Does anyone use an accountant for personal taxes?

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cinghiale
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Re: Does anyone use an accountant for personal taxes?

Post by cinghiale »

snapvestor wrote,

We use a CPA and have for about a decade now. As the complexity of our taxes has increased over the years even in the personal space, I do it for peace of mind and not having to deal with it i.e. my time.
This ^^^^^^^^^^ And one other thing. For reasons I cannot itemize, much less fathom, the US tax code leaves me utterly confounded. I’ve got a good background in quantitative methods and statistics, and have no problem with managing my investments. But taxes? Something cognitively burps, hiccups, sputters, crashes when I try to slog through the incoherent sub-dialect that poses as IRS tax instructions.

To the rescue: a solid, contentious, veteran CPA. Our CPA has done our taxes for 22 years, has never farmed us out to any of his younger employees, and is right there in case of an urgent matter (we have had two of those over the years). His services cost less than a business class upgrade on a medium haul flight. In short, this is a luxury worth paying for. That’s what the money is there for.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell
rich126
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Re: Does anyone use an accountant for personal taxes?

Post by rich126 »

At one time I always did my own taxes, often by hand. The only time I got a letter from the IRS was when I was using tax software and some "stupid" pop up box came up and I dismissed it w/o reading it closely. Apparently my dismissal of that box meant the state refund amount I had entered got deleted and the IRS (somehow) noticed it :oops:

I've used a CPA ever since I had an out of state rental property. I didn't want to figure out how to do returns for multiple states, depreciation, etc. Nothing that tough but just too tedious/uninteresting for me to do so I've paid someone. The current CPA doesn't charge much and it is well worth it in my case. A previous CPA was a bit more costly, and then he had some kind of accident so I moved on.

The more complex your return is, the better to have someone knowledgeable to do it. For most people I don't think they need one.
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vitaflo
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Re: Does anyone use an accountant for personal taxes?

Post by vitaflo »

My favorite check to write every year is to my accountant. But between my wife and I we do own 3 businesses. Paying someone else to handle it it all is well worth the cost.

One thing to keep in mind is tax law changes almost every year, and a good accountant will know all the changes and know if you need to make those changes, how they could benefit you, etc. In the end that's what I'm really paying for more than anything.
neverpanic
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Re: Does anyone use an accountant for personal taxes?

Post by neverpanic »

tj wrote: Mon Nov 23, 2020 10:29 pm
neverpanic wrote: Mon Nov 23, 2020 10:22 pm
2Scoops wrote: Mon Nov 23, 2020 11:49 am I took his advice and I went from paying to a several thousand dollar return.

My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
If you hate paying $250 to save several thousand dollars, there's nothing I can say that will make any sense.
How can $250 generate thousands? What tax credit could the CPA possibly find that you can't find on your own that causes that type of variance?
I don't know what that CPA found for his client, but could the same thing happen in back-to-back years? 4 out of 10? OP got great value for his investment. My CPA's job is to keep up with ever-changing tax code and to know the things I do not know. My only audit was on DIY years. YMMV
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
neverpanic
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Re: Does anyone use an accountant for personal taxes?

Post by neverpanic »

MikeG62 wrote: Tue Nov 24, 2020 8:24 am
Similar thread here from 2019:

viewtopic.php?f=2&t=273595

I'll repeat here what I said in that thread...

Retired finance guy (started my career in public accounting (and passed the CPA exam) as a financial accountant and not tax accountant). I am familiar enough the tax rules and as a result have always done my own taxes.

My father-in-law uses an accountant to do his taxes. Loves her. She's very aggressive in taking deductions. He sees this as wonderful. He's done consulting for a number of years, but for one company out of their office (never done anything from home). Yet his accountant has him convinced that he can take a home office deduction. I've talked to him about this and shown him the rules - it's clear he does not meet the criteria to take a home office deduction. Despite this he continues to take the deduction because his accountant has told him it's ok. I've pointed out the multi-year risk he'd face on audit, but none of that dissuades him.

SIL and BIL use the same accountant. Same thing for them - she claims all sorts of what I would consider highly aggressive/questionable deductions. Like my FIL, they think she is great.

I provide these examples to show that some accountants are super aggressive and their clients (most of whom don't know any better) think they are wonderful because they claim lots of garbage deductions and get them larger refunds - much larger than they'd ever get if filing on their own.
How many audits have these family members been through?
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
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eye.surgeon
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Re: Does anyone use an accountant for personal taxes?

Post by eye.surgeon »

I've used an accountant to do my taxes for the last 10 years or so. With ownership in multiple surgery centers, income from half a dozen sources, and some very complicated partnerships, my federal return is usually 100+ pages long and there is simply no possible way an amateur could do it reliably. It costs me about $1000/year which represents about 0.4% of my tax burden annually.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett
ncbill
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Re: Does anyone use an accountant for personal taxes?

Post by ncbill »

I do since I foolishly bought into some direct oil & gas investments which all generate K-1s, plus supporting documents like depletion schedules, plus having to file taxes in other states.

Right now my federal return alone runs over 60 pages.

Fortunately all the above "investments" were structured to have finite lives so I should back to doing my own taxes...around 2030.:)
Last edited by ncbill on Tue Nov 24, 2020 12:59 pm, edited 1 time in total.
shess
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Re: Does anyone use an accountant for personal taxes?

Post by shess »

MikeG62 wrote: Tue Nov 24, 2020 8:24 am So, OP the answer to your question may be "it depends on who you ask and what they know or don't know about taxes". I think accountants can add value for people who have no idea what they are doing and would likely make mistakes doing their own taxes, despite software like TT that make it virtually idiot proof. They also add value for people who have complex tax situations. Might be able to toss in folks who are just too busy to do it themselves too.

