Benefits of using CPA for taxes

[TreadLightly]

We pay our CPA $800 for our annual returns. I feel like I should be getting stellar service. We "inherited" the CPA as he always did my husband's taxes via his parents until he took over the responsibility. Before this i did Turbo Tax and I was pleased as punch (although my taxes were pretty simple).

This year I found out about the Saver's Credit on this forum. I wrote a note about it in our workbook for our return, and the CPA still didn't apply it (i'll have him fix it, of course). We never got it before, but have had 2 low AGI years. This year we contributed to our IRAs. Unfortunately, it's too late to get the credit for last year because we didn't contribute. I wish the CPA would've mentioned that we'd qualify if we contributed.

A few years ago before we were married, my husband had the CPA file an amended return for some very big vehicle purchase deduction/credit/whatever it was that the CPA missed and he learned about later because his dad had gotten it, but the law had changed by that point so he didn't get it. he paid for the service of the amended return, but still got screwed out of thousands of dollars because of their oversight.

Does a CPA usually extend the information on what credits/special deductions we qualify for? Should I have to find this out on forums, write it in our workbook, then still get it left out of the return? I feel like I'm not getting alot for the money. I spend a ton of time totaling all relevant items and sending everything filled out as applicable in the workbook they send. There should be no looking, guessing or digging for them. I make it really easy. Tax returns have always felt out of reach for me to do on my own, but if I'm paying someone $800 to miss a significant tax credit opportunity, what else are they missing? Should I do it myself? They are a highly respected firm in town. Our in laws are happy, but they don't returns their returns before signing to file.

Am I off base?

[Tachyon]

Sounds like you don't have an accountant. You have a glorified data entriest.
$800 sounds somewhat steep for a data entriest. It sounds somewhat cheap for a true tax-planning consultancy.

[Katietsu]

First of all, I will say I am surprised that you are sending the return back to add the savers credit. The software should automatically calculate and add that credit if you are eligible.

I do not get the impression that very many CPA's and preparers spend much time on proactive tax planning when you just hire them for return preparation. When they do in that setting, I would think it would more commonly focus on a narrow topic suggested by the return.

You should decide if you are getting a serice worth $800 to you.

[seawolf21]

Having a CPA does NOT necessarily mean a person specialize in income taxes.

If you want someone to do your books, go with a CPA. For taxes, you don’t need to hire a CPA nor are they necessarily the best person for the job.

If $800 is only for filing income taxes, then you might as well bring your return to H&R Block and keep the difference.

[Spedward]

I have a CPA (and even work in tax) but I am the last guy you would want preparing your tax return (or any for that matter).

Point being, a CPA does not equate to the right person for the job.

[dodecahedron]

A few years ago before we were married, my husband had the CPA file an amended return for some very big vehicle purchase deduction/credit/whatever it was that the CPA missed and he learned about later because his dad had gotten it, but the law had changed by that point so he didn't get it. he paid for the service of the amended return, but still got screwed out of thousands of dollars because of their oversight.

The professional tax preparers with whom I am familiar know that some mistakes are inevitable and they maintain Errors & Omissions (E&O) professional liability insurance to cover the consequences of their mistakes. The American Institute of CPAs (AICPA) recommends such coverage.

If it is too late to amend the return to correct his mistake, then the CPA should reimburse your husband for the consequences of his error--assuming it was the CPA's error. (Usually tax preparers have their clients complete a questionnaire, which should have asked about the vehicle purchase. If your husband answered that question accurately on the questionnaire and the CPA did not enter it on the tax return, then that's professional error on the CPA's part.)

[Shallowpockets]

Seems like you are doing a lot of work on your taxes. Second guessing the CPA, checking your return. May as well do the whole thing yourself.
Sure, your in laws are happy with this CPA, they never check so they do not even know if all is best on their tax return. They may be missing or have missed some important info that may have saved them some money over the years. They will never know.
If I had to essentially check my tax return, why am I spending $800 for someone to do it?
It is a case of absolute trust in your CPA, otherwise you may as well do it yourself.

