How to do taxes-DIY or pay the man?

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Not Cherry Blossoms, but these are blooming down here now.

It’s getting close to mid-April, and so many minds are tuned in to what’s happening in DC.  While I wish it was the National Cherry Blossom Festival (which ends on April 14th) that has DC in the forefront of our minds, sadly it’s the next day… April 15th that has most people thinking about our capitol these days.  That’s right.  Tax Day Approacheth.

Tax preparation is a bit of a controversy in itself among the personal finance community. There are bloggers like Greg at Club Thrifty who insists that if you don’t exercise your tightwad muscles and do your taxes yourself, you’re a wuss. And on the other side of the spectrum is The Banker at Bankers Anonymous, who sees the risk of doing your taxes yourself as too high for a typical working adult with an average salary compared to the savings benefits.

We’re Somewhere In The Middle.

When Mr. PoP and I were single and didn’t have anything to speak of in terms of investment income, we did our own taxes using tax software – my own personal favorite at the time was TaxAct. It was fairly straightforward, and I tried to continue using it when we got married. But the thing is, it really doesn’t catch everything. Here’s our tax prep history as a couple.

 

2009 – We Biffed With The Software

The first year we were married (2009), Mr. PoP sold some stock that he had purchased through an employee stock purchase program at a previous employer. The purchase was done before we got married, so I didn’t have all the paperwork, but I was able to see the basis for the stock in the brokerage account and TaxAct kindly led me through entering the sale of the stock into our taxes so we could pay capital gains (long term since we had held it more than 12 months). It wasn’t a trivial exercise. (No small part of which was that we had to do a lot of the paperwork to find the basis months AFTER the sale and his brokerage account with that firm was already closed.)

But I did it! And right! Or so I thought…

Fast forward to that summer and we get a letter from the IRS. Turns out I (though to the IRS it’s we since Mr. PoP signed it as his return, too!) didn’t do it correctly. There was a clause in the employee stock purchase program whereby any stock sold within a certain number of years was considered compensation and would be taxed at regular income tax rates. Long story short, we ended up owing the IRS something to the tune of a couple hundred bucks because of the difference between our marginal income tax rate and the long term capital gains rate. We didn’t even try to fight the decision, just paid the bill (I think there was a small penalty and the difference in tax rates). I don’t even want to look up in mint how much it actually was because I don’t want to get mad at myself all over again.

 

2010 – We Did Okay With The Software But Probably Overpaid

2010 was a fairly straightforward year for us tax-wise, right up until the last week. In the last week of 2010, we purchased our investment duplex and started working on it.

When it came time to do our taxes for 2010, I used the software, and pretty much omitted the existence of the duplex in our holdings in 2010. We didn’t have any passive income to take expenses that we had incurred against the duplex so far, so it didn’t seem like it would be worth it.

To date, the IRS has no complaints – but in hindsight, I’m pretty sure we overpaid this year, so why would they?

 
A musical intermission for your listening pleasure…

 

2011 – We Called In A Pro

The duplex was extremely complex for tax purposes in 2011. Not only were we generating income from it, but we had spent thousands of dollars renovating it and all of those renovations had to be classified as “repairs” or “maintenance” or “capital investments”, which triggered depreciation schedules, etc. Then there was the issue of interest expenses. We were paying interest to Mr. PoP’s parents for money that technically speaking isn’t a mortgage, but we used it for the express purpose of investing in real estate. Then we also took out a HELOC at the end of the year that the duplex is collateral for, but we spent the money investing in a residential lot (which doesn’t throw off any income), so we didn’t know if we could take that expense against the rental income.

I genuinely tried to do our own taxes in 2011. I probably spent close to 40 hours trying to figure out all these various issues. And I kept finding conflicting answers. So we hired a Guy, who we’ll call G.

In 2011, we owed the IRS about $700, and G $500 for his services. Before going to G, my best efforts showed us owing $1200 to the IRS, so using G was net neutral to the budget and gave me a lot more confidence in our return.

