Is it better to use a CPA for personal tax returns once you own a home? (buy, limit)

[Dm84]

Originally Posted by bande1102

A CPA can absolutely save you money after the end of the calendar year. There are absolutely things you can do to lower your taxes. Legal things, I might add.

Don't track expenses??? Please read the irs publications regarding record-keeping. Seriously.

There are limits and certain things are only deductible if they exceed a certain percentage of your AGI. The question is can a CPA "save" you more money than they are charging you to do the return? For most people the answer is no.

[robr2]

Originally Posted by bande1102

Fun fact: Every year, TurboTax hires CPAs and Enrolled Agents. Know why? To help taxpayers do their own taxes. Funny, isn't it? The industry giant that is currently running commercials on how simple it is to do taxes actually has to hire credentialed tax professionals to, you know, help people do their own taxes.

The bottom line is that most taxpayers have absolutely no idea what they don't know. That being said, choosing a tax preparer is a big deal. But that's whole other post.

Often too many people with complicated returns try to use turbotax and they really should be using a paid preparer. Hence Intuit provides professionals behind the scenes to help those folks.

Once I started a business, I've started using a CPA.

[bande1102]

Originally Posted by Dm84

There are limits and certain things are only deductible if they exceed a certain percentage of your AGI. The question is can a CPA "save" you more money than they are charging you to do the return? For most people the answer is no.

Not true. I can think of one off the top of my head that has nothing to do with a percentage of AGI.

I respectfully disagree. It's about so much more than cost of self-preparation vs fee for preparation. A good CPA sees beyond that moment in time when you're calculating taxes. Like I said, the overwhelming majority of taxpayers have no idea what they don't know.

[Parsec]

Originally Posted by bande1102

Not true. I can think of one off the top of my head that has nothing to do with a percentage of AGI.

I respectfully disagree. It's about so much more than cost of self-preparation vs fee for preparation. A good CPA sees beyond that moment in time when you're calculating taxes. Like I said, the overwhelming majority of taxpayers have no idea what they don't know.

You are either a CPA or have been brainwashed by a smooth-talking CPA. Can you give an example of a deduction that a CPA will claim for an average homeowner that Turbotax doesn't take into consideration? We are talking about deductions that will not appear in the Turbotax interview and/or are too complicated to calculate in the program. I'm a CPA and I disagree that a typical taxpayer will benefit from using a professional tax preparer for their taxes.

However, a high net worth individual who has a complicated investment portfolio will benefit from using a CPA/CFP (not just any CPA). There are absolutely ways to allocate your portfolio in a tax-efficient way, e.g. IRA re-characterizations, allocating taxable brokerage investments within certain equity classes and keeping them out of certain classes, etc.

[Partial Observer]

Originally Posted by bande1102

Not true. I can think of one off the top of my head that has nothing to do with a percentage of AGI.

I respectfully disagree. It's about so much more than cost of self-preparation vs fee for preparation. A good CPA sees beyond that moment in time when you're calculating taxes. Like I said, the overwhelming majority of taxpayers have no idea what they don't know.

I, too, would like to hear which deduction(s) I could be taking that don't have an AGI threshold. If you don't own a business, have any non-traditional sources of income, or have any other quirky issues (e.g., you live and work in multiple different states during the course of a tax year), I'm not sure what kind of savings a CPA could legally offer. Instead of winking and telling us we have no idea what we don't know, why not share just one example?


Can I claim my dog as a depreciating asset? Do I get to deduct the cost of Netflix as a necessary business expense, because it keeps my kids occupied while I try to work? I'm all ears...

[boshyd]

I didn't say not to track expenses. All I meant was because of all the phase outs and other considerations, once you get the big deductions out of the way, you are only talking about saving few tens of dollars. So, if you have proper documentation, go ahead and claim everything. If not, just move on noting that you are talking about just saving a few extra dollars. More often than not CPA will cost more than the savings.

[boshyd]

Ofcourse, if you are using a CPA as a financial advisor to plan for taxes in the current and future years, that is something totally different and may be worth it depending on your situation. It's just that I see little value in hiring a CPA to do taxes after the tax year has passed.

[sawyer2]

For the majority of salaried people that have standard income and deductions, a CPA will not find any pot of gold in your tax filings.

However, if someone is uncomfortable with using the various software packages then that is perhaps the value add of a CPA and that may be worth the few hundred to that person.

[snatale1]

Just owning a home doesn't make your taxes complicated but CPA's (minus the scumbag types that DelightfulNYC speaks of) always have more tricks up their sleeve. When I was self employed H&R Block Business had me owing $12k one year, I went to a CPA spent $700 for him to go over everything and only owed $1200. MANY small things got overlooked and some things that they did credit didn't get the math done right on them. I sat down with the CPA himself and went over everything, many questions back and forth. The other situation sounds like a tax preparers office that happens to be run by a CPA.

[MTQ3000]

Here is a secret. My friend is a very experienced tax attorney and CPA. Naturally, his friends and family go to him to get returns done (for free!). Guess what? He uses TurboTax to prepare those returns. lol

Mick