Most others would be fine doing their own taxes as software like TT make it quite easy. I can't imagine having had to do my return the last 20 years by hand (which I did for the first ten years of my career). The software makes life so much easier.
"Virtually idiot proof"? I routinely hit points where TurboTax tells me "OK, now you freestyle for awhile", like with foreign tax credit or AMT or distributions from a 529. It's frustrating, because TurboTax often obscures how things connect together rather than making it more transparent. When I first started using it, I'm pretty sure you could click through hyperlink style from a calculated line to the source materials, so when I noticed something going awry I could click through and see where it started and fix it.

It's possible I'm a new and improved idiot.
shess
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Re: Does anyone use an accountant for personal taxes?

Post by shess »

tj wrote: Tue Nov 24, 2020 9:24 am
deltaneutral83 wrote: Tue Nov 24, 2020 9:22 am Everyone's situation is customized. A w2, no taxable brokerage account, and just an ordinary checking account; tax software can have it done in 30 minutes. High earner with several sources of income; paying a CPA $200 an hour to A) complete the tax return and B) a go between if you're ever audited might be the best money you've ever spent with a CPA who is intimately familiar with your taxes. I also don't look at money spent for services as a pride thing like many others do here. It's a trade off between money and time IMO. Moreover, for things of this caliber (tax preparation), one error can cost an egregious amount for many and CPA is a tougher designation than say, an auto mechanic. Off topic, but I'm kind of surprised at HNW/high earner BH's who do their own taxes but refuse to buy and sell their own car(s) from anyone other than a new car dealership. Always interesting to me to see the different views on the exchange of money for time, while factoring the complexity of the task at hand.
I can't believe that a CPA would include audit representation in the preparation fees.
Mine doesn't, but I'm not super interested in going into an audit with someone who I just met last month and whose entire background with my taxes is a copy of past returns I filed. At least with a person I've worked with for a number of years, I have SOME idea of their abilities and whether I like working with them.
andypanda
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Re: Does anyone use an accountant for personal taxes?

Post by andypanda »

andypanda wrote: ↑Tue Nov 24, 2020 11:48 am
I tried paying quarterly estimated once and decided to just go straight to safe harbor from here on out.
_______________________________

"The difference between the safe harbor amount and optimal amount for many people is not enough to worry about. With low interest rates, even if you overshoot, the opportunity cost is low."

True, but after that one year of having to remember to write estimated tax checks of about $9k every 3 months or so I decided I'd rather pay up front and only have to be bothered once a year.
___________________

Now if I could only get Medicare/IRS to get IRMAA on the April 15th schedule I wouldn't have to call them every December to see what they did this time. This year they sent me a letter that said they have reviewed my 2019 taxes and that I/we would be paying 2019 premiums of $xxx.xx for Part B and 2019 premiums of $xxx.xx for Part D (even though I don't have Part D Medicare they charge me the IRMAA add-on anyway.)
I called and was told, "It says 2019 premiums? Well that's not right."

Me: Is it retroactive to 2019?
Them: I don't think so.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

neverpanic wrote: Tue Nov 24, 2020 11:24 am
tj wrote: Mon Nov 23, 2020 10:29 pm
neverpanic wrote: Mon Nov 23, 2020 10:22 pm
2Scoops wrote: Mon Nov 23, 2020 11:49 am I took his advice and I went from paying to a several thousand dollar return.

My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
If you hate paying $250 to save several thousand dollars, there's nothing I can say that will make any sense.
How can $250 generate thousands? What tax credit could the CPA possibly find that you can't find on your own that causes that type of variance?
I don't know what that CPA found for his client, but could the same thing happen in back-to-back years? 4 out of 10? OP got great value for his investment. My CPA's job is to keep up with ever-changing tax code and to know the things I do not know. My only audit was on DIY years. YMMV
Whether he got value or not will depends on if the adjustments the CPA made were correct, IF he gets audited.

The person on the hook to pay the past due taxes isn't going to be the professional. You would think that if they are a CPA they have more credibility and produce more accurate return, but if you have a simple tax return, you really should understand what the preparer is doing and if it's something that you feel comfortable with vs. just passing the buck and pleading ignorance.
Last edited by tj on Tue Nov 24, 2020 2:10 pm, edited 1 time in total.
MikeG62
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Re: Does anyone use an accountant for personal taxes?

Post by MikeG62 »

neverpanic wrote: Tue Nov 24, 2020 11:30 am
MikeG62 wrote: Tue Nov 24, 2020 8:24 am
Similar thread here from 2019:

viewtopic.php?f=2&t=273595

I'll repeat here what I said in that thread...

Retired finance guy (started my career in public accounting (and passed the CPA exam) as a financial accountant and not tax accountant). I am familiar enough the tax rules and as a result have always done my own taxes.

My father-in-law uses an accountant to do his taxes. Loves her. She's very aggressive in taking deductions. He sees this as wonderful. He's done consulting for a number of years, but for one company out of their office (never done anything from home). Yet his accountant has him convinced that he can take a home office deduction. I've talked to him about this and shown him the rules - it's clear he does not meet the criteria to take a home office deduction. Despite this he continues to take the deduction because his accountant has told him it's ok. I've pointed out the multi-year risk he'd face on audit, but none of that dissuades him.

SIL and BIL use the same accountant. Same thing for them - she claims all sorts of what I would consider highly aggressive/questionable deductions. Like my FIL, they think she is great.

I provide these examples to show that some accountants are super aggressive and their clients (most of whom don't know any better) think they are wonderful because they claim lots of garbage deductions and get them larger refunds - much larger than they'd ever get if filing on their own.
How many audits have these family members been through?
None, yet. But that does not mean there is no exposure. And if they do get audited and the deduction is denied (which it almost assuredly will be) how many years will the IRS go back to audit from there?

I am all for taking a position, where one has a solid basis to support it. However, taking a deduction where one does not meet the criteria to qualify for the deduction seems inappropriate to me. In my FIL's defense, although he has seen the rules in this area, his view is my accountant says it's ok.
Real Knowledge Comes Only From Experience
jerrysmith
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Re: Does anyone use an accountant for personal taxes?