 

2012 – We used G Again

The same issues as 2011 and more this year (2012) as Mr. PoP additionally had some non-cash compensation that we were being taxed on the cash value of. We also installed that AC system over at the duplex and I know I would have made a mistake if I went to depreciate it. Turns out AC systems get depreciated over 27.5 years. Ridiculous, right? Considering they only last about 10 or 15 years!

G worked with us when it came to that little issue of my identity being stolen, and he keeps trying to figure out ways to save us more money to see if we can stack expenses to make itemizing a possibility every other year, but so far his efforts there are fruitless. But figuring that out definitely takes effort.

In 2012, my best guess was that we were going to owe the tax guy about $2,000. G calculated that we were owed a refund of $500. We paid him $500. So I consider ourselves to have come out about $2,000 ahead for the year over what I thought we owed.

 

G Is Worth Every Penny

G charges us much less than he normally would. G doesn’t do many returns on the scale of our complexity. He mostly works with the very wealthy. The PoP taxes are done largely as a favor for a very wealthy friend of ours. As a result, we get G’s expertise – and seriously, it’s expertise – for much less than his hourly rate. It sounds like a lot, but we pay a flat fee of $500 for G to do our taxes.

For this, G sits down with me for about an hour or so and goes through every last bit of paperwork. He takes time to teach me what he’s looking for when he does so. Outside of that tax-time meeting, G answers all of my questions via email. From stupid ones like whether or not my hair donation was a charitable deduction, to the one that I’m getting ready to email him about how we can better use Mr. PoP’s HSA to make some strategic tax moves and set money aside for future health care expenses. And when I ask him questions, we don’t get “yes” or “no” answers.

G always takes the time to explain the answer, which for me increases our confidence. After all, our names are the ones the IRS cares about when it comes to that tax return.

Every year our taxes get a little more complicated and G is able to teach me something new. I’m by no means an expert. But give it another few years of learning from G and (if our investments get a little less complicated), I might have the confidence to start doing them myself again. Maybe.

The thing is, tax law changes all of the time. G knows that. G keeps up with that. I’m not going to fool myself by trying to think that I would keep up with changes in tax law minutia the way G does.

 

How do you deal with tax preparation in your family? Do you DIY it? Outsource it? Some mix between the two?

 

67 comments to How to do taxes-DIY or pay the man?

  • Nice article and thanks for the mention! As you know, I’m way too stingy to pay somebody to do our taxes. It costs me a few hours, but – while complex – ours aren’t complex enough yet to pay somebody. However, as we make more and more on the blog, I may have to give this up…
    Greg@ClubThrifty recently posted..Welcome to Planwise…plus the VIP Club RoundupMy Profile

    • You’re welcome, Greg! I’m impressed that you are able to pound it out in a few hours – ours was definitely taking me more time than that and my level of confidence wasn’t terribly high.

  • trudy

    I do my personal income taxes by hand, no software that may contain bugs or costs money for me.

    If something new comes up, I research it to see how it affects my taxes. My records of anything that affects taxes are thorough and organized.

    • By hand – that’s very impressive. I did my returns by hand when I was on the 1040-EZ but not since then. Just out of curiosity, how long does it take you to do them this way? Do you have a variety of different income sources, etc?

      • trudy

        The more I did them, the more I got organized. I file everything throughout the year and update online records, ex: a folder for medical expenses and an Excel worksheet totaling them up. At the end of the year I spend maybe half an hour collecting the taxable income data and then spread out that and the through the year stuff on a work surface. The 1040 and schedules take about an hour, mostly due to arithmetic on worksheets. I have two different sources of income. The state return is a fairly simple variation on the federal numbers.

        It took much longer when I was disorganized and had to deal with the proverbial box of papers.

  • I too am troubled by the tax preparation question. I have a fairly complicated/easy tax situation depending where you are sitting. I prepare an in depth report to my accountant with break downs on each of the rental properties and other information. It’s a very nice… neat summary…with dates…amounts etc. Soooo my accountant just dropped a $700 bill on me which is about $100 more than last year. I’m thinking I could buy the tax software and save about $550. Would be interested to hear from your readers if this is viable. I guess I’m just cheap or maybe realistic. After all $700 is a bit of money to me …for plugging numbers in that I provided in an accurate and timely manner. Your thoughts?

