tax software vs. accountant

**sweeps** · 01-27-2008, 03:47 AM

You've been a satisfied TT customer for many years, and TT Deluxe handles the situation you've described. Save yourself a couple hundred dollars and go with the software.

Also, Does your accountant work for you or the IRS?

**MonkeyMama** · 01-27-2008, 04:20 AM

I have to laugh at that article sweeps. This affects accountants who were not doing their due diligence, who were signing off on extremely aggressive tax positions, refers to wealthy people with elaborate tax strategies. & mostly the accountants who increase your odds of being audited in the first place. (I don't know about you but our clients expect all the deductions they can get AS LONG AS the IRS never knocks on their door, ideally. That is the goal of a good accountant).

We are not doing anything different this year as most ethical CPAs I would imagine. We've heard about the new IRS penalties and we shrugged our shoulders. We may be charging more for higher malpractice premiums though. That is the true problem here. It does drive a wedge in that sense. We have to watch our butts more. (As with everything coming down these days). That part of the article rings a little true. But man I don't think anyone in this forum needs to worry about a bigger bill from their CPA because of this. If so I would say it is a big red flag anyway.

**MonkeyMama** · 01-27-2008, 04:36 AM

I am a CPA and I have to say I see nothing wrong with Turbo Tax.
I would say in general unless you had a business or something more complicated you would not need an accountant.

However. You have one big complication this year. You moved to a new state. I do not think that Turbo Tax knows how to handle this properly. (I remember doing my sisters' return by hand a few years ago because I use Turbo Tax for my family and when she moved it was not working properly).

Here is the thing though. Technically when you move mid-year you need to file as a non-resident for California and figure out how much to deduct for the year (an include), etc. It is complicated. Also, you should not be double taxed for both states. (You generally would claim a credit for any double taxation).

Turbo Tax will likely do it wrong.

I couldn't tell you if H&R would do it right. I would hope they would.

For a simple return it would cost $300-$400 with a CPA. Maybe a tad more with the move. But in your case you might save more money getting it done right (& peace of mind).

H&R might be $200 or under. They may or may not do it right.

For the most part though, you are probably just better off doing it yourself and doing it "wrong." I am not sure in this case if you will save money and it's not like a high audit area. I don't know anyone who got an audit because they did their state tax return wrong when they moved here. You might lose some dollars but it would probably cost more to get it done right. So you weigh if it is worth it. Turbo Tax might have improved in this area anyway.

Unless you open a business though I wouldn't worry about hiring one for the long-term.

**maat55** · 01-27-2008, 05:21 AM

We 've had our accountant for years and have considered him a miracle worker. I've always wanted to get turbo tax and just see the difference between the two but I figure I would always stay with my accountant.

**MoneyenoM** · 01-27-2008, 05:33 AM

No software and accountant is perfect. Software has a bug while accountant has doubt in their due diligence.

I prefer software rather than person. I feel save and no one will know how much money I make. On the other hand, accountants is human. They have friends. They might have conversion about your personal finance with their friend. Who know right?

MoneyMaMA also has a good point about big complication too. But if you really know how to use Turbotax, you won't need to be afraid. Just take your time (still have 2 months). I cannot remember how many states you can add in Turbotax. For my experience last year, I worked in MO, lived in IL side, and moved to and worked in PA. Turbotax really helped to file 3 states.

Just my 2 cents

**disneysteve** · 01-27-2008, 06:03 AM

I've always used an accountant, but that is largely because my father was an accountant and had a family firm with his brother. My dad did my taxes until he died in 1992. Since then, my cousin has been doing them. Between all the various deductions, our regular jobs, self-employment income (ebay and doctor work outside of my regular practice), investments and all the other details, I simply have no desire to tackle that myself.

As for cost, I really can't say because even though I do pay him, I'm sure he charges me less than he would charge a stranger. But whatever he would charge me would be worth every penny.

**sweeps** · 01-27-2008, 06:03 AM

Tax preparers, unfortunately, are facing a perfect storm. Tax software is getting better each year, it covers more situations each year, and it becomes cheaper each year. Accountants, meanwhile, have to increase their prices each year to keep up with inflation and a shrinking client base.

Obviously accountants are still the choice for truly complex situations, but the gap is closing fast.

One thing you could count on your accountant doing was taking a questionable position for you to get that extra credit or deduction. If you were audited, the accountant would back you up. But now with this new law that's probably not going to happen anymore. AND even if your accountant does find that extra credit or deduction, did it make up for the extra $300-$500 or more that the accountant charged?

Technology is the great equalizer. Accountants are feeling the pinch, just as real estate agents, full-commission stock brokers, and newspaper printers are feeling.

**maat55** · 01-27-2008, 06:24 AM

I've walked buy that stack of Turbotax for years now and I know i'm going to buy it one day, just out of curiosity.

