I'd changed states over this past year and had paychecks from two companies in two states, so my situation was more complicated than most. Yet I always do my own taxes. The same places you can download all the forms it gives you line by line instructions on what to put or what you can claim or not. People that have far simpler situations than I did this past year it's normally pretty cut and dry. For a lot of people the most complicated thing they would have is itemizing.

A lot of these professionals, if you don't read the rules, you don't know if they screw you out of money. I was reading the rules on North Carolina's D-401 form for how to fill out the D-400 and found an explicitly stated way to reduce a large amount of my N.C. tax liability that was plain to see, not something where I was stretching definitions at all. Friend of mine in contrast in the same situation as I was used a tax preparer that did not notice this, although he said he thankfully hadn't filed yet.

Then there's the bit where if you do get a small tax refund, you just spent most of your refund probably on either H&R Block or TurboTax.

(to clarify: talking individuals or married couples, not businesses)

[Edited on March 10, 2014 at 10:34 PM. Reason : /]

3/10/2014 10:28:47 PM

I can't justify spending $40 or $50 on tax prep with turbotax but I can definitely justify $13 with taxact

3/10/2014 10:36:01 PM

2 states, 2 jobs, relocation gross-up, paid off student loan, home office write off, office supply write-off, and mucho investments

the $400 in errors/deductions that they caught and saved me was well worth the $150 I paid them

3/11/2014 12:28:43 AM

The $30-40 I spend at Turbotax is well worth it in my opinion. It's easy and it's direct deposit. Mine aren't even that complicated (2 states this time and student loans). It comes down to my time is money and paying myself the $30-40 to do it myself I would be working for too damn little compared to my day job so it makes more sense to have a website do it.

3/11/2014 12:49:12 AM

Quote :

"A lot of these professionals, if you don't read the rules, you don't know if they screw you out of money."

Some tax preparers are bad. Some are good. Just like in every other business in the world.

I think it's obvious why people use CPAs. Tax law is hard to understand sometimes and there are a lot of people that get completely lost when talking about finances. Most of them don't have the patience to read line by line instructions or they're worried they'll interpret it wrong and the big scary IRS will come down on them with an iron fist.

I agree with you though - for a lot of the tax returns I do, I wonder why the person just isn't doing it themselves. A W-2 and a 1099 interest statement shouldn't need a professional. I think two of the benefits of using a CPA other than the actual return is that a) they'll have records of your past tax returns and b) you have someone familiar with your taxes and someone with experience in dealing with the IRS if you ever do get a letter from the IRS.

The thing I really don't understand is people that take their taxes somewhere different every single year (H&R Block one year, back to a local firm the next, TurboTax the next, etc.). It never fails that a loss carryover or suspended loss isn't picked up correctly when you're dealing with somebody different every single year.

3/11/2014 8:49:30 AM

Because I am a business owner. Payroll, property amortization, maximizing write offs and deductions, and etc. are a pain my ass.

Saves me a ton of time and stress, which is worth it . Your time is worth what you decide it is (and of course how profitable you can make it.)

There's no way you can make $1,000/hour if you are willing to trade your time to save a few bucks.

3/11/2014 9:31:38 AM

I take it the OP is 23 right out of college with a W2 and a 1099 INT form and taking the standard deduction, if so, then yea, it's not a big deal. If you trade stocks, own a business, depreciate assets for business, own rental property, have other investments in real estate, or you itemize 25 things, it's easy to use Turbo tax or CPA. ^^, TT imports your your past return and updates loss carry over. It's also easy to go find that on your previous return if you have to manually enter that on the current year's return. Also, TT would give you your previous return even if you dind't have it if you got audited. Can't imagine you would unless you have some serious deductions that look shady and they are to the tune of 5 figures. You also are putting yourself out there with your CPA when you sign it at the end especially since most folks don't look through it.

If you're really a cheapskate, you can split TT up to I think 4-5 ways.

[Edited on March 11, 2014 at 9:44 AM. Reason : .]

3/11/2014 9:39:26 AM

nm

[Edited on March 11, 2014 at 10:09 AM. Reason : e]

3/11/2014 10:03:07 AM

^^ right. If you're diligent and know what you're looking at, there are no problems.

But in my experience, the majority of people have no idea about passive losses and carryovers and all that. And I'm not hating on H&R Block because it happens with full CPA firms as well, but in my experience, the switching over of tax preparers is usually the cause of things missing from prior returns.

An example of what I meant by having records and somebody responsible for helping with the IRS is older taxpayers or military spouses. It's nice for them have everything handled by a professional in case somebody dies or is gone for an extended period of time and the person who never deals with the taxes has no idea what they're looking at. And I'm not just talking about being audited. I mean if something was accidentally left off the return, like not reporting a 1099 rollover or something. Dealing with the IRS is a bitch even for the smallest issues.

[Edited on March 11, 2014 at 10:05 AM. Reason : ^]

3/11/2014 10:04:56 AM

The more money you have and sources of income/write-offs/deductions included, it really saves a lot of time and typically saves you money to pay a professional to do it. Plus it helps if you actually know/trust the CPA you use.

3/11/2014 10:15:52 AM

^ definitely. It helps to have somebody you can trust and get advice ahead of time so you know what to plan for and how to adjust your taxable items. A CPA can't do that much after the fact.

Also, a common misconception is that Liberty Tax or H&R Block are going to be a lot cheaper than a CPA firm too and at least for us, that's not the case at all. People will take their return somewhere else one year and then come back the next when they find out it's the same price or even more.

3/11/2014 10:41:58 AM

Quote :

"I'd changed states over this past year and had paychecks from two companies in two states, so my situation was more complicated than most."

As others have pointed out, this doesn't sound very complicated at all. If that's all you're dealing with, I wouldn't hire a professional either.

3/11/2014 10:54:34 AM

Because if you think doing your taxes was easy... Then you are doing them wrong or don't have a bunch of stuff going on.

I have my job, a company on the side, a beneficiary Ira yadda yadda yadda medical bills everything's a write off.

This year I could owe or get 10k depending on my tax man... That's why I hire one.

3/11/2014 11:37:59 AM

Probably will hire one next year between starting up a business, tuition reimbursement, buying a house, new retirement stuff.

Also, the small fee isn't worth my time.

3/12/2014 5:59:26 PM

bend over if you use H&R block

3/12/2014 6:34:53 PM

I have an S-Corp. it's complicated and would rather not fuck with it.

3/12/2014 11:18:34 PM