My husband and I have always done our own taxes, because they were always pretty simple. We bought a house in May, though, which means they’ll be more complicated this time around, so we’re thinking about having a pro do them for us. I’ve heard some bad things about H&R Block, and I don’t really know of any other professional tax-doers. Anyone have any recommendations?
A house purchase doesn’t make your tax return much more complicated. You should still be able to do it yourself. Assuming there’s a mortgage, you’ll get a Form 1098 from the mortgage company, telling you the numbers to put on Schedule A for mortgage interest and property taxes (if your mortgage payment includes escrow for property taxes). If you paid points when getting the mortgage, that may be deductible on Schedule A. There’s not much more to it than that. Even if you also sold a house it’s usually pretty simple.
I agree, it isn’t hard at all. I do my taxes in about 15 minutes because my only deductions are mortgage interest, property taxes, some part of my vehicle registration fees and charitable donations. Schedule A is pretty easy and obvious. If you’ve never itemized your deductions before you’ll probably need the amount of your last state tax refund also and any 1099s that you get from your bank showing the interest paid as well. If it seems to complicated you can use software like Turbotax that will walk you through it.
HR Block can be good. Look for an HR Block Premium office. They have enrolled agents there and generally a ton more experience.
I would recommend TurboTax. It’s $50 and it will walk you through everything very simply. I’ve never had any trouble doing taxes (including my mortgage deduction) with TurboTax.
I can’t recommend H&R Block as they screwed up my taxes very badly and I had to end up doing part of them myself. In my experience, they are over-worked, part-year employees that simply can’t be expected to know every nuance of state tax laws (especially out of state tax laws).
What really pissed me off at them was that they told me definitively that I didn’t have to file a tax return in a state where I had worked. I checked the laws, and guess what, I did. I guarantee they wouldn’t have paid for my audit or penalties if I had followed their advice and not filed.
Thanks for the suggestions. I think maybe I’ll look into Turbotax. I’d seen the commercials, but I didn’t know anyone who’s used it.
I’ve used it simply out of laziness before. It remembers all of your prior year information so that you don’t have to keep re-entering it year after year and when they e-file it you get your return in your bank account very quickly. It generates the state tax form too. I’ve heard that it isn’t good for a complicated tax situation but since I’ve never had one I wouldn’t know.
In the Pro Tax community, that company is generally looked down upon.
You want an EA or CPA. EA’s are a little better price-wise.
Once you get a Pro to do your taxes, you can go to Turbo-tax for the next years. But starting with Turbo-tax can mean you miss a lot of things.
You represent the entire “Pro Tax community” and can speak with authority about an entire company? :dubious:
As for EA vs CPA, I think that is kind of like for some reason saying you should get an overpriced general doc (CPA) when you need a good heart surgeon (EA). Both have credentials, but the CPA takes a test over the various aspects of general bookkeeping whereas an EA takes a more detailed test specialized in the field you really need at that moment (i.e., taxation) and is “enrolled” by the agency that you need them to represent you with (i.e., the IRS). (Both an EA and a CPA need a PoA to represent you at an audit. I am not sure if a CPA has the cred to represent you in tax court, though). FWIW, my EA also has a MS degree in Taxation - something that I would encourage you to ask your CPA to show you.
Nope, just what my Bro tell me. He’s an EA. He tells me that when a client comes into a Pro and tells the Pro their taxes were done at at that company, there’s quite a bit of inward groaning and eye-rolling. That company made most of their bux preparing 1040EZ’/A’s and charging Usurious rates on "refund anticipation loans, etc.
http://www.usatoday.com/money/perfi/general/2006-09-17-refund-loans-usat_x.htm
"*The loans often run for seven to 14 days — the interval between the date they are issued and the date the lender receives the IRS payment that satisfies the debt. Because the loans are short term, the annualized interest rates often soar to 100% or higher.
More than half of those who received the loans in 2004, or more than 5 million taxpayers, were recipients of the earned income tax credit, a major federal anti-poverty program, IRS data show.
They paid an estimated $1.24 billion in refund-anticipation loan fees for 2004, the most recent year for which the data are available, according to a January report by the National Consumer Law Center, a non-profit that focuses on issues that affect low-income Americans.
They often don’t realize that they’re borrowing their own money at high rates — or realize that they’re signing up for a loan at all. "…
In February, California Attorney General Bill Lockyer sued H&R Block for allegedly misleading clients about the cost of the loans, a charge the firm denies. The case, which seeks several reforms, is proceeding even as H&R Block and its lending partners recently agreed to pay $101.5 million to settle other class-action cases filed over refund-anticipation loans.
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Actually a good number of EA are retired IRS agents, who don’t have to take the test and likely do not have a MS degree in Taxation. You are correct in that EA’s are specialists and most CPA’s are generalists.
For a few rare problems, you need a Tax Attorney. Generally if you do, your EA will tell you and suggest a good one.
I’d be sure to Google for “turbo tax discounts” if you’re going to use them. No reason to pay full price for the product.
NO! Do not use TurboTax the 1st year of buying a house! There are a lot of deductions and weird things involved in the escrow, closing costs and what not. Some of which are kind of grey, so you need a pro.
Go to a EA or CPA, get them done professionally. After that 1st year, you’ll be able to do them yourself using TT, if you like.
See, that’s the kind of thing I was worried about. I got the tax form thing from our mortgage people, but we both only have a tentative (at best) grasp of how the escrow thing even works. We just feel so out of our depth with this. Are there any websites out there that rate EA’s or CPA’s? Or should we just open the yellow pages, close our eyes, and point. 
If they are an EA, or a Tax Specialist CPA, they are competant. That doesn’t mean they will be a perfect fit for you, of course. I suggest you ask around your local freinds and co-workers. Or, call a few and talk to them over the phone, and you’ll be able to tell if you will work well together. Do it now, before the end of the month, before they get busy.