Post by jerrysmith »

We do, not particularly high earners but we've used the same firm and the cost is very reasonable.
Quick turnaround and I don't have to worry about it. 100% worth it.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

MikeG62 wrote: Tue Nov 24, 2020 2:29 pm
neverpanic wrote: Tue Nov 24, 2020 11:30 am
MikeG62 wrote: Tue Nov 24, 2020 8:24 am
Similar thread here from 2019:

viewtopic.php?f=2&t=273595

I'll repeat here what I said in that thread...

Retired finance guy (started my career in public accounting (and passed the CPA exam) as a financial accountant and not tax accountant). I am familiar enough the tax rules and as a result have always done my own taxes.

My father-in-law uses an accountant to do his taxes. Loves her. She's very aggressive in taking deductions. He sees this as wonderful. He's done consulting for a number of years, but for one company out of their office (never done anything from home). Yet his accountant has him convinced that he can take a home office deduction. I've talked to him about this and shown him the rules - it's clear he does not meet the criteria to take a home office deduction. Despite this he continues to take the deduction because his accountant has told him it's ok. I've pointed out the multi-year risk he'd face on audit, but none of that dissuades him.

SIL and BIL use the same accountant. Same thing for them - she claims all sorts of what I would consider highly aggressive/questionable deductions. Like my FIL, they think she is great.

I provide these examples to show that some accountants are super aggressive and their clients (most of whom don't know any better) think they are wonderful because they claim lots of garbage deductions and get them larger refunds - much larger than they'd ever get if filing on their own.
How many audits have these family members been through?
None, yet. But that does not mean there is no exposure. And if they do get audited and the deduction is denied (which it almost assuredly will be) how many years will the IRS go back to audit from there?

I am all for taking a position, where one has a solid basis to support it. However, taking a deduction where one does not meet the criteria to qualify for the deduction seems inappropriate to me. In my FIL's defense, although he has seen the rules in this area, his view is my accountant says it's ok.
It looks like they can go back as far as they want if there is determined to be fraud.

https://www.irs.gov/businesses/small-bu ... 0deduction.

Period of Limitations that apply to income tax returns
1.) Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
2.) Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
3.) Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4.) Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5.) Keep records indefinitely if you do not file a return.
6.) Keep records indefinitely if you file a fraudulent return.
7.) Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
MikeG62
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Re: Does anyone use an accountant for personal taxes?

Post by MikeG62 »

tj wrote: Tue Nov 24, 2020 3:05 pm
MikeG62 wrote: Tue Nov 24, 2020 2:29 pm
neverpanic wrote: Tue Nov 24, 2020 11:30 am
MikeG62 wrote: Tue Nov 24, 2020 8:24 am
Similar thread here from 2019:

viewtopic.php?f=2&t=273595

I'll repeat here what I said in that thread...

Retired finance guy (started my career in public accounting (and passed the CPA exam) as a financial accountant and not tax accountant). I am familiar enough the tax rules and as a result have always done my own taxes.

My father-in-law uses an accountant to do his taxes. Loves her. She's very aggressive in taking deductions. He sees this as wonderful. He's done consulting for a number of years, but for one company out of their office (never done anything from home). Yet his accountant has him convinced that he can take a home office deduction. I've talked to him about this and shown him the rules - it's clear he does not meet the criteria to take a home office deduction. Despite this he continues to take the deduction because his accountant has told him it's ok. I've pointed out the multi-year risk he'd face on audit, but none of that dissuades him.

SIL and BIL use the same accountant. Same thing for them - she claims all sorts of what I would consider highly aggressive/questionable deductions. Like my FIL, they think she is great.

I provide these examples to show that some accountants are super aggressive and their clients (most of whom don't know any better) think they are wonderful because they claim lots of garbage deductions and get them larger refunds - much larger than they'd ever get if filing on their own.
How many audits have these family members been through?
None, yet. But that does not mean there is no exposure. And if they do get audited and the deduction is denied (which it almost assuredly will be) how many years will the IRS go back to audit from there?

I am all for taking a position, where one has a solid basis to support it. However, taking a deduction where one does not meet the criteria to qualify for the deduction seems inappropriate to me. In my FIL's defense, although he has seen the rules in this area, his view is my accountant says it's ok.
It looks like they can go back as far as they want if there is determined to be fraud.

https://www.irs.gov/businesses/small-bu ... 0deduction.

Period of Limitations that apply to income tax returns
1.) Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
2.) Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
3.) Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4.) Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5.) Keep records indefinitely if you do not file a return.
6.) Keep records indefinitely if you file a fraudulent return.
7.) Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
And a good reason not to take a position that has no prayer of even passing the red face test.
Real Knowledge Comes Only From Experience
Osterix
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Re: Does anyone use an accountant for personal taxes?

Post by Osterix »

I used TurboTax for about 6 years for my spouse and myself when we had only W2 income. Even with a simple return, it took hours of my time because I would triple check for mistakes. Now that I am an indecent contractor with an S-Corp, I gladly pay the $3,950 per year to have both personal and business tax returns done. I have several Zoom calls yearly as they are based in another state. They are quick to reply to my questions via email. It is money well spent to make sure my monthly EFTPS is paid and that they accurately estimate my quarterly taxes.

My worst grade in college was Intro to Financial Accounting. God didn’t give me the gift of numbers.
Dead Man Walking
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Re: Does anyone use an accountant for personal taxes?

Post by Dead Man Walking »

Did our taxes manually for over 50 years. When Congress “simplified” the tax code a couple of years ago, I decided to use an accountant due to my advanced age and my wife’s ignorance of the process. It sure is nice to drop off the data at his office and pick up the completed forms in several days. Furthermore, my wife will have a relationship with a local accountant when I die.

DMW
rjbraun
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Re: Does anyone use an accountant for personal taxes?

