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March 14, 2014

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When we had a business we used a preparer. When all our income was from just W2's, I used the prepare for a year and compared it to turbo tax. No difference because the situation was pretty straight forward and simple. So it's been turbotax since because my situation hasn't changed significantly.

Another nice thing about turbotax is I can do my kids tax forms with it as well. Again, pretty straight forward.

I use H&R Block at home. I was audited once (actually, the IRS tried to coerce $7000 out of me ... basically a letter saying pay now or we'll see you in court). I defended myself successfully without going to court. I had no need to waste my money on legal fees when I had the documentation proving I had paid the correct taxes. It did take, however, 9 months for the IRS to finally admit their pursuit of extra cash from me was over.

You could use a tax service, turbo tax, etc....to mechanically produce a return after the fact or have proactive, ongoing advice from a CPA during the year as well as at tax time...as I provide....The choice is yours...

Patrick R. Willis, CPA

I use TurboTax, and work closely with my company's tax dept so I can ask specific questions re: non-salary income, such as stock options, etc.

I use a CPA firm as well. My reasons are very similar to those cited by FMF.

While I obviously respect FMF, and I love this blog---there is one area, with all respect, where I am at odds with FMF however. Although I am an attorney and I keep up to date with personal finance issues-- I still see value in talking to a financial advisor on occasion.

If you find the right fee-only pro, who is educated, up to date, respected in their industry and works with people similar to you every day--- there is no question in my mind that they can add value.

I recently spoke with a financial advisor about my prospects for early retirement. Although my net worth is relatively high and I am working my way towards financial independence-- there are a slew of complicated issues and risks. Sequence risk. Interest rate risk. Longevity risk. Taxes. Mandatory distributions. Roth conversions. Inflation. Healthcare.

Retiring without a second set of experienced eyes critiquing your analysis and retirement income plan is playing with fire.

Not only does a pro have years of experience dealing with these issues, but they have the right technology and software and contacts to find solutions and options that most people would never think of.

If you simply fail to execute your social security filing strategy correctly it could cost you hundreds of thousands of dollars. And these are decisions that are not fixable after the fact.

I would advise everyone, even FMF, to talk to a really good fee only financial adviser at key points in your life. Especially before pulling the plug on your career and retiring. Whether its early retirement, on-time retirement or late.

FMF-- your thoughts?

Millionaire --

I don't disagree that advice is good if you can get it from someone who knows what they are talking about, practices it, and is honest. That's what I've found in my CPA. Haven't found a planner like that yet, but I haven't been looking either. ;)

I don't disagree that talking to someone is worthwhile, especially at/near retirement.

But just because I don't have a planner, doesn't mean I don't get advice. I get it from wealthy individuals who manage their money as well (some of them use planners, so I get info that way.) I get it from "planners" at parties, business gatherings, church, networking, etc. It's not detailed and specific, but there are nuggets of useful info, and it's free!

I also have two financial evaluations I can get for free -- one from Chase and one from Vanguard -- because of the amount of money I have with each of them. Obviously these will some with some baggage (especially Chase), but I'm willing to try them in the future.

Advisers are good. I don't think I appreciated that until I started using them, including a CPA for taxes. It's very tempting to save money and go it alone, but in the end, I've never regretted deferring to experts. I also like what FMF says about going over their work with a fine-tooth comb. No one cares about our money more than we do. I do all the grunt work for my CPA and give him a list of educated questions, then he does the thinking and advising. Also, No.5 on FMF's list is No.1 on my list. If I'm audited, I want the IRS to know that I payed for professional help and if I missed something, it was an honest mistake. I'd pay just for peace of mind when I file.

I have been doing my own taxes ever since I came to the USA in 1958. I have never had a problem, never been audited, and saved myself a lot of money over those 56 years. Likewise I have never paid anyone for financial advice and make all of my own investment decisions. I deal only with Fidelity Investments and have been extremely satisfied with their services.

We have similarly complicated taxes to FMF, with W-2 income, real estate, numerous partnerships and LLCs, and numerous deductions. We use a CPA because it's my mom, and she doesn't charge. We'd use a CPA regardless, because it's not worth it to us to try to figure everything out and keep track of the tax code changes each year. My mom already says she tends to learn something new each year from our tax return, so that's reason enough for me to leave the details to her.

I do my own taxes, but, if I had LLCs and real estate holdings to worry about, I expect I'd pay an accountant, too. If you only have salary (sub-~200K, to keep you out of the AMT zone) and investment income, there's no need to spend the money, though.

Sarah,
Our income (other than our pensions and SS checks) comes primarily from municipal bonds which are free of federal taxes. Of course now that we are well over 70 we also have to take mandatory taxable distributions from our IRAs, so even though we pay a fair amount of state & federal taxes our returns are quite straight forward.

CPA's have enough knowledge when it comes to money esp taxes. In order for you to be informed well, better consult a CPA.

Did my own taxes for the first time in years. I frankly got tired of doing all the work and feeling like I knew more than the CPA. Then last year when I got a notice about a weird state tax filing and small payment I didnt do for an LLC and i asked him about it he had no idea. I tried to find someone else but anyone who seemed qualified enough seemed even less interested than the current CPA (who was never good about getting back to me), so I just did it myself. Once you tax plan and prepare everything you've done pretty much all the work anyway.

Like I've found in everything from work to plumbing, only you care enough about your things to do it right.

I always use a professional to file my taxes. What they know about whats deductible and whats not has saved me thousands over the years.
I've become friends with my accountant over the years - I cant count the number of times I've called him up to pick his brains about something and have been glad that I did

It is hard to find a CPA that works. When I looked for one, most specialized in business only taxes, not personal or real estate (which is where I make most of my money). Maybe a blog article on how you found yours FMF?

Ginger --

I have two tips:

1. I asked around when I first moved to Michigan. Then I went and interviewed a couple CPAs, and picked one. FYI, I asked friends I thought were financially savvy, not just anyone.

2. I had the above CPA for several years, but he got too pricey. At a party I met another CPA who was a friend of my real estate mentor. We chatted and I liked his approach to taxes and so I switched my business to him. I've been with him three years now.

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