I think those rates are in line with what we pay. Most of it is a deductible expense for us since we have a couple of businesses. I'm really happy with our CPA. She answers tax questions for me all year long and rarely charges extra except for tasks that require a lot of calculations. Personally, I gladly pay for the expertise for the taxes and advice throughout the year.
Your Thoughts Pls: Paying for Tax Advice instead of for the Tax Return itself? (LONG)
- Thread starter Amethyst
- Start date
I have always done my own taxes (34 years) which included a rental property for 13 years. I prepared both a federal and CA state return the year I sold my rental property (2004). Technically, I should have been filing CA returns every year (and I knew it) but the penalty for not filing was based on the tax owed and I never owed any taxes because the property was never profitable (until I sold it). I was always conservative and kept good records. No funny business.
I considered having a tax accountant do our return the year of the sale of the CA rental property until I saw the bill for a 45-minute phone consulation (about $300). And that was in the boonies of OH! That got me real motivated to slog through the TaxAct CA return and do lots of reading. I did make a small mistake (under $20) which CA corrected after the return was submitted. That was 5 years ago so I consider the matter closed.
I took H&R Block's 13-week course (twice, about 3 years apart) that prepares folks to work in their stores. It was helpful in building my confidence and teaching me how to do my not-so-simple personal return. The class was about $300 both times but I found enough additional deductions during the first class to pay for the classes a couple times over.
The hardest year will be the first year because you have to load all the historical information, i.e. where is all your depreciation. I have no doubt you can do it! My guess is you will also get a tremendous amount of satisfaction from doing them yourself. Good tax software makes it possible.
Doing a 2008 return yourself and comparing it to what the CPA prepared for you is what I would do. Do they provide you with all the background information that went into you tax return? If not, just ask for it. You paid dearly for it.
Good luck!
P.S. The Fairmark Forum is very, very helpful!
I considered having a tax accountant do our return the year of the sale of the CA rental property until I saw the bill for a 45-minute phone consulation (about $300). And that was in the boonies of OH! That got me real motivated to slog through the TaxAct CA return and do lots of reading. I did make a small mistake (under $20) which CA corrected after the return was submitted. That was 5 years ago so I consider the matter closed.
I took H&R Block's 13-week course (twice, about 3 years apart) that prepares folks to work in their stores. It was helpful in building my confidence and teaching me how to do my not-so-simple personal return. The class was about $300 both times but I found enough additional deductions during the first class to pay for the classes a couple times over.
The hardest year will be the first year because you have to load all the historical information, i.e. where is all your depreciation. I have no doubt you can do it! My guess is you will also get a tremendous amount of satisfaction from doing them yourself. Good tax software makes it possible.
Doing a 2008 return yourself and comparing it to what the CPA prepared for you is what I would do. Do they provide you with all the background information that went into you tax return? If not, just ask for it. You paid dearly for it.
Good luck!
P.S. The Fairmark Forum is very, very helpful!
I've done my taxes for years and many times by hand (no programs). This year will be complex again with living overseas (exemption on federal tax if live overseas more than 330 days), consulting business, military income (subject to all federal taxes). However, have had complex returns before with renting out house while living overseas and also selling said house after living in it - still had to pay capital gains on depreciation....and the state of CA - well, let's just say they have some crazy tax forms.
I consider it part of being a citizen. It allows me to find out exactly what my government is doing and how. Money is one of those subjects the government gets serious about and the tax code is the way you see how serious they are. Yes, it's a pain at times, however, it's also sometimes a pain to find out about all of the initiatives on a ballot - the language and pros and cons. I'm not retired yet, but do take the time to research these things.
I think the more complex situations are some of the farming set-asides, railroad pension (?), in CA, some of the actors and entertainment businesses have some funky rules (good lobbyists, perhaps). If things were more obscure as the above, I might pay someone else, but probably only after I'd tried to do it myself.
So, guess I can't help you with your issue except to pile on the majority bandwagon here and suggest you become a DIY.
I consider it part of being a citizen. It allows me to find out exactly what my government is doing and how. Money is one of those subjects the government gets serious about and the tax code is the way you see how serious they are. Yes, it's a pain at times, however, it's also sometimes a pain to find out about all of the initiatives on a ballot - the language and pros and cons. I'm not retired yet, but do take the time to research these things.