[TreadLightly]

Seems like you are doing a lot of work on your taxes. Second guessing the CPA, checking your return. May as well do the whole thing yourself.
Sure, your in laws are happy with this CPA, they never check so they do not even know if all is best on their tax return. They may be missing or have missed some important info that may have saved them some money over the years. They will never know.
If I had to essentially check my tax return, why am I spending $800 for someone to do it?
It is a case of absolute trust in your CPA, otherwise you may as well do it yourself.

Is this something that I would use tax prep software to do? Is this typically as good as using a CPA?

[RudyS]

In your original post you said you used TurboTax and were pleased with it. Why would you not do that again, considering what you have already found out about your CPA?

[TreadLightly]

In your original post you said you used TurboTax and were pleased with it. Why would you not do that again, considering what you have already found out about your CPA?

I thought TurboTax was great for just me. Then again, my taxes were very simple. I always felt like to really do taxes in complex scenarios, you either need a CPA or to surround yourself with stacks of all the right forms and keep up-to-date with all tax law. Does TurboTax really do a good job for "complex" tax returns? Not sure what I mean by complex, just multiple LLCs, retirement accounts, investments, property transfers, etc. When I write that out it seems logical that TurboTax would do just fine...

[BL]

Why not pick up a 2017 tax program (Amazon often has them on sale, maybe after tax deadline) and run through the program with the info you furnished the CPA? Then compare results, and decide if it makes sense. As they say, No one cares about your finances as much as you do. Not sure which level you need for best LLC coverage. Do you get a k-1?

[TreadLightly]

Why not pick up a 2017 tax program (Amazon often has them on sale, maybe after tax deadline) and run through the program with the info you furnished the CPA? Then compare results, and decide if it makes sense. As they say, No one cares about your finances as much as you do. Not sure which level you need for best LLC coverage. Do you get a k-1?

no k-1, we have single member LLCs. i like your idea of seeing how tax software does our taxes once we have the results from a CPA. i'm going to do this!

i'll say this though, i really respect the work of CPAs. i want to be sure that i didn't lump my experiences with my opinion. the CPA preparing our return is different from the senior CPA reviewing our return, familiar with our family's financial situation, and the one contacting me when they have questions. so when i give information to the contact, there may be a break down in going back and fixing other things when updates are made.

[BL]

It does sound like there is value added to simply preparing your taxes here, so that is something to keep in mind. Still, it wouldn't hurt to spend a bit for the proper level program to see how it works and maybe get some clues or play "what if" on some business decisions that may affect taxes. Look at subjects of interest in Publication 17 and other pertinent IRS pubs available online (or maybe can be ordered in print). IRS has a lot of valuable info.

[TreadLightly]

Having a CPA does NOT necessarily mean a person specialize in income taxes.

If you want someone to do your books, go with a CPA. For taxes, you don’t need to hire a CPA nor are they necessarily the best person for the job.

If $800 is only for filing income taxes, then you might as well bring your return to H&R Block and keep the difference.

quite honestly, i never knew this. i always assumed H&R block type thing was "lesser," but good enough if you just want your taxes done legally. i also assumed going to a CPA was the ultimate way to get your taxes done best. if we're not doing anything else with them throughout the year, perhaps we are overdoing it?

EDIT: maybe over-spending and still not getting an income tax specialist. we "inherited" them from father-in-law who moves alot of money and i'm sure has them do the books, so what you're saying makes sense. if we don't use them for book keeping, maybe we should look elsewhere.

[TreadLightly]

It does sound like there is value added to simply preparing your taxes here, so that is something to keep in mind. Still, it wouldn't hurt to spend a bit for the proper level program to see how it works and maybe get some clues or play "what if" on some business decisions that may affect taxes. Look at subjects of interest in Publication 17 and other pertinent IRS pubs available online (or maybe can be ordered in print). IRS has a lot of valuable info.

i like the playing "what if" idea. i love the IRS website, it really is informative. but what i'm most concerned about is that "you don't know what you don't know," and if I happen to fail to read on a subject that I don't know to read on, I could get us in hot water.

honestly the whole "CPA isn't necessarily the best person to do your taxes" idea is rocking my world. so yeah i have a few options now.