Comments on How Are Your Taxes Prepared?TypePad2013-02-20T02:42:02ZNAhttps://www.freemoneyfinance.com/tag:typepad.com,2003:https://www.freemoneyfinance.com/2013/02/how-are-your-taxes-prepared/comments/atom.xml/Elizabeth commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d415a4627970c2013-02-28T17:28:10Z2013-02-28T17:28:10ZElizabethI do my own taxes. First, because I simply LOVE all that stuff. I'm part of the 3.5% that uses...<p>I do my own taxes. First, because I simply LOVE all that stuff. I'm part of the 3.5% that uses TaxAct. Usually, I prepare my taxes on both Turbo Tax and TaxAct and always file with TaxAct. Why? It's a lot cheaper for the same result and sometimes my refund is higher and/or my taxes due are lower. The total cost is about ~$35.00 compared to Turbo's $100 in change. My taxes are pretty straightforward, however, even if they weren't, the tax software is sophisticated enough and covers just about everything.</p>Mc commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d4159acaf970c2013-02-28T16:00:02Z2013-02-28T16:00:02ZMcI use a professional tax service since 2000, because it is provided as a benefit of my job (which is...<p>I use a professional tax service since 2000, because it is provided as a benefit of my job (which is way cool!) Before that I always did it myself using the paper forms, but I dont think I could do that now that my finances have gotten more complex. The tax service also provides personal recommendations on tax planning and I use that too.</p>sbruce45 commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c3724f318970b2013-02-28T02:28:30Z2013-02-28T02:28:30Zsbruce45I do them myself using both TaxAct and doing it by hand. This way I get a better understanding of...<p>I do them myself using both TaxAct and doing it by hand. This way I get a better understanding of how the taxes are calculated and it's a double check on what I have entered. I've caught missing entries in TaxAct and on paper by comparing the two results. This is especially true when you have to make manual calculations for entry into Tax program to your dividends and capital gains for state tax purposes to account for different exempt income.</p>jim commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c65044970d2013-02-27T21:54:47Z2013-02-27T21:54:47Zjimhttp://www.freeby50.comIvy, are you in a relatively small town where the CPA you use is the only one in town? That...<p>Ivy, are you in a relatively small town where the CPA you use is the only one in town? That might cause his higher expenses as he has to cover his overhead with few customers. Maybe you could check into the CPA in nearby towns?<br />
</p>CoolMouseLuke commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c63a1b970d2013-02-27T21:39:36Z2013-02-27T21:39:36ZCoolMouseLukeTo me, the main value of the CPA is not so much the tax prep, but tax planning. I need...<p>To me, the main value of the CPA is not so much the tax prep, but tax planning. I need to talk to them or exchange emails for 15-30 min a few times a year to determine tax affects of different things that come up. I have that cost included in my yearly fee, have somewhat complex return with real estate LLC, and still only pay $425/yr. That advice in itself can easily cover the fee, besides all the hours saved in preparation. And you'd be surprised how easy it is to talk to them during the year when it is not tax season and they aren't swamped!! </p>jim commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d41520ddd970c2013-02-27T20:47:18Z2013-02-27T20:47:18Zjimhttp://www.freeby50.comI'm surprised that so many people use 'expert' preparers. I had the impression a lot more people used software.<p>I'm surprised that so many people use 'expert' preparers. I had the impression a lot more people used software.<br />
</p>Noah commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c372295a7970b2013-02-27T20:05:22Z2013-02-27T20:05:22ZNoah@JP Instead of doing the taxes by hand, can't you print out the forms with the values within TurboTax? I...<p>@JP</p>
<p>Instead of doing the taxes by hand, can't you print out the forms with the values within TurboTax? I could see moving them onto the forms by hand taking at least an hour and being rather tedious.</p>DPF commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c5121d970d2013-02-27T19:02:49Z2013-02-27T19:02:49ZDPFhttp://digitalpersonalfinance.comI now use a CPA. While I think that people with simple returns can simply do it by themselves or...<p>I now use a CPA. While I think that people with simple returns can simply do it by themselves or with tax software, it can become more complicated for people as they get older and have more going on financially speaking. Expertise of a professional can help save money and save time.</p>getagrip commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d41511c47970c2013-02-27T18:37:59Z2013-02-27T18:37:59Zgetagrip@ Apex. I probably should have stated at least you "feel" covered if there is a mistake. Fully agree you...<p>@ Apex. I probably should have stated at least you "feel" covered if there is a mistake. Fully agree you should understand what was done and why and be in agreement before signing. If there is a mistake and they did something wrong while I would expect to pay additional taxes and fees they better not be charging me for refiling.</p>