I think the more complex situations are some of the farming set-asides, railroad pension (?), in CA, some of the actors and entertainment businesses have some funky rules (good lobbyists, perhaps). If things were more obscure as the above, I might pay someone else, but probably only after I'd tried to do it myself.
So, guess I can't help you with your issue except to pile on the majority bandwagon here and suggest you become a DIY.
Amethyst - Your situation is not simple, but nothing you mentioned is really all that earth shattering (as others have noted as well). It seems that you are interested in learning how to do your own returns, but feel uncomfortable being on your own...
I think having your CPA "on call" to help you out while filling a return may be tough. It's unlikely he's intimately familiar with all of the nuances of the software you are using and will probably charge quite a bit to figure out how to do whatever software expects. If his practice is hopping he may not even want to be bothered with such a request.
My suggestion? Ask your CPA whether he is willing to schedule a paid consultation to go over your (printed copy of the final) return. This can be a simple consultation or full blown sign off -- make sure you're both clear in terms of what is expected. So, muddle through the return on your own - read all instructions, publications, ask questions (online or call IRS) and use last years return as guidance. Try to "trace" 2008 tax documentation (e.g., 1099s) through the 2008 return. Unless your tax situation changed, the same lines/boxes will be filled out as on the last years return. Check to see what's new this year (irs.gov usually has a summary) and whether any of it applies to you.
When you meet with your CPA you can walk him through the return. Tell him what and how you handled your return (e.g., how/why you ended up with $X tax exclusion for the pension). As a CPA he should have no problem following the trail of the tax documentation through the forms. Having a professional look over your work and confirm your assumptions could be yet another learning experience and may alleviate your discomfort ("I don't know what I am doing and all this may be wrong").
With this approach you are not saving as much $$ as possible this year, but I would write that off as a learning experience. And remember, once you have done it once, next time will be a breeze.
Edit - I am not familiar with TaxAct, does it provide an option to switch to the IRS form view? I have found that sometimes help/explanation available with software is confusing. When that happens I fall back to basic IRS forms and instructions/publications that come with it...
I think having your CPA "on call" to help you out while filling a return may be tough. It's unlikely he's intimately familiar with all of the nuances of the software you are using and will probably charge quite a bit to figure out how to do whatever software expects. If his practice is hopping he may not even want to be bothered with such a request.
My suggestion? Ask your CPA whether he is willing to schedule a paid consultation to go over your (printed copy of the final) return. This can be a simple consultation or full blown sign off -- make sure you're both clear in terms of what is expected. So, muddle through the return on your own - read all instructions, publications, ask questions (online or call IRS) and use last years return as guidance. Try to "trace" 2008 tax documentation (e.g., 1099s) through the 2008 return. Unless your tax situation changed, the same lines/boxes will be filled out as on the last years return. Check to see what's new this year (irs.gov usually has a summary) and whether any of it applies to you.
When you meet with your CPA you can walk him through the return. Tell him what and how you handled your return (e.g., how/why you ended up with $X tax exclusion for the pension). As a CPA he should have no problem following the trail of the tax documentation through the forms. Having a professional look over your work and confirm your assumptions could be yet another learning experience and may alleviate your discomfort ("I don't know what I am doing and all this may be wrong").
With this approach you are not saving as much $$ as possible this year, but I would write that off as a learning experience. And remember, once you have done it once, next time will be a breeze.
Edit - I am not familiar with TaxAct, does it provide an option to switch to the IRS form view? I have found that sometimes help/explanation available with software is confusing. When that happens I fall back to basic IRS forms and instructions/publications that come with it...
jIMOh
Thinks s/he gets paid by the post
Yes, TaxAct does allow IRS forms view and it is very helpful at times.
In May or June, whenever he returns from the vacation he's starting on 16 April...
OP
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Amethyst
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Thanks for your thoughts and help
Thank you, to everyone who took the trouble to respond, and to those who encouraged me to learn how to do the return myself. It was also interesting to hear from folks whose situation is much more complicated than ours.
My ultimate goal is what 2Cor521 described: Go to a CPA with the more arcane questions, and pay for informed answers.
For now, I decided to follow Nords's suggestion to pay $1400+ for a course in the "school of experience." (Aren't we all enrolled in that darn school all the time, anyway?) I dropped off the user-unfriendly, filled-out 2009 tax "organizer" at the CPA's office on Friday. Meanwhile, I finished my mock-up 2009 return in TaxAct and will compare my results when the professional return is done. Along those lines, the suggestion to re-do 2008's return appealed to me, since I learn by doing. Thanks for making me aware that the software for 2008 is still available on-line.