    • Looks like the point is moot for your 2012 taxes, right? If your stuff isn’t getting more complicated, why not try and see if you can take your summaries and plug them into the returns for 2013 like the 2012 ones? I’m hoping at some point I’ll have learned enough from G, and he’s got ours “mechanized” to the point that I can just plug in the new numbers each year.

    • Anne

      I’d recommend putting your numbers through some software (I don’t know about all of them, but Turbotax doesn’t make you pay until you’re ready to file) using the sheet you prepared and see if you get the same numbers for 2012 as your accountant got to see if there is any benefit. If it turns out he doesn’t save you money, time, or trouble, I’d start doing them.

      I started using Turbotax once I couldn’t file EZ anymore, but will need to start using my fiance’s CPA once we’re married since he is self employed and that gets a bit hairy.

      • I’ve heard that doing them as a self-employed person can definitely be a pain in the neck – glad your fiance’s got a CPA looking after it all.

  • Brian

    I do my own taxes. I have a fairly complex return but Turbo Tax (have to use to versions) gets the job done. It also helps that I used to do taxes as a seasonal gig for one of the local places in town (it was a franchise, but the guy who owned it actually was a good person and not shady at all which is kind of rare for those places). They always gave me the more complicated returns, so there aren’t too many things that really bother me when it comes to doing taxes.

    I just always have to wait until the last minute to file mine while I wait for some K-1 forms to show up.

  • Jonathan

    My mom’s a CPA – she does our taxes for free. Good thing, too…I think she would charge at least $500 due to the complexity of our return. There’s no way we’d want to do it ourselves, though we do always go through the return with a fine-toothed comb before e-filing.

    • Three cheers for mom! I guess it’d be harder to find a CPA who’s more concerned with your best interests than she would be, right?

  • I use TT, and I’ve been really happy with the results. The only time I’ve paid somebody else was the first year I owned my home because I was worried about not knowing too much about homeownership’s impact on taxes. Turns out I could have easily done it myself so I kicked myself a bit for that one! :)
    The Happy Homeowner recently posted..Do You Always Have an Excuse for Why You Can’t Meet Your Goals?My Profile

    • Yeah, I didn’t think homeownership was too hard to deal with tax-wise the first year we were married. There were some calculations to see if our mortgage interest (and points) were high enough to itemize, but they weren’t. I think we had an additional smaller deduction for property taxes since we couldn’t itemize. I don’t think that’s still in effect, though.

  • I’ve done both. I have to say that TurboTax has gotten WAY, WAY easier to use!

    I had a CPA last year, but this year, they wanted $750 to do a return. Uh………….NO!!!

    I know we’re on the East Coast, but sheesh. I just did it myself, and honestly, I know I got the best deductions, so a CPA wouldn’t have helped.
    Jenny @ Frugal Guru Guide recently posted..How My Credit Card Is Saving Me 10+% On My Remodel At Lowe’sMy Profile

  • I’ve had my taxes done by a “professional” once – never again, and our taxes have been pretty complicated. I had a pro do it the year we got married because we had a house sale, two states involved, and we got married… I think I was already stressed out about it, and went with the folks who (used to) do our company’s taxes. I filled out a form that looked a heck of a lot like TurboTax and 3 weeks later, I get our taxes back – done incorrectly. I complain, they “fix” that particular issue (had to do with double taxing state income) and I catch another error. I’m finally OK with it – send it off to the IRS, and we get a letter from the IRS says we’d overpaid here’s your check. We paid $600 for the “privilege” of having our taxes done wrong – three times!

    With our rental property sale, I do have a CPA “on call” to help me answer questions as they come up that I can’t figure out through TurboTax or the IRS website. “made” us $2k with deductions I wasn’t aware we could take (but I had the receipts for). But he only helped with that one particular issue – I did the rest.