Post by rjbraun »

I have off and on but became interested to hire someone these past few years if I could find the *right* person. A small business owner I know highly recommended her tax preparer. We went with her for our 2019 taxes and hope to continue for the foreseeable future.

To me, the benefits are to save time and avoid doing something I don't enjoy nor feel particularly interested in or skilled at. What I like about this particular preparer is that she is experienced and the sole proprietor, but also accessible. So, my hope is that after the dust settles from tax season . . . oh, that would be now :shock: , we can meet with her for tax planning or to discuss other questions we may have. Then, over time maybe we will find that we don't need her and can take care of things on our own. So, the idea was to find someone to be able to bounce ideas off of and to learn from, in addition to just having someone to prepare our tax returns.

She is an "enrolled agent", not something I actively sought but which seems like an added benefit. That said, I would be interested to hear from knowledgeable folks who may have a different view.
jebmke
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Re: Does anyone use an accountant for personal taxes?

Post by jebmke »

Dead Man Walking wrote: Tue Nov 24, 2020 3:18 pm Did our taxes manually for over 50 years. When Congress “simplified” the tax code a couple of years ago, I decided to use an accountant due to my advanced age and my wife’s ignorance of the process. It sure is nice to drop off the data at his office and pick up the completed forms in several days. Furthermore, my wife will have a relationship with a local accountant when I die.

DMW
That is important. I do ours (and many others in TaxAide program). But I have already identified a firm to shift to if I become incapacitated or croak.
When you discover that you are riding a dead horse, the best strategy is to dismount.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

rjbraun wrote: Tue Nov 24, 2020 3:42 pm I have off and on but became interested to hire someone these past few years if I could find the *right* person. A small business owner I know highly recommended her tax preparer. We went with her for our 2019 taxes and hope to continue for the foreseeable future.

To me, the benefits are to save time and avoid doing something I don't enjoy nor feel particularly interested in or skilled at. What I like about this particular preparer is that she is experienced and the sole proprietor, but also accessible. So, my hope is that after the dust settles from tax season . . . oh, that would be now :shock: , we can meet with her for tax planning or to discuss other questions we may have. Then, over time maybe we will find that we don't need her and can take care of things on our own. So, the idea was to find someone to be able to bounce ideas off of and to learn from, in addition to just having someone to prepare our tax returns.

She is an "enrolled agent", not something I actively sought but which seems like an added benefit. That said, I would be interested to hear from knowledgeable folks who may have a different view.
An enrolled agent does suggest some credibility. They must have passed a test or worked as one of the following for the IRS:

five years in one of these taxpayer-facing field positions: appeals officer, special agent, revenue officer, revenue agent, tax specialist, tax law specialist, or settlement officer. Three of the five qualifying years must have occurred within the last five years prior to separation from the IRS.

https://www.irs.gov/tax-professionals/e ... lled-agent
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dziuniek
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Re: Does anyone use an accountant for personal taxes?

Post by dziuniek »

Yup.

Look at the schedules where you see a difference between your return and your CPA's.

In turbo tax, up-top, you can switch between forms and questions. So go to schedules where you're off* and see what questions you might be answering incorrectly.
rjbraun
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Re: Does anyone use an accountant for personal taxes?

Post by rjbraun »

tj wrote: Tue Nov 24, 2020 3:51 pm
rjbraun wrote: Tue Nov 24, 2020 3:42 pm I have off and on but became interested to hire someone these past few years if I could find the *right* person. A small business owner I know highly recommended her tax preparer. We went with her for our 2019 taxes and hope to continue for the foreseeable future.

To me, the benefits are to save time and avoid doing something I don't enjoy nor feel particularly interested in or skilled at. What I like about this particular preparer is that she is experienced and the sole proprietor, but also accessible. So, my hope is that after the dust settles from tax season . . . oh, that would be now :shock: , we can meet with her for tax planning or to discuss other questions we may have. Then, over time maybe we will find that we don't need her and can take care of things on our own. So, the idea was to find someone to be able to bounce ideas off of and to learn from, in addition to just having someone to prepare our tax returns.

She is an "enrolled agent", not something I actively sought but which seems like an added benefit. That said, I would be interested to hear from knowledgeable folks who may have a different view.
An enrolled agent does suggest some credibility. They must have passed a test or worked as one of the following for the IRS:

five years in one of these taxpayer-facing field positions: appeals officer, special agent, revenue officer, revenue agent, tax specialist, tax law specialist, or settlement officer. Three of the five qualifying years must have occurred within the last five years prior to separation from the IRS.

https://www.irs.gov/tax-professionals/e ... lled-agent
In my case, I believe she passed a test. I'm not aware that she ever worked for the IRS. It sounds good that she could represent one before the IRS, something I hope to never need, of course. Also, adherence to ethical standards and the completion of 72 hours of continuing education courses every three years would seem desirable.

https://www.irs.gov/tax-professionals/e ... nformation
michaelingp
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Re: Does anyone use an accountant for personal taxes?

Post by michaelingp »

What I liked about having an accountant do my personal taxes is he had perspective as to what was important and what wasn't. I remember I was going crazy trying to come up with an exact figure. He said, "Mike, it's not important. You don't know the exact number, but neither does the IRS. Let's just put in something reasonable." I could never do that with TurboTax. That said, I have worked relentlessly to make my financial life as simple as possible, to the point where it would be crazy not to just use TurboTax. I get a bunch of forms and I type the numbers into TurboTax. The days of having to determine if an investment is "at risk" or to perform a complex basis computation are long over for me.

One recurring theme I hear in these posts is "We've used the same person for years." I wonder how difficult it would be to find somebody these days. My neighbor is a CPA and more than 10 years ago he told me he stopped doing personal returns, there was just no money in it since TurboTax and other tax software came along.
afan
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Re: Does anyone use an accountant for personal taxes?

Post by afan »

If you have a simple return, you are paying the accountant for convenience, not for expertise. If you have more complicated taxes then hiring a pro might save you from having to learn and keep up with our constantly changing tax code.