<p>Also, while IRS auditors are restricted to a large extent in their discression, they are people too. I would suspect that if they felt it was an honest mistake on your part and you were trusting a preparer to do it correctly, they would be inclined to give you some leeway if it was within their authority.</p>Paul commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c372180e2970b2013-02-27T17:34:41Z2013-02-27T17:34:41ZPaulI used pen and paper up until 6 years ago. By then, the worksheets became too time consuming, so I...<p>I used pen and paper up until 6 years ago. By then, the worksheets became too time consuming, so I switched to H&R Block software. Takes me less than 2 hrs to enter all the information and file.</p>JayB commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c48d2c970d2013-02-27T17:34:29Z2013-02-27T17:34:29ZJayBI'm one of the 3.5% who use TaxAct. I have been using it for 3 or 4 years now and...<p>I'm one of the 3.5% who use TaxAct. I have been using it for 3 or 4 years now and it is very straightforward, thorough and easy. I usually get it around $17 which does my State and Federal, and it remembers things from the previous year, so unless a lot has changed, it can go very quickly. I know last year it took me 1 hour and it was completely processed. The most time consuming part is figuring out business expenses for my online advertising campaign. I will continue using it since it does the job and is cheap. </p>PEG commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c4790b970d2013-02-27T17:17:47Z2013-02-27T17:17:47ZPEGMy 87 year old dad still does his taxes with a pencil and paper and no calculator. Last week I...<p>My 87 year old dad still does his taxes with a pencil and paper and no calculator. Last week I used turbo tax to check his return and he was correct to the cent, as he doesn’t round his figures. His taxes have gotten simpler since he no longer files schedule C and F, but he still hand figures the taxable portion of his pensions, IRA’s and dividends. Very impressive for an “almost old” guy. He is very frustrated that he no longer gets tax forms in the mail. He doesn’t use a computer so he goes to the library to get the forms and booklets.</p>Strick commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d4150a3db970c2013-02-27T17:13:31Z2013-02-27T17:13:31ZStrickIvy - sounds like you should use a 'real' CPA for a couple reasons, but $600 is way too high...<p>Ivy - sounds like you should use a 'real' CPA for a couple reasons, but $600 is way too high for such a simple return. You maybe should be willing to pay 'more' for a good CPA given your issues and concerns, but I'd consider that 'more' to be closer to $200-$250. You just need to call around.</p>FMF commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c46470970d2013-02-27T17:01:04Z2013-02-27T17:01:04ZFMFhttp://www.freemoneyfinance.comIvy -- Is he the only option in your town? If not, ask your friends and business contacts who they...<p>Ivy --</p>
<p>Is he the only option in your town? If not, ask your friends and business contacts who they use/recommend for alternatives.</p>
<p>If he is, ask if you could potentially save some money by having a junior CPA in his firm do your taxes. They would likely charge a much lower hourly rate for their work.</p>Ivy commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d415089cc970c2013-02-27T16:55:04Z2013-02-27T16:55:04ZIvyI need to change how we do our taxes, but am not sure what is the best solution. I had...<p>I need to change how we do our taxes, but am not sure what is the best solution. <br />
I had done our taxes myself when we just had W-2s. Then some years ago I messed up the IRA deduction (we had exceeded the allowed limit for a deductible contribution). IRS caught this 2 years later, we paid interest, and I went running to a CPA with whom we have stayed ever since. IRAs still intimidate me a lot - we have done Roth conversions since, and every year we seem to untangle the status anew. <br />
Having somebody else's eyes on this increases my comfort, there are 2 major issues I have with the current arrangement<br />
- he is very expensive, close to $600 - for what is, outside of the IRA contributions and conversions, a very simple return (salary, mortgage and property tax, some charities). This is the co-owner of the CPA firm in our town, so I expect the overhead is not small<br />
- despite the cost, this annual resorting of the IRAs is bothering me - and we've had to do 2 amendments already. At this price I would expect everything to work smooth and fast. And since I am responsible to the IRS, I need to be certain that this is handled correctly</p>
<p>I am not sure how to find a better solution though. I guess I'll see if I can get TurboTax to give me the same result this year and if not, I may check H&R Block next year.</p>Jonathan commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c37213da0970b2013-02-27T16:45:04Z2013-02-27T16:45:04ZJonathanI use a "mom and pop" CPA...well a "mom" CPA...my mom. We definitely check the return over before filing, and...<p>I use a "mom and pop" CPA...well a "mom" CPA...my mom. We definitely check the return over before filing, and my wife often finds an omission or an oversight which we correct. Still, it's a great deal as my mom does it for free rather than charging us $500+ due to the complexity of our return.</p>JTS commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c42417970d2013-02-27T16:15:52Z2013-02-27T16:15:52ZJTSI used to do all my taxes on pen and paper. It was easy when I started off with EZ...<p>I used to do all my taxes on pen and paper. It was easy when I started off with EZ forms, but I continued to do them by hand even when I had side business income. It helped me a learn a lot about taxes and small businesses, but it was definitely time consuming. And I was also doing my parents' taxes by hand, which was complicated given my dad was doing work as a missionary outside of the U.S., so I had to learn a bit about foreign income.</p>