    I’m still a fan of TurboTax, and calling my CPA when I have questions – it’s worth the hourly rate (he also represented us in front of the IRS when we got audited for that same issue)
    Mom @ Three is Plenty recently posted..More Freezer Cooking taste resultsMy Profile

    • Wow. That sounds awful. Your form was just like Turbo Tax? Yikes! What are you paying for then? The form that our tax guy gave us to help get everything organized prior to our meeting was over 30 pages. It was insanely thorough, and I flagged stuff I had questions about and that was pretty much what we followed through when we met in person.

  • I’ve been a professional tax preparer for over 25 years, taught tax law at the IRS, and owned my own accounting/tax prep firm. The IRS has thousands on staff to fix the mistakes made by lawyers, accountants, CPA’s, and the public. Just because you pay someone to prepare your taxes does not mean they will be done right – we had a standing joke at the IRS that the larger paid firms (no names mentioned, LOL) kept us in business. (I also did a stint at H&R B corporate, and the horror stories I could tell you about what I saw there concerning tax prep!)

    Make sure that whoever you do hire has a policy of standing behind their work and following through with any after-the-fact IRS letters, federal or state tax issues, audits, agency phone calls, etc. You should not be charged for this follow-thru service, and never buy any sort of “guarantee” on top of the tax prep you paid for. About the only thing your preparer should charge extra for, over and above the tax prep, is for an audit. If their mistakes set off a flurry of correspondence between you, the Feds, and the state, there is no reason you should pay extra – the preparer needs to clean up what they’ve done wrong.

    If you are familiar with an interview type setting, and know a little bit about your finances and how taxes work, a paid program such as Turbo Tax is much better to use than trying to wing it alone. The program has the latest updates, will do the math for you, will figure depreciation based on a few simple and easy questions, will prepare your state return, assess the correct tax, and a whole lot more. You’ll avoid a lot of common taxpayer errors by using software – it’s a good thing :-)

    Re: A/C depreciation over 27.5 years. How long have you owned the rental house and how many years have you been depreciating it already? That will make a difference in how long you expense out the A/C improvement. 27.5 years is for the dwelling (land is never depreciated), and if you’ve got 15 years left to depreciate the dwelling from the date first placed in service, then you’d depreciate the A/C unit over 15 years, not 27.5. Date placed in service means the first day the house was available to be rented, not the day you rented it. You can depreciate the dwelling if it is sitting empty, because it is qualifying property placed in service, even if it isn’t being used.

    Was there remaining depreciation for the old unit? If so, was that remainder taken as s deduction in the year the unit as replaced? :-)
    Wendy recently posted..5 Things You Should Know if You’re Filing Taxes LateMy Profile

    • I love it when you stop by and share lots of tax knowledge! To answer some of your questions…
      We started renting the duplex out in spring 2011, and the dwelling (not the land) started its depreciation then. The AC was replaced at the end of May 2012, and we took about 0.5 of the 27.5 years worth of depreciation on this year’s taxes. (Both the dwelling and the AC are on straightline.)
      We never depreciated the old unit separately from the building and the thought wouldn’t have even occurred to me. When we bought the place out of foreclosure, we had no way of knowing dates of service for any of the AC units (other than very old and will probably need to be replaced before too long).

      And to ask one of my own…
      How would that work if you’ve already depreciated your entire dwelling. Say you’ve been renting a property for 30 years and install a replacement AC or a new roof. Are you saying that if you’ve already depreciated the entire dwelling those would be expensed all in one year rather than depreciated? Or am I totally misunderstanding what you said?

  • Taxes this year were painful to do. I was very tempted to move onto a CPA. But for $500, I’ll happily do them myself.
    My Financial Independence Journey recently posted..A Primer on Margin AccountsMy Profile

  • We do our taxes ourselves although with TurboTax. It’s pretty easy and straightforward and I’ve never had an issue. I should probably do them by hand because of all the information I have on our finances, but I don’t want to take the time to do it, especially now that I have a taxable brokerage account. Of course ours is very simple too, no mortgage, no kids, no crazy deductions, just the standard married filing jointly return for us.
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    • How much is TurboTax anyhow? TaxAct was always really affordable, especially since we don’t have to file for state taxes so we were just paying for 1 filing.

