Just curious: how much do you pay your accountant? A single federal/state personal return done by a pro goes for anywhere between $400 and $800 around here, compared to $80 or so with TurboTax. I can’t imagine the difference between an accountant and me doing my taxes to be more than that, especially with a “not terribly complicated” return. Are your taxes really hundreds of dollars less just from hiring a sorcerer to do them?
I used to use TurboTax and painstakingly enter everything imaginable and read everything to make sure I wasn't missing anything and would consistently get back around $4,500 to $5,000 in total between Federal and state. Using him, we got back $6,500 total. Also, with the Trump tax changes taking effect, a bunch of coworkers of mine said they got screwed and got back like half of what they used to get back. A few said they were about on par. We got back more than usual.
He actually just does them for free because my wife has an LLC in her name and we pay him to do the LLC taxes and other stuff. And he said the hardest part is doing the LLC work and we were already paying him for that - so since our returns were actually quite simple he'd just file them for us because the hard part was done (and paid for). Not sure what it normally goes for. I think you're correct that it's around $400, though. And in that case, we definitely net out much more than the $400 we would be paying if we were paying. I'm sure every situation is different, but for us it's a clear win. And if you're wondering - no we aren't funneling losses through the LLC or anything like that. The LLC is profitable and only increases our income which is why we figured we would get screwed like my coworkers with the tax changes, but somehow did not.
Comparing the refund amount isn't very informative. Effective tax rate or dollars paid is a better comparison, especially in years like this one where the witholding tables got kinda weird so lots of people over/underpaid their taxes over the course of the year.
Good point. I took a look. He appears to be 0.5% more effective than me doing it myself with software. Doesn't sound like much, but it's far more than the $400 or so we would normally be paying for this.
EDIT - 0.5% meaning my effective tax rate is 0.5% lower.
Wow, does he provide any explanation of the delta between the two returns? Side by side comparison of what’s being filed?
I ask because I once did go to a CPA, after first filling out the forms myself. The tax bill he computed was identical to what I came up with, so I concluded he provided no value over doing it myself!
He just files for us so no side by side because I'm not going to do it in tandem to compare because that's what his job is. But I think for us the reason is that he plans in advance what we should be doing during the year to minimize the tax impact on the business side of things - i.e. do this now, do that later, and do that other thing next year, take this disbursement now, pay this estimated tax, write off that loss now, etc. So I think it's more that the critical stuff is done throughout the year rather than just doing a post-mortem - proactive rather than reactive.