**MonkeyMama** · 01-27-2008, 06:48 AM

Originally posted by sweeps View Post

Tax preparers, unfortunately, are facing a perfect storm. Tax software is getting better each year, it covers more situations each year, and it becomes cheaper each year. Accountants, meanwhile, have to increase their prices each year to keep up with inflation and a shrinking client base.

Accountants are feeling the pinch, just as real estate agents, full-commission stock brokers, and newspaper printers are feeling.

.

???????????????

I just laugh at the idea of a shrinking client base. This is a very flawed view of the industry.

Actually the tax laws have never been so complex. & there is an eXTREME shortage of tax preparers.

Our prices are rising to weed out the flood of clients and to keep up with the complexities. Have you tried shopping for a CPA lately? I have professionals calling me daily begging for good CPA referrals and recruiters calling daily also. We stopped taking new clients about 4 years ago. We just can't handle any (but the few rare favors for friends/existing clients).

I could hardly think of a better industry to be in right now as far as making money AND job security. I don't know any accountants feeling any pinch. I just laughed out loud. Sorry sweeps but this is not an accurate representation of my industry. We are on the opposite end of the spectrum, which creates its own problems, I have blogged much about them.

Back to the topic at hand, everyone else points out why we have so many simple clients willing to pay much for simple tax returns though we encourage/beg them to go elsewhere. They like just not worrying about it. That is worth something I guess. But because of the reasons I mentioned it is all getting very expensive and hard to find a good tax preparer.

**Caoineag** · 01-27-2008, 06:54 AM

I have used taxact so I can't speak to Turbotax (but I am pretty sure they are close) but I did the whole moving to a new state with multiple W-2's, a 401(K) distribution, and a couple of other weird situations.

Almost all of those softwares will not only walk you through all that, but if you try to use a lower level software than you need, they will let you know that you need to upgrade.

**Caoineag** · 01-27-2008, 06:58 AM

Originally posted by MonkeyMama View Post

???????????????

I just laugh at the idea of a shrinking client base. This is a very flawed view of the industry.

Actually the tax laws have never been so complex. & there is an eXTREME shortage of tax preparers.

Our prices are rising to weed out the flood of clients and to keep up with the complexities. Have you tried shopping for a CPA lately? I have professionals calling me daily begging for good CPA referrals and recruiters calling daily also. We stopped taking new clients about 4 years ago. We just can't handle any (but the few rare favors for friends/existing clients).

Everyone else points out why we have so many simple clients willing to pay much for simple tax returns though we encourage/beg them to go elsewhere. They like just not worrying about it. That is worth something I guess. But because of the reasons I mentioned it is all getting very expensive and hard to find a good tax preparer.

I could hardly think of a better industry to be in right now as far as making money. I don't know any accountants feeling any pinch. I just laughed out loud. Sorry sweeps but this is not an accurate representation of my industry.

I have to agree. The CPA's I know can't take ANY new clients. They probably shouldn't have as many as they do (but those personal favors add up). I don't know how they find time to sleep from 4th Quarter through the end of 1st Quarter. Yuck. Don't forget to get some sleep Monkeymama!

**MonkeyMama** · 01-27-2008, 07:08 AM

That is one of the problems with the shortage of professionals. No sleep! I would gladly take a slow down.

No, it's not so bad, I have a good situation myself. But I do have to work a good chunk of the day so I am leaving this thread. Hehe. Sorry markusk, for getting so off track. But I guess it is relevant, it is hard to find a good ethical tax preparer these days. Which is a valid concern for anyone shopping around for one. Any tax preparer that can take on a new client? Be wary.

**sweeps** · 01-27-2008, 10:40 AM

MM, you must not be that busy since you're able to draft such long responses on this topic. Just kidding

Your point is well-taken, I'm sure in general an increase in business-related tax preparation has easily compensated for any decrease in personal filings. But I'm willing to bet tax preparation firms that rely on 1040 filings for a good portion of their revenue are feeling the effects of the TurboTax's and TaxCut's out there. And if they haven't they will soon.

Your comments further reinforce the recommendation to take the software route. If accountants are too busy for and disinterested in the average taxpayer, then why keep paying extravagant amounts of money giving them business?

I know -- it's the same reasons why people still pay 6% real estate commissions, still fork over 5%+ to financial planners and VUL insurance salesmen, still cough up $50 or more commission per stock trade.

**LivingAlmostLarge** · 01-27-2008, 12:11 PM

I used a CPA when we moved cross country. Well worth it. We didn't have any time to learn the rules of the new state income taxes. Nor how to file partial year in CA and MA. Plus we had all moving expenses covered, not to mention buying/selling homes, and bonuses.

But 2 years later we're ready to try it ourselves. We used them again last year. AND it costs me $575 a year for 2005 and 2006. Now we're ready because we learned how to handle from the CPA our bonuses which were not cash but company stock.

Especially since the company handed out papers explaining the tax situation, which our CPA had to read and double check with others before we could file.

tax software vs. accountant