<p>Last year, I switched to TurboTax, and wish I had done so earlier. My main reason to switch was that we started getting rental income in 2011, and my wife started a small business of her own, so I didn't want to do all the additional paperwork by hand. With some additional investment changes in 2012, I'm glad to have TurboTax and some of the built-in importing features to help me through the data gathering. I'm still curious to see if a CPA could do any better, but have yet to consult with one.</p>
<p>-Jon</p>Old Limey commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d41503123970c2013-02-27T15:50:12Z2013-02-27T15:50:12ZOld LimeyI prepare my own tax forms using pen and paper, and have done so since 1958 when I first came...<p>I prepare my own tax forms using pen and paper, and have done so since 1958 when I first came to the USA. These days my situation doesn't change much from year to year so it's quite easy.</p>
<p>I like the idea of "If it ain't broke, don't fix it."</p>FMF commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c3720f1b4970b2013-02-27T15:48:58Z2013-02-27T15:48:58ZFMFhttp://www.freemoneyfinance.comTo back up what Apex said, here's a mistake my former CPA made: http://www.freemoneyfinance.com/2008/04/my-tax-mess.html This is why you need to...<p>To back up what Apex said, here's a mistake my former CPA made:</p>
<p><a href="http://www.freemoneyfinance.com/2008/04/my-tax-mess.html" rel="nofollow">http://www.freemoneyfinance.com/2008/04/my-tax-mess.html</a></p>
<p>This is why you need to know your taxes and check them over before filing -- even if a CPA (or similar person) does them for you.</p>
<p>As for responsibility, my CPA actually has an "engagement letter" that says while they will be doing the taxes, the ultimate responsibility for them being correct is mine.</p>Apex commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c3720ebdb970b2013-02-27T15:44:23Z2013-02-27T15:44:23ZApexBTW, CPA's make mistakes too. I have used a CPA since I started investing in real estate. Two years ago...<p>BTW,</p>
<p>CPA's make mistakes too. I have used a CPA since I started investing in real estate. Two years ago they made a mistake on my return. They deducted double the mortgage interest payments on one of my properties. I do not know how they managed to do that but they did. I examine my returns very carefully and found their mistake within minutes. Fixing their mistake increased my tax bill, but not fixing it could have meant an audit with back taxes, penalties and interest.</p>Apex commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c3720e333970b2013-02-27T15:37:50Z2013-02-27T15:37:50ZApex@getagrip: "Is it any wonder most people are intimidated into using someone else to file? At least you're covered if...<p>@getagrip:</p>
<p>"Is it any wonder most people are intimidated into using someone else to file? At least you're covered if there's a screw-up."</p>
<p>Not sure what you mean by covered but if you mean that you are not responsible for mistakes because a CPA prepared your taxes that is not true. If there is a mistake on your taxes you the filer are 100% responsible for it, for paying the back taxes and interest and penalties. Your CPA firm will likely represent you in an audit but if the IRS disagrees with "choices" your CPA made they don't fine the CPA they fine you. </p>
<p>I suppose it's possible your CPA firm could warrant their work but I know of people who were "aggressive" in their deductions. When the IRS threw them out, their CPA did not pick up the tab, the filer did.</p>
<p>You still sign your form and even if you don't understand a thing that your tax accountant did, by signing you are stating that you understand what is being reported and that it is all correct. This is the verbiage above the signature line on the 1040 which I am sure most people don't read: "Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete."</p>
<p>Using a CPA reduces the chance for mistakes, but it does not shift the liability if there is one.</p>KT commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d414ff337970c2013-02-27T15:03:12Z2013-02-27T15:03:12ZKTI used to do my taxes through the IRS site, since I just had a W-2 and could always file...<p>I used to do my taxes through the IRS site, since I just had a W-2 and could always file the EZ forms. But this year, I have moving expenses and some IRA stuff, and I tried to do it myself but found it very confusing. On the software I was using (1040.com, one of the free files through the IRS), I couldn't figure out where to report my 1099s and how to show that I had had taxes withheld from a roll over. I don;t know what iRA recharacterizations are, or what an IRA basis is, or how to show the IRS the difference between my traditional and my Roth IRA, it all seemed to run together. So, because my AGI is low enough, I'm going to the state provided free tax preparation. But I want to learn how to do it in the future, so I'm hoping the organization can show me how to do it.</p>JP commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c3c4cf970d2013-02-27T15:03:10Z2013-02-27T15:03:10ZJPDid TurboTax to get the "correct" numbers but never actually filed. Then filled out the forms by hand and made...<p>Did TurboTax to get the "correct" numbers but never actually filed.</p>
