tax software vs. accountant

[Taribor]

Hi folks,

Need advice concerning taxes.

I've been a satisfied turbo tax user for many years, but now I'm thinking about getting an accountant. I can use the online turbo tax delux version (via my bank discount) for $25.45 with free efile included, state is extra.

Our situation is complicated, but not as complicated as some...
Married with 1 child, moved to another state in 2007 (CA) for a higher paying job with moving expenses paid for by new job, charitable contributions, mortgage, and student loans.

We have no investments outside of 401K/IRA (yet)

Any pros/cons or advice? How much do accountants charge to do taxes? And are they worth it? How complicated do your finances have to be for you to really need an accountant -- I would imagine someone who is self-employed needs one, but what about the rest of us?

Thanx in advance.

That one is 100% on how comfrotable/adventurous you are. I am/was in a simliar situation, changed jobs, moved to CA from FL, had home office half the year and turned that house into a rental home when we moved; converted a 401k funded with pre and post tax dollars to an IRA then converted to a ROTH, and on and on...

In the end, I used turbotax for a few reasons:
-I like to learn and while it took me many hours of reading and trial and error, I finally got our taxes solid and learned a TON about finances/taxes in the process, so now for the rest of this year I can keep a better eye on possible deductions for next year
-I saved myself hundreds of dollars
-Sense of satisfaction knowing I could do it

More than a few times I almost three turbotax and my computer both out the window but if you have the patience, give it a shot on your own.

You could always do both, do them on your own and then use the turbotax file review service for a sanity check.

[markusk]

Thanx everyone (sweeps, et al) for your thoughts.

I will continue to go with Turbo Tax. I think, however, I will go with the "Premier" version of TT that has the state tax included, around $37 at Costco.

When I lived in PA, the state tax was VERY simple -- it was all done electronically via the phone. CA tax, is probably more complicated (and they take out more tax! Ouch).

MonkeyMama, I appreciate your thoughts....I imagine that a good, honest CPA is worth their weight in salt

[MonkeyMama]

Hey markusk,

I was wrong. I think Cali handled the multi-state thing okay in Turbo Tax. Just keep in mind you will probably have to file 2 state returns (depends on PA rules). Which may mean buying 2 state modules.

I am now recalling doing my sisters' by hand because I didn't want to buy the second state. & her state was much simpler. Just wanted to clarify because I remembered that better.

[DebbieL]

I have to agree with MonkeyMama. I am currently working toward my accounting degree and from everything I can see the profession is in HUGE demand (of course, accountants are so much more than tax preparers). I am always AMAZED at how much the accountant that prepares our year end corporate tax returns has to know (the corporation that I currently work for that is). I find him informative to say the least.

For just a simple tax return (such as mine is) I would not bother with an accountant. For more complicated situations they can be worth their weight in gold.

[zetta]

When I exercised incentive stock options (ISO)'s in 2001 and knew I would have to deal with AMT, I decided to try using a CPA. She basically plugged the numbers into a software program, but had no more insight into the ISO/AMT picture than I could've gotten from TurboTax. We used her for a couple of years, but she was unable to advise us whether there were any actions we could take that would help us recapture the AMT any faster. So in 2003 we tried another CPA, and later discovered that he forgot to file the form for state AMT carryover -- potentially losing us a couple thousand dollars. I've been using TurboTax for the last few years and have been happier with it than I was with the CPA's we tried.

I think the original poster would be fine with TT.

That said, I'm currently debating whether our financial lives are getting complicated enough to consider using a CPA again... The main change is starting a sole proprietorship (software contracting), and our investments are starting to rack up significant capital gains ($20k last year). Maybe a CPA could advise us on SEP-IRA and similar things...

[DebbieL]

Zetta, your experience certainly isn't anything like what I've experienced with any of the accountants I've dealt with through the companies I do bookkeeping for. I've found them to be so helpful and informed. I don't know what the qualifications are for CPAs as I'm in Canada and we have different accounting bodies here.

[zetta]

MonkeyMama did a little research for me on ISO/AMT, and to be fair, it's a pretty obscure area of the tax code that was just starting to hit a lot of engineers during the dotcom boom -- folks who have high incomes but reasonably straightforward tax returns for the most part. And the CPA's that serve that segment of the market just weren't on top of it. Both were recommended by friends as being very good, but of course our friends are mostly engineers as well.

[disneysteve]

MonkeyMama did a little research for me on ISO/AMT, and to be fair, it's a pretty obscure area of the tax code that was just starting to hit a lot of engineers during the dotcom boom -- folks who have high incomes but reasonably straightforward tax returns for the most part. And the CPA's that serve that segment of the market just weren't on top of it. Both were recommended by friends as being very good, but of course our friends are mostly engineers as well.

It is important when choosing an accountant to interview him or her as you would any other professional, financial advisor, attorney, etc. Find out if he does the type of work you need done. Find out what type of experience she has. Find out if he has other clients similar to you. Just as you wouldn't go to a cardiologist for a problem with your foot and you wouldn't go to a real estate lawyer to draw up your will, you shouldn't go to a CPA whose client base is mostly retirees on fixed incomes if you are a small business owner with a dozen employees. Accountants specialize just like many other professionals and you want to find one who is knowledgeable in the areas that apply to your situation.

[getrichslow]

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.

If you have a spare hour you can go to TurboTax's website and essentially complete your Federal return for free. Try it and compare the results to what your CPA comes up with. Do that for a couple of years and you will know if the accountant is worth the extra $$.

[maat55]

getrichslow

I'll give that a try, thanks for the imfo, I didn't know I could do that. That will save me some bucks.