For an estate we settled years ago, we used an enrolled agent, rather than an accountant or tax lawyer. The attorney who did the legal work and was also CPA insisted on checking the return. He said that EAs were fine for income taxes but that they did not know estate returns. Well, this one taught courses on estate tax returns and got everything right, at least according to the JD, CPA.

EAs are generally a lot cheaper than accountants. Unlike accountants, they focus all their attention on taxes and have to do 72 hours of continuing education per 3-year renewal cycle, specifically about on taxes. The CE has to be from an IRS-approved vendor.

I don't have a business, so I don't need an accountant to run it. If I needed someone to do my taxes, I would have the EA do them.
Last edited by afan on Wed Nov 25, 2020 1:31 pm, edited 1 time in total.
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Gnirk
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Re: Does anyone use an accountant for personal taxes?

Post by Gnirk »

Yes, we have used a CPA every year. I would use Turbotax to do our taxes, but my DH is more comfortable with the CPA he used both personally and for his business, doing our taxes. Gosh, I wouldn't charge him near as much! :D
checkyourmath
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Re: Does anyone use an accountant for personal taxes?

Post by checkyourmath »

Five things I have don't use
1. Accountants
2. Mechanics
3. Financial Advisors
4. Hair stylist
5. Realtors

My hair average depending upon my stylist's mood. I saw a video in the 90s how to cut your hair on MTV and I enjoyed doing it for almost twenty years. The last couple years my mom started cutting my hair again. It seems like a lot of work to find someone, get your information together, and pay them when you can fill your own taxes in 45 minutes. I know I am generaliz. Last year taxes were a nightmare for me but most of the time it is pretty quick.
JBTX
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Re: Does anyone use an accountant for personal taxes?

Post by JBTX »

I am actually a cpa but I don't practice so I'm not an expert. I always use turbotax, even when self employed. There were times I probably could have saved money with a cpa when self employed by paying myself salary, etc, but I decided not to bother.

I am curious for those instances where a cpa saved money vs turbotax what caused the difference? That is something I'd want to know.
Cruise
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Re: Does anyone use an accountant for personal taxes?

Post by Cruise »

afan wrote: Tue Nov 24, 2020 6:59 pm If I needed someone to do my taxes, I would have the EA do them.
I'm curious if people who have the view that an EA is a suitable substitute for a CPA also feel that a Physician's Assistant or Nurse Practitioner is a suitable replacement for an Internist, Anesthesiologist, Orthopedic specialist, etc? Would one want their loved ones preferably treated by a licensed counselor with two years of graduate education vs a doctor-level provider?

While I know that competency involves many factors like experience, conscientiousness, ethics, and sincerity, all things being equal, I want the person with the most amount of training doing my brain surgery and my taxes.
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dziuniek
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Re: Does anyone use an accountant for personal taxes?

Post by dziuniek »

Cruise wrote: Tue Nov 24, 2020 8:19 pm
afan wrote: Tue Nov 24, 2020 6:59 pm If I needed someone to do my taxes, I would have the EA do them.
I'm curious if people who have the view that an EA is a suitable substitute for a CPA also feel that a Physician's Assistant or Nurse Practitioner is a suitable replacement for an Internist, Anesthesiologist, Orthopedic specialist, etc? Would one want their loved ones preferably treated by a licensed counselor with two years of graduate education vs a doctor-level provider?

While I know that competency involves many factors like experience, conscientiousness, ethics, and sincerity, all things being equal, I want the person with the most amount of training doing my brain surgery and my taxes.
You're assuming that person is a CPA. Not necessarily the case.
I am not saying you're necessarily wrong, but it's not always the case.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

Cruise wrote: Tue Nov 24, 2020 8:19 pm
afan wrote: Tue Nov 24, 2020 6:59 pm If I needed someone to do my taxes, I would have the EA do them.
I'm curious if people who have the view that an EA is a suitable substitute for a CPA also feel that a Physician's Assistant or Nurse Practitioner is a suitable replacement for an Internist, Anesthesiologist, Orthopedic specialist, etc? Would one want their loved ones preferably treated by a licensed counselor with two years of graduate education vs a doctor-level provider?

While I know that competency involves many factors like experience, conscientiousness, ethics, and sincerity, all things being equal, I want the person with the most amount of training doing my brain surgery and my taxes.
I don't think it's a fair comparison. Taxes are just a tiny fraction of what CPA's have to learn. Many CPA's don't touch taxes. There's no way for you to know if your CPA is more tax educated than an EA. unless they have a Masters in Taxation or something.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

JBTX wrote: Tue Nov 24, 2020 8:07 pm I am curious for those instances where a cpa saved money vs turbotax what caused the difference? That is something I'd want to know.
This is something I'd like to know. Without seeing people's tax returns, they make you think CPA's can find these magical deduction loopholes, but I don't see how that could apply to a simple individual 1040 return.
Cruise
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Re: Does anyone use an accountant for personal taxes?

Post by Cruise »

dziuniek wrote: Tue Nov 24, 2020 8:23 pm
Cruise wrote: Tue Nov 24, 2020 8:19 pm
afan wrote: Tue Nov 24, 2020 6:59 pm If I needed someone to do my taxes, I would have the EA do them.
I'm curious if people who have the view that an EA is a suitable substitute for a CPA also feel that a Physician's Assistant or Nurse Practitioner is a suitable replacement for an Internist, Anesthesiologist, Orthopedic specialist, etc? Would one want their loved ones preferably treated by a licensed counselor with two years of graduate education vs a doctor-level provider?