DrDeth appears to have a vested interest in steering you to a tax professional. Your return is not complicated. A little bit of research on your part (which you’ve started here already) will save you a couple hundred dollars in preparation fees.
Escrow is not directly related to your tax return. There are two forms of escrow involved in a house purchase - escrow of funds before the purchase and escrow of property tax payments by your mortgage servicer. Escrow of funds before the purchase makes no difference to anything - it’s just an account that held some money until the transaction was completed. It is immaterial to your tax return.
Your mortgage servicer (the company you send your mortgage payment to) probably holds money in escrow to pay your property taxes. They get this money from you by adding it on top of the principal and interest payments that make up your mortgage payment. When your taxes are due, the mortgage servicer pays the taxes for you with the money in the escrow account. This is also largely immaterial to your tax return. The only part that matters is that the Form 1098 that your mortgage servicer sends you (usually in January) will say how much they paid in property taxes on your behalf last year. This number will go on Schedule A on your tax return.
Form 1098 also shows how much mortgage interest you paid. This number also goes on Schedule A. However, you may have paid more interest than what Form 1098 states:
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During the closing of the house purchase, you may have paid some mortgage interest upfront. This will be shown on the HUD-1 Settlement Form you received at the closing. If you paid mortgage interest at closing, add that amount to the amount on Form 1098 and use that number of Schedule A.
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You may also have paid points. Points are a prepayment of interest which lowers your interest rate. If you paid points on the mortgage, add that amount to the amount of mortgage interest and enter that number on Schedule A.
Basically, you need to add up all of the mortgage interest you paid last year and include it on Schedule A. There are other items you include on Schedule A, such as state tax and personal property taxes (such as vehicle excise tax).
If you use TurboTax it will ask you in detail about each of these things. Almost all tax professioansl use tax software that works just as TurboTax does. In fact, many of them use TurboTax itself. You can save yourself a lot of money if you take a little bit of time to learn how to use TurboTax or TaxCut or any of the other popular tax programs.
True statements. The question is whether you understand the tax laws well enough yourself to understand the questions appropriately. It is far more than understanding the software - go pickup set of tax regulations & give 'em a read. (There are only a dozen or so - with teeny print). But hey, what do I know - save yourself a couple hundred bucks on preparation & loose perhaps more on deductions from a lack of understanding. The government will thank you & its less that they will come to the rest of us to collect.
By the way, I also suspect those “professionals” that are using TurboTax are probably also standing behind the counter at the local beer & wine or changing your oil, too. There are all kinds of people that will do things for a “cheap” fee. I prefer someone with the qualifications to advise me and in the event I do get a note from Uncle Sam can effectively represent me in their presence.
FWIW - I have no vested interest in sending you to a tax professional. I do, however, appreciate the fine advice I get from mine. Worth every penny and has saved me far more than I have spent on the services. YMMMV.
I am going to fall somewhere in between GusGusterson and** DrDeth**. I work for a CPA firm, and am happy to tell you that (based on what you have said) you CAN do your taxes yourself if you want to do the research to make sure you do them right. You might find it worth your time to check into going to a pro and seeing what they would cost you. The ammount of headache they could potentially save could be worth their cost to you. But you do not *need *a pro, and H&R Block, while not the horrible place they have been made out to be in this thread, probably won’t do a lot better by you than you could do for yourself. I know a few very competant young CPA’s who moonlight at H&R block (not from my firm, our guys are too busy to moonlight) but they seem to be few an far between.
Also, if you are going to go to H&R block, go as soon as you possibly can. The closer it gets to April the more overworked they become and the more likely they are to not actually give a damn about your tax return.
Disclaimer: I am not your financial or tax advisor and this does not constitute tax or financial advice etc etc.
From what I understand, H&R people aren’t really formally educated and they basically are just trained to take your forms and enter it in a program. So you’re pretty much paying a normal joe retail worker, and very likely a clueless one, to run your precious tax documents through the green box.:eek:
I am an user of H&R Taxcut program and have not had a problem at all with it.
Sure, I do. :rolleyes:My Bro, who is an EA, does taxes for non-profits, so of course I’ll benefit from a client (likely in another state) who can’t possible even be a client of my Bro’s.
What exactly is a Point? They aren’t always called points. Can TurboTax read your closing documents and tell you which are Points and which aren’t?
During closing and escrow, there are also a number of other Taxes paid, and even small amounts of Mort interest paid. Can TurboTax read your closing documents and tell you which items are deductable taxes and which aren’t?
Although it is true that many Tax Pro’s do use TT, it is a case of GIGO. If you don’t know what to look for, you can’t possibly input all the correct numbers.
I have little doubt that a 1040 (with a new home purchase) done by a Pro will save more than the cost of the fees as opposed to the same 1040 done by an amatuer their 1st time.
To prove this, all the OP needs to do is buy TT, prepare their taxes with TT, then go to a Pro for review, which costs less. I’ll bet the Pro will be able to save them at least the cost of the preparation. Then there’s the added peace of mind.
HR Block does a crummy job of telling people about their Premium Offices. I wold grant you that there are a lot of “trained” people in the regular offices. A lot of the people with the real credentials end up in the Premium Office though. These are the EAs, usually (at least as far as I understand it). If you have not checked into services at the Premium Office, I would recommend you at least check it out.
As previously mentioned, it does come down to finding the right person. My preparer handles the aspects of tax that are important to me. There are others that deal with corporations, others that handle trusts, etc.
Interesting article today in the Washington Post on problems that people who should understand can have with tax software - here. (Note - this is not intended as a cite to back up my points. Just an interesting article.)