I’m writing this on behalf of the Thoroughly Enchanting Mrs. Pluto, although without her knowledge or consent. (As I’ve mentioned elsewhere, invoking the Straight Dope to settle an argument with Mrs. P. is like fighting a fire with gasoline.)
Every year about this time we sit down and write a check to the IRS. Lately the checks have been getting uncomfortably large. I maintain that this is largely the result of our affluence. We both work and I am very fortunate to have a job I enjoy that pays me very well. Having never learned Mr. Micawber’s lesson about nineteen, nineteen and six, we still have money worries, but that’s not the issue.
Mrs. Pluto, OTOH, maintains that the reason we pay so much tax is that we don’t use an accountant to prepare our tax forms. I have tried to explain to her that I am a tax-literate individual, that I know how to fill out the forms, that we are taking advantage of all the tax breaks that are (legally) available to us, etc., etc., and the only thing an accountant would do for us is to charge us money to do what I’m already doing. (His/her fees would be deductible, though. See, I know this stuff.)
So far I have resisted her arguments, but I can tell she’s thinking that I’m just being a stupid macho man who doesn’t need to ask for help. (I can tell she’s thinking that because she tells me she is. Repeatedly.) Now – it’s just possible, though it galls me to admit it, that she’s right and I’m (gasp!) wrong. I know you are all on my side and find the possibility ludicrous, but just for the sake of argument: Is there any good reason I should have an accountant do my taxes?
Our taxes are not complicated: We own our home so there are deductions for taxes and interest, we deduct our charitable contributions and our state taxes. We have good medical benefits so there is no deduction available there. We get some education credits because we have two kids in college. The reason we end up paying money rather than getting money back is because Mrs. Pluto’s employer withholds taxes from her wages at a rate consistent with her salary, which is in a lower tax bracket than that of our combined incomes. We know about that and we’ve taken steps to increase her withholding. We both defer a portion of our income into employer sponsered retirement plans. As I’ve said, we’re very fortunate. So what does Mr. Accountant do for us?
“I’ll tell him but I don’t think he’ll be very keen. He’s already got one, you see!”
I shan’t be able to speak for accountants. I do know that there are many good ones and for people with complicated tax situations they are indeed necessary.
I personally use one of the Tax prepartation programs (Taxcut and TurboTax are generally regarding as being the best).
My boss decided to go to an accountant this year. His wife was given a booklet with a bunch of questions. She then answered all of those questions which included writing in all the pertinent numbers off their tax documents. Then the accountant likely had someone type this into a tax preparation program and it told them their tax refund/bill. Then the accountant sent him a bill for like $400. He was going to go through a tax program himself, to see what the difference was, but I am not sure if he has or not.
One thing I know that his accountant missed was the Lifetime learning credit. My boss is going back to school and is elligible for the LTLC and the accountant did not even ask a question regarding that. So, he did not get the credit that he could have.
If you have a relatively routine tax situation (sounds like you do), then likely going through the interview process of the tax software would give you the same as the accountant. Maybe better because you know your own situation better than the accountant does.
Well, I had a beautiful reply crafted until I mindlessly hit the close button at the top and lost everything I typed. So, instead of an extended treatise advising you to keep on doing what you are doing, I am making this quick since I don’t want to type everything again.
I am an accountant.
If you feel comfortable with your final numbers being relatively solid, stick with doing it yourself. You have probably seen the reports where a person takes their tax info to 10 different accountants with 10 wildly different results. There is a reason for this. Tax laws range from the archaic to pointless to incomprehensible to outdated to irrelevant. It is a mindboggling task for anyone to know everything, so people usually come close, but likely aren’t perfect, even the professionals.
If your taxable and deductible items are truly as easy as you say, there is no reason to pay someone to do your taxes for you. You are likely pretty darn close to what their final numbers would be.
And, remember, it is actually a much better thing to owe money on the 15th than to be owed money. You pay the same amount of taxes either way. By owing money, you have been able to collect a little more interest with this during the year. As long as you plan for this eventuality and have the money available to pay the bill, you are in better shape.
Remember, this is your money they are taking. Not their money that you are being given.
Off of my tax soapbox.
We went right out there and refused to do accoustical versions of the electrical songs that we had refused to record in the first place.
I work in accounting and have prepared taxes in the past - they really are not that hard. Unless you have your hands in multiple companies, are buying/selling stocks regularly, etc., the normal home-owner, with 401k, IRA’s, children, etc, really can prepare their own taxes with confidence. With turbotax and other tax preparation software out there - go for it!
Pluto, I don’t have any real advice or comparisons to add. I just wanted you to know that there’s someone else out here facing the same arguments. Mr.C3 and Mrs.Pluto could be reading from the same script, with the distinct difference being that my dainty self was never accused of trying to be macho. I finally did the taxes myself and it did hurt to write that damn check out to the Treasury, but not nearly as much as it would have if I had had to add a couple hundred onto it for the CPA.
I’m with ya, man. Stick to your guns.
Unless you have taken large capital gains in the past two years and/or you have capital loss carryovers. When the government lowered the capital gains rate, they made the rules incomprehensible for those holding periods between 18 and 24 months for assets bought during 1997 and 1998 (I think those are the correct months and years, but don’t bank on it). So after having used TurboTax for a few years, I’m having an accountant review the numbers this year. I just want to make sure I’ve got all my long term gains lined up with long term losses and similar for short term.
NYC IRL III
is on April 15th. Do you have what it takes?
I work in accounting, I have always done mine myself. I think you are on the right track. If you think you got all areas covered, then you prolly do, who should know better than you, right? My $.02
I don’t know what happened to the thread in which I prrviously mentioned this (it’s around here somewhere, I know…), but, the first year that I was married, my wife insisted that we should let her mother’s accountant do our taxes, instead for undergoing the stress of doing them ourselves. I consented, and we paid him $50 (this was a while ago).
He made a $500 mistake. I’ve done the taxes since.
You should point out to Mrs. P. that:
Whilst accountants can be stupid (no offense, Mullinator), they are unlikely to be as endearingly stupid as you are; and
No matter how endearingly stupid your accountant is, you can be that endearingly stupid for free.
Just don’t tell her that you read these arguments on the SDMB :).
“I don’t just want you to feel envy. I want you to suffer, I want you to bleed, I want you to die a little bit each day. And I want you to thank me for it.” – What “Let’s just be friends” really means
Thanks for the good advice. I need to mention a couple of things I should have included in the OP:
I’ve got nothing against accounting as a profession or accountants as professionals. There have been times when I’ve needed and used an accountant and I’ve always gotten good service. And there are certainly a lot of tax-related issues that you would be foolish to do yourself. I just don’t think (and most of you seem to agree) that I need to hire somebody to do my taxes at this time.
The discussion between Mr. and Mrs. Pluto degenerated when I discovered I’d made a large and egregious error. She asserted that a professional would not have made such an error. I calmly responded that I always check the numbers two or three times and that I had in fact caught the error. She then resorted to tactics such as rolling her eyes and laughing maniacally. Honestly, I don’t know what gets into her sometimes!
Rather than worry about paying an accountant to do your taxes AFTER the fact, you might consider hiring a financial planner (or tax planner) to look at your finances BEFORE the fact. There are tax-deferred or tax-exempt investments, for instance, that might be worthwhile doing. Or buying a property to rent. Or…
It’s hard to save money on taxes once the year is over. The time to save money on taxes is BEFORE the year is over.