      • trudy

        Some brokerages offer discounts on turbotax for clients. I see Vanguard has it running from $35 to $80, unless you’re rich, in which case it’s free :-)

        • Wow – $80! TaxAct was never that much when we used it… which might have been why I picked it in the first place all those years ago come to think of it!

  • Ivy

    We use a CPA in our town and pay $575, which is a bit too much, I always here that the cost is more in the 200-400 range if you don’t have a business. If I change, I would probably look for less costly tax preparer and still use a person.

    A friend (working for a Big 5 tax unit) did it for free for us for a few years, and somehow missed the IRA deductability ceiling, so a couple of years later we got a letter from IRS, paid what we owed, and as a result of my panic I had some knee jerk reactions that tangled everything further. So I went running to the CPA, and now every February I spend 1 – 1.5 hours in his office with all my paperwork and that’s it.

    IRA is still my big issue, now that we do also Roth backdoor conversions. I have tried replicating what our CPA does with TurboTax and I just can’t get it the tax owed same or lower, and I know it’s the IRA thing that is the difference. Maybe investing more time in learning, or talking it over with the TT experts will eventually get me there, but I don’t have the time to spend, I hate doing taxes, and the thought of an IRS letter or audit still scares me. So this is an area of my life where very intentionally I am refusing to cost-optimize :-)

    • Ugh, I got hit with the Roth IRA ceiling the year before we got married. Luckily TaxAct found it before I filed, so while I had already put the money in, Vanguard let me take it out and the IRS was fine with it. Sorry that your guy didn’t catch that. I would not have liked to deal with that, especially not two years later! How do they figure out what to make you take out? And what about the growth and or losses since then?

      I’m starting to learn more about the backdoor Roth, since there’s a chance we might not be Roth eligible next year. How do you feel that’s working out for you?

      • Ivy

        Works very smoothly (aside from the tax time headache) – we put it in regular IRA and shortly thereafter convert to Roth. All in Vanguard, the regular IRA account is a treasury bonds fund (could even be money market) to minimize any up or down moves before conversion. And in the Roth IRA the fund is whatever we want.
        Keep in mind if you already have some traditional deductible IRA funds, it won’t be so straightforward as your tax will get prorated, you can’t just convert cleanly the non-deductible portion. We avoided that by converting the whole balance in 2010 when they opened the backdoor

        http://www.bogleheads.org/wiki/Backdoor_Roth_IRA

        • Thanks for the link. It’s on the table if we have another jump in income like last year – since that would put us over the Roth qualification limit, but nothing is set in stone, obviously. Good to know it’s not exceedingly complicated since we don’t have regular IRAs, just our 401Ks and Roth IRA accounts.

  • I use turbo tax. My return is still simple enough that there’s just no need to pay someone else to do it. Plus I’m kind of sick and actually enjoy doing it myself!
    The First Million is the Hardest recently posted..The Government Wants To Limit Your Retirement Savings!My Profile

  • Karen

    If you overpay, the IRS will give you a refund. I didn’t claim that working tax credit (whatever it’s called, I wasn’t aware of it!) and they adjusted my return.
    I’ve done my own via Tax-Act, the free fillable forms and through a preparer. One year, I sold stock, moved (included state taxes) and had rental income so I let someone else do it. I think I had 28 pages. This year, I paid someone again. Probably not next year. I just wanted a professional to look over my rental income

    • Really? Wow.
      For us, I think we overpaid because we might have been able to take some of the duplex expenses in 2010 but it’s not worth the cost of preparing the filing to get it. Instead (if I remember right) G has rolled those costs into the cost basis for the dwelling and they’re being depreciated with the building.

