For the past 10-15 years, either I or Mr. Athena have been self-employed as contractors, and have used a CPA to do our taxes. Between various write-offs from working from home as well as the extra complications that come from self-employment, the $700-$800/year seemed well-spent.
Now, for the first time, we’re both employed as real W2 employees, and have been for all of 2014. I remember doing taxes back in the late 1990s, and it wasn’t a big deal. I just bought some software and went through it.
I’m hoping I can go back to that. We have certain deductions, but not anything crazy, I don’t think. We own a home. We have 401ks and we sold some stock from our employee stock purchase plan last year. We both still work from home, but as employees I don’t think we can deduct that. Nothing else stands out as anything unusual or difficult.
So… dump the CPA and save the $$? If so, what tax service/software do people recommend?
I think my first instinct, unless your CPA is a jerk, is to ask him. I’ve been using the same person for several years, and he’s always got a full plate at tax time. I don’t think he’d have any trouble telling me that he didn’t think I needed him (and there have been, in fact, years where I haven’t). At the very least, you should ask him to give you an estimate for his services based on how much your situation has simplified this year. Maybe it would be significantly cheaper than what you’ve been used to.
That being said, if you feel comfortable enough doing it yourself, I think you probably should. As much as the IRS gets a bad reputation (and perhaps deservedly so, in some cases), I’ve had two separate encounters with them over mistakes on my taxes, and in both cases, a few phone calls was enough to sort things out with them without much stress.
I like Turbo-Tax. We also buy “audit defense” for additional $49.95 when we file.
We’ve used “Audit Defense” to reply to 2 IRS letters (past two years) about 529 withdraws. Basically Audit Defense was just an intermediary passing our substantiation of educational expense to IRS so we could get “sorry - no tax due” letter after a few months. Almost not worth the trouble of having somebody in the middle, but many would find representation a comfort. I think of it as insurance in case of a real audit.
On the home office - Turbo Tax will figure out if you qualify I expect. You take sq footage of home office, provided it meets IRS rules, and allocate expenses and then there is an AGI exclusion. If you make too much $ your decision is simple, no deduction. If not, you might want to consult tax professional to decide if it is “worth” potential tax consequences down the road when you sell for the tax benefit of home office deduction now. You can probably use a tape measure and some goggle info to figure out whether home office deduction is option.
For the record… I am not a CPA or tax professional.
You’ve come to be in the same situation I am in - work-from-home W2 person, homeowner - and I’ve used TurboTax since 2006. Always get a nice fat return. It’s VERY thorough (I buy the…Deluxe? The one they recommend for homeowners)
Then I learned I’d being doing it wrong. I was fortunate, in that the IRS accepted my explanation, and very fortunate, in that the final cost to me was actually quite small.
I just download the forms and instructions from the IRS, fill in the forms online and save all the pdfs, and mail in paper. Doesn’t cost a dime other than postage, ink, and paper. If your income is all wages and your deductions are the usual mortgage interest and local taxes, it’s a piece of cake.
Second the IRS downloads if there is little to no figuring- but when we had a business and home office to figure in, TurboTax deluxe. Prior to the internet, CPA. TurboTax got us more deductions than I had been able to find
ESPP sales can be a bit tricky. Even with software you have to understand how the basis is calculated for ESPP sales or you can get it wrong. It’s not really complicated but you can have situations where you made money on the sale but your Schedule D should show a loss, which can be confusing if you don’t understand why it’s like that. Other than that, your tax return sounds pretty easy and is certainly not worth paying $700 to a CPA.
I use H&R Block’s TaxCut, which consistently seems to be a bit cheaper than TurboTax, and I’ve never had any problems. It’s useful to me over doing it myself, because year-over-year it tracks things like capital loss carry-forwards and my IRA basis.