While I know that competency involves many factors like experience, conscientiousness, ethics, and sincerity, all things being equal, I want the person with the most amount of training doing my brain surgery and my taxes.
You're assuming that person is a CPA. Not necessarily the case.
I am not saying you're necessarily wrong, but it's not always the case.
Valid point. That is why I said "all things being equal" with respect to experience, etc.
tj wrote: Tue Nov 24, 2020 8:26 pm
Cruise wrote: Tue Nov 24, 2020 8:19 pm
afan wrote: Tue Nov 24, 2020 6:59 pm If I needed someone to do my taxes, I would have the EA do them.
I'm curious if people who have the view that an EA is a suitable substitute for a CPA also feel that a Physician's Assistant or Nurse Practitioner is a suitable replacement for an Internist, Anesthesiologist, Orthopedic specialist, etc? Would one want their loved ones preferably treated by a licensed counselor with two years of graduate education vs a doctor-level provider?

While I know that competency involves many factors like experience, conscientiousness, ethics, and sincerity, all things being equal, I want the person with the most amount of training doing my brain surgery and my taxes.
I don't think it's a fair comparison. Taxes are just a tiny fraction of what CPA's have to learn. Many CPA's don't touch taxes. There's no way for you to know if your CPA is more tax educated than an EA. unless they have a Masters in Taxation or something.
Perhaps. I would only take my taxes to a CPA that specialized in this, just like I would not have my joint replacement done by someone who just did a few a year. In fact, my CPA ran the Tax Department of a Big 5 firm before opening up her own practice years ago.
tj
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Re: Does anyone use an accountant for personal taxes?

Post by tj »

Cruise wrote: Tue Nov 24, 2020 8:34 pm
dziuniek wrote: Tue Nov 24, 2020 8:23 pm
Cruise wrote: Tue Nov 24, 2020 8:19 pm
afan wrote: Tue Nov 24, 2020 6:59 pm If I needed someone to do my taxes, I would have the EA do them.
I'm curious if people who have the view that an EA is a suitable substitute for a CPA also feel that a Physician's Assistant or Nurse Practitioner is a suitable replacement for an Internist, Anesthesiologist, Orthopedic specialist, etc? Would one want their loved ones preferably treated by a licensed counselor with two years of graduate education vs a doctor-level provider?

While I know that competency involves many factors like experience, conscientiousness, ethics, and sincerity, all things being equal, I want the person with the most amount of training doing my brain surgery and my taxes.
You're assuming that person is a CPA. Not necessarily the case.
I am not saying you're necessarily wrong, but it's not always the case.
Valid point. That is why I said "all things being equal" with respect to experience, etc.
tj wrote: Tue Nov 24, 2020 8:26 pm
Cruise wrote: Tue Nov 24, 2020 8:19 pm
afan wrote: Tue Nov 24, 2020 6:59 pm If I needed someone to do my taxes, I would have the EA do them.
I'm curious if people who have the view that an EA is a suitable substitute for a CPA also feel that a Physician's Assistant or Nurse Practitioner is a suitable replacement for an Internist, Anesthesiologist, Orthopedic specialist, etc? Would one want their loved ones preferably treated by a licensed counselor with two years of graduate education vs a doctor-level provider?

While I know that competency involves many factors like experience, conscientiousness, ethics, and sincerity, all things being equal, I want the person with the most amount of training doing my brain surgery and my taxes.
I don't think it's a fair comparison. Taxes are just a tiny fraction of what CPA's have to learn. Many CPA's don't touch taxes. There's no way for you to know if your CPA is more tax educated than an EA. unless they have a Masters in Taxation or something.
Perhaps. I would only take my taxes to a CPA that specialized in this, just like I would not have my joint replacement done by someone who just did a few a year. In fact, my CPA ran the Tax Department of a Big 5 firm before opening up her own practice years ago.
I don't think there would be any risk using a CPA with those credentials. I don't think most people's accountant have such credentials.
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Mullins
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Re: Does anyone use an accountant for personal taxes?

Post by Mullins »

A CPA who can pull thousands in savings out of the air where your numbers wouldn't using tax software - might be inputting numbers and doing a few things they figure you can get away with.
neverpanic
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Re: Does anyone use an accountant for personal taxes?

Post by neverpanic »

MikeG62 wrote: Tue Nov 24, 2020 2:29 pm
neverpanic wrote: Tue Nov 24, 2020 11:30 am
MikeG62 wrote: Tue Nov 24, 2020 8:24 am
Similar thread here from 2019:

viewtopic.php?f=2&t=273595

I'll repeat here what I said in that thread...

Retired finance guy (started my career in public accounting (and passed the CPA exam) as a financial accountant and not tax accountant). I am familiar enough the tax rules and as a result have always done my own taxes.

My father-in-law uses an accountant to do his taxes. Loves her. She's very aggressive in taking deductions. He sees this as wonderful. He's done consulting for a number of years, but for one company out of their office (never done anything from home). Yet his accountant has him convinced that he can take a home office deduction. I've talked to him about this and shown him the rules - it's clear he does not meet the criteria to take a home office deduction. Despite this he continues to take the deduction because his accountant has told him it's ok. I've pointed out the multi-year risk he'd face on audit, but none of that dissuades him.

SIL and BIL use the same accountant. Same thing for them - she claims all sorts of what I would consider highly aggressive/questionable deductions. Like my FIL, they think she is great.

I provide these examples to show that some accountants are super aggressive and their clients (most of whom don't know any better) think they are wonderful because they claim lots of garbage deductions and get them larger refunds - much larger than they'd ever get if filing on their own.
How many audits have these family members been through?
None, yet. But that does not mean there is no exposure. And if they do get audited and the deduction is denied (which it almost assuredly will be) how many years will the IRS go back to audit from there?

I am all for taking a position, where one has a solid basis to support it. However, taking a deduction where one does not meet the criteria to qualify for the deduction seems inappropriate to me. In my FIL's defense, although he has seen the rules in this area, his view is my accountant says it's ok.
It depends, but the IRS probably won't go back more than 1-2 years on a personal return. Most audits are for a single year. If the home office deduction is the only thing wrong with FIL's return, the worst-case scenario involves having the tax liability increased by the appropriate amount, plus interest and then there may be an inaccuracy penalty added. Overall, it's going to be a pretty small number - I assume he is not claiming a $25,000 home office deduction - so he's taken the advice of his tax professional and decided it's worth the risk.

