Armed Polite Society
Main Forums => The Roundtable => Topic started by: zahc on November 12, 2017, 02:05:31 PM
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I pay a CPA 300-400 per year to do my taxes. This is a hangover from when my taxes were much more complicated. I generally consider it the good kind of expense, like paying to have my trees trimmed instead of spending two weekends per year on it myself. It's nice to help other people make a living while slacking. But since I haven't done my own taxes since college, I forgot what it's like and I don't know what I am getting at this point.
I am a sole breadwinner, I have wife and 3 kids, generally itemize due to charitable giving and mortgage interest. I contribute to an HSA, a 401k, and a Roth IRA. All my income is in one state which has state income tax and vehicle property tax. About how much work are we talking about for me to do my own taxes with the $35 softwares out there? Like a couple hours or a couple weekends? How do I know I did it right? What if I get audited; will I wish I had paid the CPA?
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The fact that you itemize makes it an order of magnitude more complicated. You're looking at about a day's work. Most of it just understanding what the software is asking for.
You didn't mention investment income outside of tax-sheltered accounts, otherwise that's the next complicated thing for taxes.
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It depends.
Are you just dropping off all the paperwork that comes in "Important Tax Information" letters that come in the mail to you CPA, or is he sitting down with you and asking you questions about the prior year and possible tax events ??
Are you will organized and disciplined to sit through several hours of IRS-speak and willing to try to discern what's what and what they mean ??
Looks like you do some investing for retirement. Any other investing ?? Depending on how much that can be a giant time suck.
What is your job ?? Is there anything deductible about it ??
And while the odds of getting actually audited are relatively small, the odds of the IRS (or state) sending you a letter disputing or changing your return, based on what information they have, is somewhat larger. TurboTax doesn't help you resolve that issue. And it's amazing the number of people that are walking into our office this time of year because they used Turbotax or other "free" or cheap tax software to do their returns and they get a letter from the IRS that says 'You owe us $X,xxx.xx" (including penalties and interest) because last/two/three years ago you said Y and our records show Z."
Then you are on your own...
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My wife and I have a similar tax situation as yours, except that our kids are grown, and it takes me approximately an hour per year with the H&R Block tax software from WalMart. We have never been audited and the risk of being audited is infinitesimal. I have been using the tax software (I used to use TurboTax) for decades without problems.
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I have income from stock options that happen to vest in the green, restricted stock that happens to vest in the green, and whatever it's called when part of your compensation is discounted stock. I think it's all short term capital gains.
One of the things I have been trying to decide is if I should be investing in my Roth at all, considering I am not maxing out my 401k and I can't afford to do both.
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Mom, stepdad, aunt, uncle and a couple of cousins are all CPAs. I avoid family gatherings around tax time.
It's like listening to hardcore gamers right after a buggy beta release.
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I work full time and part time realtor. Contribute to ira x2 plus realtor expense deductions. I use turbo tax and it’s done in a couple of evenings. First year is harder but things carry over. I like it.
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I have income from stock options that happen to vest in the green, restricted stock that happens to vest in the green, and whatever it's called when part of your compensation is discounted stock. I think it's all short term capital gains.
One of the things I have been trying to decide is if I should be investing in my Roth at all, considering I am not maxing out my 401k and I can't afford to do both.
Do you plan to be in a higher tax bracket when you retire or now?
I plan to be in a higher bracket, so Roth for me.
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I have no large deductions for anything anymore, (property tax and charitable is under the joint standard deduction) don't work at all so the only income I have is SS and a pension. I've had a CPA for many years who charges a couple hundred bucks. Is the 1040 EZ actually EZ? Me and Swmbo and the standard deduction.
PS: I don't have to pay income tax on SS or pension in Michigan. Does one have to actually file an income tax return if one does not have any tax liability?
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It depends.
If you had over $23,200 in income (including pension and SS), and that number may vary, if your "pension" includes things like interest income and residuals from insurance policies you sold when you were working. Plus any other types of income, like from investments, IRA's etc.
Without knowing exactly how much and where that money is coming from, the answer is "Perhaps".
See IRS Publication 554 for details: https://www.irs.gov/publications/p554#en_US_2016_publink100043523
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I have no large deductions for anything anymore, (property tax and charitable is under the joint standard deduction) don't work at all so the only income I have is SS and a pension. I've had a CPA for many years who charges a couple hundred bucks. Is the 1040 EZ actually EZ? Me and Swmbo and the standard deduction.
PS: I don't have to pay income tax on SS or pension in Michigan. Does one have to actually file an income tax return if one does not have any tax liability?
I haven't used the 1040 EZ since I graduated from college, but I remember it being pretty straight forward. Even if I didn't have a tax liability, I would still file taxes, might be a tax credit for you.
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I just stumbled upon E File.com. Looks like you fill in the blanks and off it goes to the IRS. Oooops, never mind I just looked at some reviews and they get very low stars. one or two out 10. I have a hunch I'll just bite the bullet and pay my old CPA and be done with it. He told me I can just e mail him the appropriate $$ info and he'll file electronically. I can mail him stuff later or when I get home in the spring I can sign stuff and bring in the 1099's for his files.
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I use TaxAct. Cheaper, better version of TurboTax.
TurboTax, H&R block and TaxAct are the big 3 for software do it yourself. Jackson Hewitt is terrible. If you know what you're doing, I prefer TaxAct. If you don't mind paying more for better UI, H&R block is most user friendly probably. TurboTax is best for the "math challenged" folks. But everyone has preferences, and nothing wrong with that. TaxAct has my info for past couple of years, so significantly less data entry. I just update the new numbers for the year.
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I use a really good CPA who also happens to be a retired IRS agent. He has saved me more money than I've paid him. Some of the corporate filings and such my lawyer was charging me $ for are now done by our CPA. My tax situation is complicated enough that I wouldn't try to do it myself. I'm in business as an S Corp with my wife and I and 2 other employees with some benefits, I have a small farm with a little income and (convenient) expenses, and wife and I personally own a commercial property and rent it to the S corp business.