      • Karen

        I hate dealing with the rental income. Ugh, all this talk about A/C reminds me that I need to be prepared to replace the rental unit’s. It’s 15-17 years old.
        I went with a preparer that my friend has used for years (although her taxes have probably always been relatively simple). I paid $150. The fee is based on number of forms basically. I probably have 10 different forms to include (another) state tax. Which reminds me, she hasn’t sent me my state forms.
        She did save my about $50 as every year, I’ve come up with owing $50ish. She also claimed sales taxes which I’ve never done before.

        • Good luck the AC units. We could have repaired rather than replaced this last time around, but the repair was going to be $1200 or so, and there was another $1000 part that looked iffy, so replacing it for $3500 seemed more prudent for the long run.

          Does she use the IRS estimates for the sales tax? I’ve run those calculations before since the IRS allows you to claim sales tax when we don’t have income tax, and I was always surprised at the amount the IRS thinks people spend every year on taxable items!

          • Karen

            Yes, she used the IRS estimates. I use mint and looking at my spending there, I don’t think I come close ($700+). Does gas have sales tax or is it another type of tax, I wonder?

            *I meant I owed $50ish for the state tax

          • I just googled it, and it looks like gas tax is different from sales tax. So it wouldn’t count. Ah well – I bet that’s a lot of tax!

  • Sounds like a great guy!

    If we had someone that we trusted like that, we would have used him the years our taxes were especially complex (spending a portion of the year in a tax-happy state like CA or MA can be a pain at income tax time). Most years though, it generally takes so long to get everything together that using the tax software after getting all the paperwork seems not so bad. Especially since DH does it all.

    Also we’re fortunate that DH’s father is an accountant so we can call him if we get stuck on something.
    nicoleandmaggie recently posted..Your googled questions, our sage wisdomMy Profile

  • Ah, you are lucky to have an accountant on call for when you get stuck. Hopefully your FIL gives you a nice rate for that =)

    We are lucky. It was a hard pill to swallow going from paying almost nothing to use TaxAct to paying $500 for G, but after doing it for two years now… well, I’ve learned so much in the process and the level of confidence I have in our returns is much higher than it used to be. So it makes paying the bill a tad bit easier of a pill to swallow.

  • We do our taxes ourselves. Bf has always done, “Old school” paper and pencil and I use turbo tax or H&R block free file. This is probably the last year I’ll be able to use the free file, because next year I’ll be over the income limit (I’m not complaining). We’ll probably end up hiring someone for next year because it may be the first year we file together and we may have (fingers crossed) and income property.
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  • I would not touch mine with at ten foot pole. Our accountant is very reasonable and he give me lots of ideas about how to plan and make changes that reduce our tax burden well in advance. Some of the things he has suggested, like using our daughter for modeling and advertising purposes and paying her a salary that went straight to a Roth for her, I would have never thought about or thought they were legal. We also got a notice from our 2011 taxes that we owed about $1500, but the IRS didn’t have one of our 1099’s so that was fixed pretty easily by the accountant. I would have probably panicked and just paid the whole thing. Having a professional who understands tax law and isn’t afraid of the IRS is worth every penny to me.
    Kim@Eyesonthedollar recently posted..How Can You Still Have Student Loans at Age 40?My Profile

    • Wow, definitely sounds like you’ve got a good accountant there! And the move for your daughter is very slick. She will definitely benefit from that in the long run.

  • Our taxes are probably as simple as they get, so I do them myself. However, there is often a time when it tips into the favor of going with the pro. In your case it seems like you’ve made the right choice. Hopefully we’ll be in your position where a pro will help us.
    Justin recently posted..Friday Update: It’s Good to be HomeMy Profile

  • its tough to say when to switch to a prifessional. i tell all my friends that are my age with no property to figure it out themselces just sobthey learn something, but having a tax ally like G sounds suoer important whrn things get complicated.
    Ross recently posted..How Big Is Your Financial Safety Net?My Profile

    • I don’t know if we made the switch at the right time… a couple years earlier would have saved us some mistakes, but those mistakes wouldn’t have covered his fees, ya know?