Anecdotally, your family has years and years of audit-free living. A questionable home office deduction is a common audit trigger - that is true - but he's never seen it happen, so they are going to continue on that path until there is a reason not to.

Different CPAs interpret the tax code differently. If one is ever audited, an audit defense comes down to applicable law and substantiation of the taxpayer's claim that makes sense. Documentation is the key.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
shess
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Re: Does anyone use an accountant for personal taxes?

Post by shess »

tj wrote: Tue Nov 24, 2020 8:28 pm
JBTX wrote: Tue Nov 24, 2020 8:07 pm I am curious for those instances where a cpa saved money vs turbotax what caused the difference? That is something I'd want to know.
This is something I'd like to know. Without seeing people's tax returns, they make you think CPA's can find these magical deduction loopholes, but I don't see how that could apply to a simple individual 1040 return.
I don't know why there have to be magical deduction loopholes or anything. My tax preparer usually comes in a few hundred bucks to the positive over my pencil-estimate numbers, which is less than 1% of my overall tax bill. That usually offsets the few hundred bucks I pay him to dot all the i's and cross all the t's. Is it because he interpreted Form 1116 differently than I did, or because he said at our income level deducting our Goodwill donation at a value 2x what we suggested was perfectly reasonable? Gods, I don't care, and if the IRS wants to devote an agent to spending a few hours with us tracking down a $500 discrepancy on a $125k tax bill, go for it.

I wouldn't call it a magical loophole unless it's saving me a few tens of thousands off my taxes, and I honestly don't feel like most of the posts on this thread have been talking about ANYTHING like that.
Count of Notre Dame
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Re: Does anyone use an accountant for personal taxes?

Post by Count of Notre Dame »

I don't want to be accustatory, but in my own personal experience there are some tax preparers who cheat on taxes for their clients. I reviewed my brother's and mother in law's returns and they both had tax deductions that were not valid. In my brother's words he is fine with it since the tax preparer is taking the chance. I told him to be accountable for his own return and know what's on it.
afan
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Re: Does anyone use an accountant for personal taxes?

Post by afan »

Cruise wrote: Tue Nov 24, 2020 8:19 pm
afan wrote: Tue Nov 24, 2020 6:59 pm If I needed someone to do my taxes, I would have the EA do them.
I'm curious if people who have the view that an EA is a suitable substitute for a CPA also feel that a Physician's Assistant or Nurse Practitioner is a suitable replacement for an Internist, Anesthesiologist, Orthopedic specialist, etc? Would one want their loved ones preferably treated by a licensed counselor with two years of graduate education vs a doctor-level provider?

While I know that competency involves many factors like experience, conscientiousness, ethics, and sincerity, all things being equal, I want the person with the most amount of training doing my brain surgery and my taxes.
1. Not a fair comparison. This assumes that a CPA has more qualifications than an EA, which I do not believe is true. SOME CPAs are experts at complex business and personal tax issues. These charge way more than the prices people have been citing and would be a total waste of money for someone who could do the taxes themselves with Turbotax.

Unlike CPAs, who can do many things, many of which have nothing to do with taxes, EAs are trained, tested and required to do extensive continuing education ON TAXES. This is way MORE than you would get with a generalist CPA, who may do some taxes during the season, but also other accounting tasks for much of their time.

2. A nurse practitioner specialist in the field you need could easily know a lot more about how to manage a condition than would a family practitioner, general internist or physician specialist in area removed from your issues. I would not simply assume the MD was better.

3. By no means is everyone who is a CPA an expert in individual taxes. Some people who are CPAs themselves but do not do tax returns professionally have others do their taxes for them for exactly this reason.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
RetiredCSProf
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Re: Does anyone use an accountant for personal taxes?

Post by RetiredCSProf »

I used an accountant twice for personal taxes -- the first time was when I purchased my home and was uncertain about IRS rules for deducting closure costs; the second time was in a year when I had significant medical expenses -- both times were before TurboTax became available.

A few years back, I sold property that I owned jointly with my two siblings. My siblings' CPAs had both incorrectly concluded that we sold the property at a loss -- I pointed out to my sister's CPA that we had neither a loss nor a gain. It was useful having a CPA involved as he served in a neutral role and was better able to explain the IRS rules regarding gain/loss on the sale. OTOH, if I had gone along with the CPA's assessment, I could have "saved" money on my taxes.
neverpanic
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Re: Does anyone use an accountant for personal taxes?

Post by neverpanic »

Count of Notre Dame wrote: Wed Nov 25, 2020 11:58 am I don't want to be accustatory, but in my own personal experience there are some tax preparers who cheat on taxes for their clients. I reviewed my brother's and mother in law's returns and they both had tax deductions that were not valid. In my brother's words he is fine with it since the tax preparer is taking the chance. I told him to be accountable for his own return and know what's on it.
RetiredCSProf wrote: Wed Nov 25, 2020 6:31 pm A few years back, I sold property that I owned jointly with my two siblings. My siblings' CPAs had both incorrectly concluded that we sold the property at a loss -- I pointed out to my sister's CPA that we had neither a loss nor a gain. It was useful having a CPA involved as he served in a neutral role and was better able to explain the IRS rules regarding gain/loss on the sale. OTOH, if I had gone along with the CPA's assessment, I could have "saved" money on my taxes.
Yes, there are tax preparers who play fast-and-loose with the rules. They mostly play around the edges in terms of avoidance, but admittedly, there are some bigtime fraudsters out there engaging in pretty blatant evasion and getting a friendly CPA to sign off on it.