Thanks to all who sent me links to information and software programs. I am checking them out.
The suggestion to cut down on the number of 1099's makes sense, but there's an irony: Selling the securities generates even MORE 1099's!
I also appreciated Deserat's thoughtful point - that there is almost a civic responsibility to understand how our taxes are computed:
Amethyst
Thank you, to everyone who took the trouble to respond, and to those who encouraged me to learn how to do the return myself. It was also interesting to hear from folks whose situation is much more complicated than ours.
My ultimate goal is what 2Cor521 described: Go to a CPA with the more arcane questions, and pay for informed answers.
For now, I decided to follow Nords's suggestion to pay $1400+ for a course in the "school of experience." (Aren't we all enrolled in that darn school all the time, anyway?) I dropped off the user-unfriendly, filled-out 2009 tax "organizer" at the CPA's office on Friday. Meanwhile, I finished my mock-up 2009 return in TaxAct and will compare my results when the professional return is done. Along those lines, the suggestion to re-do 2008's return appealed to me, since I learn by doing. Thanks for making me aware that the software for 2008 is still available on-line.
Thanks to all who sent me links to information and software programs. I am checking them out.
The suggestion to cut down on the number of 1099's makes sense, but there's an irony: Selling the securities generates even MORE 1099's!
On husband's 1099R, that block says UNKNOWN. I hope to figure it out by re-doing 2008's return.
I wouldn't expect him to sign a return that I prepared. As for backing us up, their engagement letter states that they charge an hourly fee for that....so we would be out even more money....still, I guess the firm would "make good" if the error turned out to be theirs.
I agree, that would be a rude, ignorant way to treat another professional. I wouldn't put up with it and I'm sure no CPA would.
I also appreciated Deserat's thoughtful point - that there is almost a civic responsibility to understand how our taxes are computed:
Amethyst
Moemg
Gone but not forgotten
You can call the OPM they will tell you the amount or since you are taking it to the CPA ask them what number they use .
Ask your CPA to direct you to the location on your 2008 paperwork that shows you the taxable amount of your husband's 1099-R. It's already been calculated and documented so it shouldn't be an additional charge to just be directed where to look for the number.
Oops! Looks like someone already told you to do this.
Oops! Looks like someone already told you to do this.
If the taxable amount is really unknown (sometimes it is not on 1099R), you can use the general simplified method on p. 26 of 1040 instructions here
http://www.irs.gov/pub/irs-pdf/i1040gi.pdf
to calculate it. It seems intimidating at first but if you just go line by line and answer the questions, it should lead you to the answer. Basically they use your age/life expectancy and allocate the after tax contributions equally over some time period.
Subtract the annual amount of that from the gross pension proceeds to determine the taxable income. If the pension was just started recently, you'd have to take a proportion of the annual amount.
http://www.irs.gov/pub/irs-pdf/i1040gi.pdf
to calculate it. It seems intimidating at first but if you just go line by line and answer the questions, it should lead you to the answer. Basically they use your age/life expectancy and allocate the after tax contributions equally over some time period.
Subtract the annual amount of that from the gross pension proceeds to determine the taxable income. If the pension was just started recently, you'd have to take a proportion of the annual amount.
Danmar
Thinks s/he gets paid by the post
Interesting thread. I like the idea of "civic duty" in order to understand what the gov't is doing and how. US tax code seems very complicated to me but the software is amazing. I have never paid for tax advice or return prep. Maybe I should- but the fact is I love doing our tax returns. Really. I agree that I have more experience/knowledge than most in this regard and have what is almost a fetish for fanancial matters. But I can't wait to get the slips (many now on line) and input them to the software (called Quicktax in Canada). I keep our returns as simple and conservative as possible-never anything questionnable. Usually, get a pretty big refund due to alimony deduction.
Each year we file returns in two states (Minnesota and Arizona) plus federal returns. We have multiple K-1s, rental property, and multiple 1099s. Our accountant charges about $600. So you might want to shop around.
Alternatively, I suggest a premier edition of tax preparation software. Get last year's too if possible and do last year's returns and see if it matches up with what you accountant did. Plus, it will make it easier to do this year's returns.
Alternatively, I suggest a premier edition of tax preparation software. Get last year's too if possible and do last year's returns and see if it matches up with what you accountant did. Plus, it will make it easier to do this year's returns.
