered going into that specialty at one time.

 

[truenorth418]

I also use TurboTax. I keep previous year's return handy to make sure I captured everything.


Sent from my iPhone using Early Retirement Forum

 

[Gumby]

I have done my own taxes for the last 38 years. Back in the old days, I used the JK Lasser books. Now, I use TaxCut (HR at Home). The most complicated years were the ones when I worked in NY, the young wife worked in CT, and we lived in CT. The trick was to do the federal return first, then NY, and last CT.

 

[W2R]

I have done my own taxes for each of the past 48 years. Like Gumby, I bought Lasser every year and it was falling apart from overuse/abuse by the time my taxes were ready to file.

Turbotax is great, and I wish we had had it way back when.

 

[pb4uski]

I may get a CPA for the first time this year.

..... I've come to the sad realization that it's too darn complicated for me even with software. It shouldn't be that complicated. And I'm going to have to buy the darn software anyway because I want to keep an eye on our 2015 liabilities so we can pay estimated taxes. I'm too much of a control freak to leave it all to the accountants.

I think you may be giving up too easily. I think the mistakes you made earlier were not buying all the states you needed (that thriftiness ended up costing you a lot of time) and not double checking the downloaded information back to the IRS forms.

I worked for one of the Big 4 (not in tax BTW) and as a result of traveling to assignments had to file taxes in numerous states each year. Today's software makes that horrible PITA chore much less painful.

I encourage you to try it again (after all, if an accountant can do it surely an actuary can ... I worked with actuaries for years and just couldn't resist) and perhaps your return will be easier this year now that you are retired.

 

[Senator]

I do my own books in Quicken. Then use TurboTax. I have 24 rentals, 1 S-Corp, 8 LLCs.

If you can generate a P&L for a business, or track your deductible receipts, you can do it yourself. I would guess I save $1000s.

 

[Alan]

I encourage you to try it again (after all, if an accountant can do it surly an actuary can ... I worked with actuaries for years and just couldn't resist) and perhaps your return will be easier this year now that you are retired.

A Freudian slip I'm sure, plenty of surly accountants out there.

I've used TurboTax for 20 years, including the years DW was self-employed, working from home mostly, plus this last 9 years I've had foreign income from a UK pension to report. A few years back I tried TaxAct which worked fine but I had to know what forms I needed for the foreign pension, so I switched back to using TurboTax.

 

[TrvlBug]

DH used to do our taxes until I convinced him about 20+ yrs ago that the entire weekend he spent doing them was not worth the cost of a CPA. This was pre tax software. Now that I've retired, I decided it's time to bring them back in-house. I love numbers and thought this would be fun :face palm:. His W-2, brokerage accts and a couple of K-1s; nothing complicated.

As a couple of posters mentioned, the difficult part is pulling everything together to either enter into Turbo Tax or the CPA's workbook. So, last year, rather than the usual cursory review, I did a deep dive. Some numbers didn't jive and it turns out the CPA made a $3K error . WTF...I was supposed to catch this? I never got a straight answer but some mumbo jumbo about software hiccup. Needless to say, he ain't doin' ours no more.

To get to the point, unless you have a really complicated situation, it's worth the time to do your own.

 

[pb4uski]

....So, last year, rather than the usual cursory review, I did a deep dive. Some numbers didn't jive and it turns out the CPA made a $3K error . WTF...I was supposed to catch this? I never got a straight answer but some mumbo jumbo about software hiccup. Needless to say, he ain't doin' ours no more.

To get to the point, unless you have a really complicated situation, it's worth the time to do your own.

And whatever you do, do NOT use the same tax software as TrvlBug's former CPA!

Did they at least prepare the amended return to recover the $3k for you?

 

[Lakedog]

I have always done my own but don't use tax software, just download the forms, complete, print and mail. I use an excel spreadsheet to estimate my fed/state taxes throughout the year, and it has always been very close to the actual.

 

[Lucantes]

Currently my taxes are done by a CPA, but that is because my company pays for it, once we retire then I plan on using TurboTax and do them myself as the tax situation should be very simple (although I am dreading the actual first year of filing when we retire as our tax situation will change mid-year).

 

[GalaxyBoy]

My brother, the CPA, told me years ago never to waste my money on accountants for doing my taxes. That was back in the days before TurboTax when you got your information from a copy of IRS Publication 17 you picked up at the post office.

Now, if I owned a business or something, I might think otherwise. But these days I use HR Block at Home. The only problem I had with the IRS was last year when they thought that having a retirement plan at work meant you couldn't deduct any of a Traditional IRA contribution. Took me months to educate them on their own pub 529 worksheet (that deduction is phased out based on one's income).

 

[TrvlBug]

And whatever you do, do NOT use the same tax software as TrvlBug's former CPA!

Did they at least prepare the amended return to recover the $3k for you?

Ha ha...yes, I'm tempted to ask what software he uses so I can avoid it!

I caught the error during my review of the package prior to finalization and submission to the IRS. In past years, I always did a cursory review, typos, transpositions, and the like, before finalizing and sending off.

I was puzzled as to why he or I didn't catch it by review of the year to year comparison worksheet he always provides with the package. It was the first full year of my retirement as well as the liquidation of one of the K-1 partnerships, so some very different income streams from past years. I can understand why I didn't catch it with the year to year overview, but feel he should have. I have a feeling there is no review at his end.

 

[pb4uski]

No review at his end would be unusual in my experience. Usually a more junior person prepares the return and then it is reviewed by more experienced people and also at least a cursory review by the partner who signs it.

Many moons ago I was that more junior person preparing the return but decided that I preferred corporate accounting to taxes.