But the second example above is far more common than "cheating". Three CPAs looked at the exact same situation and had 2 completely different interpretations. This happens all the time. It's no different than three MDs looking at the same MRI or three family law attorneys reviewing the same case file and arriving at diametrically opposed conclusions. There's no malfeasance - just a different reading of the pertinent facts and the applicable law. A lot of people mistakenly assume that 100% of IRS rules are clear and unambiguous and that simply is not accurate. The deliberate ambiguity - IMO - gently encourages people to be more compliant than not.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
Tattarrattat
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Re: Does anyone use an accountant for personal taxes?

Post by Tattarrattat »

The vast majority of people don't need an accountant. The more complex your return gets, businesses, real estate, etc, the more a professional may make sense. I did it myself for years, then got intimidated when I had several K-1s and used a CPA. But after seeing him just type my data into his software, I realized he wasn't really adding 750$ of value, so switched back to software.
jodhpur
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Re: Does anyone use an accountant for personal taxes?

Post by jodhpur »

We pay quite a bit ($1k a year I think) for one. He tends to specialize in small businesses (he is one himself). It’s much better than doing it ourselves. Always very engaging. Gives a lot of perspective on taxes, changes, history, estates, charity, retirement, depreciation, financial structure, personal finance etc. It’s one of the more interesting few hours of the year for me. I’ll never do Turbotax or HR Block again.
awval999
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Re: Does anyone use an accountant for personal taxes?

Post by awval999 »

I legitimately enjoy doing my taxes and look forward to using TurboTax annually.

I can’t wait to start a 72t SEPP one day when I FIRE.
Dave55
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Re: Does anyone use an accountant for personal taxes?

Post by Dave55 »

Yes. Use a CPA for the past 40 years.

Dave
AllenSmith
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Re: Does anyone use an accountant for personal taxes?

Post by AllenSmith »

neverpanic wrote: Mon Nov 23, 2020 10:22 pm
2Scoops wrote: Mon Nov 23, 2020 11:49 am I took his advice and I went from paying to a several thousand dollar return.

My CPA’s fees are now around $250 and hate paying that if there is a cheaper alternative.
If you hate paying $250 to save several thousand dollars, there's nothing I can say that will make any sense.
best reply on here!
Daphne122
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Re: Does anyone use an accountant for personal taxes?

Post by Daphne122 »

Up until 4 years ago, I used turbo Tax as my taxes were straightforward and simple. But the last 3 years have been much more complicated, so i use a CPA.
IMO
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Re: Does anyone use an accountant for personal taxes?

Post by IMO »

Count of Notre Dame wrote: Wed Nov 25, 2020 11:58 am I don't want to be accustatory, but in my own personal experience there are some tax preparers who cheat on taxes for their clients. I reviewed my brother's and mother in law's returns and they both had tax deductions that were not valid. In my brother's words he is fine with it since the tax preparer is taking the chance. I told him to be accountable for his own return and know what's on it.
Funny cause I knew a CPA from college and he told me basically he said one can get away with tax deductions that are not valid so long as they were consistent with other aspects of one's tax returns.

I often hear someone mention a deduction that they are taking or advised to take and I have the same that that that is not a valid deduction (from my reading of IRS publications). What people seem to think is that because they were able to get away with a deduction and not audited that somehow that makes it a valid deduction.

In any event, I use Turbo Tax and pay the $50 for legal support if needed on my tax return.
bantam222
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Re: Does anyone use an accountant for personal taxes?

Post by bantam222 »

Ideally you can understand each line on the final tax forms turbo tax spits out. I use to do my taxes manually my first ~5 but finally decided the turbo tax cost was worth the price to save a bit of time.

It is not uncommon for me to go through the turbo tax questions and then have the wrong results spit out into the forms that are actually submitted to IRS. I am able to identify these anomalies and go back through turbo tax and tweak my answers until the outputs align to what I expect.

I highly recommend learning how to do this — also understanding this gives you insight into how to avoid taxes with your actions you perform throughout the year
shess
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Re: Does anyone use an accountant for personal taxes?

Post by shess »

bantam222 wrote: Thu Nov 26, 2020 2:15 am Ideally you can understand each line on the final tax forms turbo tax spits out. I use to do my taxes manually my first ~5 but finally decided the turbo tax cost was worth the price to save a bit of time.

It is not uncommon for me to go through the turbo tax questions and then have the wrong results spit out into the forms that are actually submitted to IRS. I am able to identify these anomalies and go back through turbo tax and tweak my answers until the outputs align to what I expect.

I highly recommend learning how to do this — also understanding this gives you insight into how to avoid taxes with your actions you perform throughout the year
IMHO, this is the dumbest thing about TurboTax. They have everything they need to provide a kind of hypertext tutorial which helps you understand how taxes work. Instead, you generally have to figure it out yourself and "know" which inputs feed into which outputs and where to go to enter them. It's not some sort of mind-bendingly impossible task at all, there aren't THAT many places for things to live, but I find it annoying that they make you do it at all, they know which inputs feed to which outputs. When I first started using TurboTax many years ago, I'm pretty sure that when you double-clicked a field it would take you to a spreadsheet-style summary - and then you could click through items there to go to the point of entry.

I'd dearly love to have the ability to right-click and do a kind of pivot on a field. Like show me a graph of the final results as a function of the value in that field.
fundseeker
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Re: Does anyone use an accountant for personal taxes?

Post by fundseeker »

I'd never pay $250 for someone to do mine, but I have done mine and other family members for years. It can be time consuming, so if you have more productive things to do, maybe you should just pay $250. It was especially time consuming when our children were in college, which got pretty complicated trying to match the school's billing and payment records with the tax years.

But, since you have to gather the info for your CPA, you'd have done most of the work and could give TTax a try next year. Your CPA is definitely not as interested in getting you the biggest refund as you would be. It will be easier after your first year because TTax will populate the relevant information from one year to the next, and you can see a two year comparison and look for are any major changes where you might have messed something up.

I know many people do their taxes online maybe for free, but that seems very risky to me. I prefer to buy the CD and do mine and others offline. So, if you do pay for the software each year, then your net payment to your CPA will be less than $200, so that'd be less painful than paying $250.
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