<p>Then filled out the forms by hand and made sure the numbers matched.</p>
<p>Instead of paying $70, I paid postage.</p>Lance at Money Life and More commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c3a0ac970d2013-02-27T14:37:37Z2013-02-27T14:37:37ZLance at Money Life and Morehttp://www.moneylifeandmore.comI used to use the software from whatever CPA firm I worked at this year but I now work in...<p>I used to use the software from whatever CPA firm I worked at this year but I now work in corporate accounting and used turbotax. I actually wrote up a post about my experience with turbotax today on my blog.</p>JimL commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c398c8970d2013-02-27T14:31:39Z2013-02-27T14:31:39ZJimLI do have a return that is a bit more complicated than average. I could do them myself, but have...<p>I do have a return that is a bit more complicated than average. I could do them myself, but have decided to keep going to a CPA so that he has all of my history. I am a cancer patient and if something would happen to me, my wife would not feel comfortable with taking over this task and she would have someone to go to that is familiar with my finances and taxes.</p>Mike commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c372056c8970b2013-02-27T13:52:19Z2013-02-27T13:52:19ZMikeI do them myself using Turbotax (have done them this way for many years). I do itemize deductions but my...<p>I do them myself using Turbotax (have done them this way for many years). I do itemize deductions but my taxes are still pretty straightforward (I am a former accountant although I never prepared taxes for a living). I also do them in Turbotax for several other family members.</p>Strick commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c34ac5970d2013-02-27T13:23:56Z2013-02-27T13:23:56ZStrickTurboTax until I started my business and I ended up with things like home office deductions, balance sheets, out of...<p>TurboTax until I started my business and I ended up with things like home office deductions, balance sheets, out of state filings and stuff like that. Only by using my CPA have I even noticed the weird way in which some of my personal investments are supposed to be handled from the majority of them (turned out one was technically a partnership and was supposed to be filed as such).</p>
<p>I know taxes quite well and could pull this off on my own, especially with his previous work in my hands now. But besides the fact the $500 I pay him saves me tons of hours anyway, he's given me some good "free" business accounting and tax planning advice over the years while I sit there, stuff much more complex and personal than what I can find. And though I have never tried to cheat on my taxes, and know I'm ultimately responsible for the returns, there's frankly something comforting about a professional being between me and the IRS.</p>John S @ Frugal Rules commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017d414f75fa970c2013-02-27T13:20:28Z2013-02-27T13:20:28ZJohn S @ Frugal Ruleshttp://www.frugalrules.comI always used to do our taxes, but we hired a CPA last year. We run our own business and...<p>I always used to do our taxes, but we hired a CPA last year. We run our own business and there are just too many moving parts for me to do the taxes confidently anymore. I'd rather spend the money and hire an expert so I can free my time up for other things.</p>getagrip commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c32810970d2013-02-27T12:53:26Z2013-02-27T12:53:26ZgetagripI did them by hand for years. Then we used a CPA for about five years when we had an...<p>I did them by hand for years. Then we used a CPA for about five years when we had an in-home business which was very useful. After we shut the business down we used the CPA for another year or two. Then one year I had the CPA do them, while at the same time I bought turbo tax and did it myself and the results, given my situation, were the same. So from then on I used turbo tax. Turbo tax - about $45-50, CPA - about $200-225. I would have no problem going back to the CPA if my situation changed and I felt I needed them.</p>
<p>The real problem is that the states and feds are making it harder and harder to do it yourself without either software to print out the correct forms or having someone else prepare them. My kids for example had no clue where to go to get their tax forms, what to read, etc. It used to be that you got the forms in the mail so you at least had a clue where to start and could read what to do. Now, it's all about getting your forms on-line, usually with warnings about the consequences of messing up. Is it any wonder most people are intimidated into using someone else to file? At least you're covered if there's a screw-up.</p>Mike Hunt commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017c37201033970b2013-02-27T12:48:04Z2013-02-27T12:48:04ZMike HuntTurbotax: If it's good enough for Timothy Geithner, it's good enough for me! -Mike<p>Turbotax: If it's good enough for Timothy Geithner, it's good enough for me!</p>
<p>-Mike</p>JM commented on 'How Are Your Taxes Prepared?'tag:typepad.com,2003:6a00d83451bcbd69e2017ee8c31687970d2013-02-27T12:36:34Z2013-02-27T12:36:34ZJMI am part of the 7.5%, but I'm also a CPA myself.<p>I am part of the 7.5%, but I'm also a CPA myself.</p>