  • I’ve been using the same accountant to file my Canadian personal/self-employment tax returns for years. I can’t say enough good things about her. Her price is reasonable and I get a discount as I have referred several people to her over the years, plus her fees are a deductible expense. For my husband, I’ve been preparing/submitting his US returns online for the past couple of years and so far so good.
    Living Debt Free Rocks! recently posted..The Truth HurtsMy Profile

  • I’ve been using TaxAct since I started my career ~7 years ago. This year I paid $14.

    The first year I did my taxes I wanted to be sure I did it right, so I went to my local H&R Block and told the guy I already did my taxes, but if he wants to take a stab at them I’ll gladly pay him if the results are different. We spent about an hour or so and he came up with the exact same number. Every year things get a little more complicated, but my taxes definitely aren’t as complicated as yours sound.

    If it were me I would look at how much you think you might be off on all the questionable parts of your return and compare that to the price of your tax guy, $500, to see if it’s worth paying him or worth taking the gamble and getting called on it. I have no idea how much an AC system or the depreciation costs are, but if you’re only talking about <$100 difference either way on your taxes then being wrong might still be cheaper and next time you hopefully won't make that mistake again. Just a thought.
    Mr. Bonner recently posted..How are we going to buy a house – Part 3My Profile

    • That’s probably a realistic way to go about doing it, but it wasn’t just the AC system. We had a couple other issues that we wanted to discuss with him as well, so at some level we’re paying him for planning advice, too – which is tougher to put a price on.

  • In college and the first year out, I just filled out the 1040-EZ form. When things started seeming complicated, I went to H&R Block, like all my friends. I went there several years. But then one year I had an ownership in a Co-Op with a mortgage (which isn’t really a mortgage) and had cashed in my 401k, one of the many stupid things I did in my 20s. The lady at H&R Block knew less than I did! I was shocked that she had no idea how to handle the 401k. I assumed that one at least would have been somewhat common!

    So, after that I went to Turbo Tax. The only year I had any issues was one year when I was somewhat self-employed for part of the year. I think I just made that more complicated than it needed to be though. I’ll stick with Turbo Tax until things get more complicated, then I’ll definitely be hiring a professional.
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    • I’ve heard really mixed reviews on places like HRB or other pop-up type tax prep shops. It’s kindof scary that she didn’t even know what to do with your 401K cash out. That does seem like a fairly normal thing that people do, especially of they are switching jobs.

  • I think if we had very busy tax returns to do especially if we had income properties or a business we’d hire someone. Every year since I’ve lived in Canada we’ve hired someone to do our taxes. This year I took it upon myself to learn about the tax system and did them on my own. No problems at all and I saved us some money in the meantime.
    Canadian Budget Binder recently posted..How We Saved $146.90 By Reading The PaperMy Profile

  • We do our own taxes, but they’re fairly simple. The only investing we currently do is in Roth IRAs or a 403(b) (I think), so nothing weird there. The most difficult part of this year was keeping all my teacher receipts so I could accurately claim that amount on my taxes*.

    * teachers can spend up to $250 out of pocket and then take that straight off their taxes. I’m trying to remember now if it’s $250 off our income or $250 as a credit paid (I’d prefer the latter but am not sure now). I stayed under that limit, thankfully.
    Leah recently posted..A marriageable ageMy Profile

    • I think when I was a teacher, we got a one-time check for $250 that wasn’t recorded as taxable income by the IRS. I don’t know if that was a district specific way of handling it or if things have changed, but it was pretty easy.

  • ooh, that would be nice. Thankfully, my district is pretty good about purchases. They have paid far more for my classes than I have. It is simple to get purchase orders for stuff from the grocery or hardware store. My purchases were ~$150 last year, and those were either things I was too lazy to get the PO for or stuff like colored pencils or reusable activities I want to be able to take with me when I leave.
    Leah recently posted..A marriageable ageMy Profile

  • […] run this by our tax guy (answers to questions and long term planning like this are part of the service we’re glad we […]

  • […] then have no qualms about disposing of it. After all, I’ve run the numbers many times (and our tax man has even double checked them!) and we’re so far from being able to itemize deductions on our […]