When to hire someone to do my taxes?

[simplynoir]

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@iced wrote:

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@800who wrote:

Every year I contemplate hiring someone to do my taxes and I'll brain storm it for a short period of time and every time have concluded I can't justify it, I bought a house this year and am now leaning more towards it being justifed (for next year), looking for people to provide input, things to consider when weighing the option of doing them yourself on a turbotax or hiring someone, what kind of expenses should I be considering when comparing to standard deduction. Thanks for all input!

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The short answer is "when they're taking more value in terms of my time to do myself than it does to pay someone." If the time you spend doing them is more valuable than the money it costs to pay someone to do them, it's time to pay someone.

In terms of what that looks like, when I was a simple tax filer (W2 income and some random 1099s here and there), a quick run through with some tax software was sufficient. When you start piling up the 1099s, throw in some K-1s, UTMAs, and light it with random exemptions to deductions and the like, the time sink starts to become apparent. The other factor on top of this is liability -- my tax person does the accuracy-checking and record-keeping, and are liable for the tax preparation and filing. If I'm ever audited or inaccuracies are found, I have their team of accountants and bean counters ready to go to bat.

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Forgot about this. Yeah, CPAs have liability insurance like any professional services and are responsible for any mistakes/irregularities that come whether IRS has questions or does an audit. Makes for a less stressful experience when you have them do the leg work

[ocheosa]

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@simplynoir wrote:

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@SouthJamaica wrote:

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@800who wrote:

Every year I contemplate hiring someone to do my taxes and I'll brain storm it for a short period of time and every time have concluded I can't justify it, I bought a house this year and am now leaning more towards it being justifed (for next year), looking for people to provide input, things to consider when weighing the option of doing them yourself on a turbotax or hiring someone, what kind of expenses should I be considering when comparing to standard deduction. Thanks for all input!

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I think you would do well to have a professional do it, especially when you consider ... a house, self employment, and various new and changing government Covid relief options.

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As a CPA myself this is it here. In a broader sense the tax code/law is always changing with accountants constantly needing to be on top of the new rules/regulations to make sure we're providing the best service. Now, to be fair for a moment here tax software like TurboTax is good enough to get you through the process. Heck, I know accountants who use it themselves so no shame there

I think, though, that if you're looking to take advantage of any itemizations & deductions and have assets that need some long-term planning like trusts, estates, investments, rental properties, etc a professional can do more for you and help set a plan that benefits your situation and can potentialy save money than if you do it yourself

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^^^^^This!! My Grandfather taught us that the two most important relationships outside of family is - your Accountant and Attorney ; Best Advice Ever!! 

[Shooting-For-800]

With interest rates so low, most people are better off with standard deduction.

Turbo Tax can do just about anything needed for a normal tax return.

GL!

[Anonymous]

My advice to OP would be, if it is a concern, to maybe try it for one year and also do it yourself with Turbotax or something.   Then you can find out if there is something that you have overlooked and decide whether it is worth doing in future years.

Now these tax programs are fairly well tuned for "standard" situations, and can certainly deal OK with a house purchase, but it may be worth it for piece of mind.

I've been doing my own for many years, but when my daughter went ex-pat and we had questions about US/UK taxes, we consulted with a professional service (and then did it ourselves, but wanted the confidence!)

[tacpoly]

DH and I have income from regular work, investment (including investment properties in several states), and consulting (with separate individual retirement plans) and we use TurboTax.  We itemize deductions but not aggressive with taking them - we have receipts, as they say.  

The only people I know personally who have accountants and attorneys on retainer have/had money ex-US (and enough money to make it worth it). 

[Save-n-Invest]

My CPA is not on retainer. They are a fee for service fiduciary firm. He is also a CFP but his practice area is tax compliation. He readily admits that he runs my data through a computer to do the tax forms. Expertise is what I depend on. The peace of mind is well worth the fee. The tax compilation is gravy as far as I'm concerned.

The pols keep screwing around with the tax code. There are changes year to year. He is aware of legitimate deductions. I'm not. He cautions me of things that were taken away before I make a transaction that would be a taxable event.

I'm a checkbook mechanic. I don't cut my own hair. A service maintains the lawn and plows the snow. No way I plan to do taxes. There are other things to cut out should I feel the need.  Heck, I'd be willing to forgo dessert before my CPA.

[Anonymous]

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@Save-n-Invest wrote:

My CPA is not on retainer. They are a fee for service fiduciary firm. He is also a CFP but his practice area is tax compliation. He readily admits that he runs my data through a computer to do the tax forms. Expertise is what I depend on. The peace of mind is well worth the fee. The tax compilation is gravy as far as I'm concerned.

The pols keep screwing around with the tax code. There are changes year to year. He is aware of legitimate deductions. I'm not. He cautions me of things that were taken away before I make a transaction that would be a taxable event.

I'm a checkbook mechanic. I don't cut my own hair. A service maintains the lawn and plows the snow. No way I plan to do taxes. There are other things to cut out should I feel the need.  Heck, I'd be willing to forgo dessert before my CPA.

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Yes, there's certainly a place for peace of mind.  If you have a vastly complex tax situation, you need help anyway, but if your situation is more normal, using a tax preparer isn't going to be all that expensive and so can be value for money in that sense.   Plus, they can help you avoid some of the more costly mistakes (such as the 50% penalty for willful FBAR violations)

[Save-n-Invest]

There your go! I didn't know what FBAR or violations of it is. 

The CPA mails out a tax prep questionaire in October each year. I fill in the pages of questions written in dummy, not professional speak.  Documentation of any deductible items are attached per the dummy instructions. Same for income sources. The questionaire is included in the data packet I deliver to the office for tax prep in January or early February of the filing year. 

He calls when the returns are ready for filing. I stop in to sign for electronic filing slip. He reviews things with me and reminds me of anything to be done that tax year. I leave a check to avoid mailing later.

Then we shoot the breeze for a few. This year he asked about the Covid vaccine. Wanted to know about severe allergic responses reported.  His wife was very hesitant. I explained in not-quite-dummy. Same as some experience with shellfish, peanuts or meds etc. He almost slid out of his chair when I told him we managed a few such repsonses in our facility when I was still working. 

Over the years I've referred him to an excellent mechanic. He gave me good info on a dentist when mine retired. It's the type of long term relationship that cannot be quantified. 

He's near retirement age. I dread that. He's a partner so may hang in for a few more. I hope so!

[Anonymous]

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@Save-n-Invest wrote:

There your go! I didn't know what FBAR or violations of it is. 

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Amusingly (or otherwise), after writing about FBAR I thought "Oh, I wonder if my daughter should have filed one"  and checking with her the answer turned out to be "Yes" so we quickly did. 

FBAR is a form for the Dept of Treasury Financial Crimes Enforcement Network (FinCEN)  This is needed for those with foreign accounts which had $10K or more at any point in the tax year.   Not filing by mistake has a $10,000 penalty unless there is a very good excuse.  Willfull not filing has a penalty the greater of $100,000 or 50% of the account, plus criminal penalties averaging 2.5 years in prison.   So, if it applies. well worth doing!

On the site, there are notices reminding you that the due date is still April 15 (i.e. not changed like the other dates) but for those that don't meet the date, there is an automatic extension (no request needed or indeed possible) to Oct 15, which makes me not quite understand what due date really means!

[Save-n-Invest]

@Anonymous , thanks. I googled it before responding. It's just one more reason for me to keep my tax guy onboard .The questionaire asks if the client has/had interst in a foreign bank account. It asks about crypto and other things I don't want to keep up with. You may have just convinced me that my CPA is undercompensated.