Ask the Grumpies: When to use a tax professional?

Linda asks:

I’m trying to decide if I should continue working with a tax professional for my 2016 filing year. I’ve been working with a tax pro for nearly 20 years now, but I feel like I do much of the grunt work of taxes by pulling all the data together and organizing it. If I just went one step further and filled out the forms, I could be done with the process and cut out the additional cost. If I’m guided by a good tax program, I shouldn’t miss any potential deductions or credits.

But I’m not sure if this is a good idea or a bad idea. So my questions to the grumpy nation are: What works for you: tax pro or personal preparation? Why do you choose to prepare your own taxes? Or, why do you choose to use a professional? If you prepare them yourself, do you use a tax program? Which one do you recommend?

#1’s family does not use a tax professional exactly for the reasons you say– pulling the data together and organizing it is the biggest time-sink and tax programs are pretty good these days.  We do make mistakes from time to time (previously mistakes have been on state taxes back when we lived in a state with complicated taxes), but we’re not sure that a tax professional would have been any better.

That said, #1 has a friend who has a much easier tax return but uses H&R block anyway because she wants their protection if a mistake is made or she’s audited.  For the risk averse, that makes sense.

#2 uses TurboTax

#1 used to use Turbo Tax but then there was that year where they messed up something that would have forced us to spend more money on a different package of their software for something small and stupid, so we switched to TaxAct.

Both our partners do the taxes instead of us.  Because doing taxes stresses #1 out and #2’s DH has weird stock whatevers that only he understands.

13 Responses to “Ask the Grumpies: When to use a tax professional?”

  1. gasstationwithoutpumps Says:

    I’ve never used a tax professional nor a tax program. Sometimes the tax forms are a major pain to fill out, but the problem is in finding all the necessary records and trying to figure out how to declare odd forms of income (Schedule C or Schedule D?) or what education deductions/credits to take (they are mutually exclusive and have different rules). I doubt that an H&R-Block-level professional would be of any use, and I don’t really trust the tax programs to do anything more than help with the arithmetic.

    • nicoleandmaggie Says:

      Sometimes the tax software will be aware of rebates etc. that we were not aware of. I imagine that will be increasing in the future if Republicans stay in power and we stay high income.

      The tax software also does a pretty good job with dealing with how to deal with the childcare tax credit given we also take the dependent daycare credit through our employer etc.

    • Leah Says:

      I used to use a tax program when I made little enough income that it was free. I think I paid to file one year and then switched to paper after that. I always backed up and did my work on paper even when I had the program anyway (just to double check and to understand the process of doing taxe), so I feel pretty comfortable about it all. My paper amounts were always the same as the program.

      We get the book from the library plus any forms they’ve printed, so we usually only have to print one or two additional forms. Then, we read the book and follow the steps carefully. The main credit that applies to us is the teacher supplies one, so we are careful to take that.

      Re: pulling together paperwork, we have slots in our filing cabinet for taxes for the next 7 years. When I get something in the mail (or a receipt) that applies to taxes, I just throw it in the correct year. Once I get to the end of the pre-labeled files, I’ll know I can start recycling the oldest ones and making a new file for the subsequent year. That makes taxes much easier, tho we still do have to chase down all the bank forms and such.

      • Debbie M Says:

        My strategy is basically like Leah’s–I like paper, but then use my boyfriend’s TurboTax to officially do it and submit it. Once I did learn that a deduction applied to me that I had concluded did not apply to me, so that was cool.

        You could do both this year to help you make the decision for next year: do the taxes yourself, then go to the profession, see if there are any differences, and if so, ask the professional.

        If you decide to just do them yourself this year, make sure you look at your earlier returns to help make sure you’re remembering everything.

  2. Katherine Says:

    I use H&R Block online software. So far we have been low enough income that we can use the free version. That may change next year, in which case we will probably just pay for their basic paid online version. I might be tempted to fill out the forms myself to save a little bit of money, but my husband will point out that it is a very small amount of money and worth paying to get a friendlier user interface than we would get by filling out the forms ourself.

    This is the first year we’ve had any income in a state with income tax. The state return was way more confusing to fill out than the federal return, and the software was much less helpful than it is for the federal return.

  3. Leigh Says:

    Doing most of the grunt work is a huge part of why I stopped using a professional as well. We use a download version of TurboTax now and it works great! If you’re at all worried the first year, you could always do them yourself and hire someone, see what you like better and then go in that direction the following year.

  4. Dana Says:

    I think it depends a lot on how close one year is to the year before and how complicated your tax situation is. If nothing has changed, it should be easy to do the taxes yourself. If you have moved or bought a house or … then I like some reassurance and am willing to pay for it.

  5. chacha1 Says:

    We used an accountant the first few years after we got married. Then I got tired of doing all the work of pulling things together, then watching him take ten minutes to fill in the form and charge us $300 for the privilege. So I’ve been doing them myself ever since. (Yes, we could have just switched to H&R Block but once I’ve decided to stop paying someone else to do something, I just … stop.)

    DH does his mother’s taxes now, which are less complicated than ours except he does always have to do the capital-gains form. I’ve only had to do that once for our returns, and OMG what a PITA. My MIL’s brokerage account apparently provides a very clear and complete statement, including cost basis. DH’s Scottrade account does not, and I wish he would zero it out.

    In our experience, the IRS is so pathetically grateful for taxpayers who are not trying to weasel out of paying taxes (we routinely overpay and get refunds) that they will go to some lengths to help you fix anything you have done wrong. We’ve only had a couple of errors, both resolved in our favor, and we’ve never been audited despite the self-employment/business use of home potential red flags.

  6. Angela Says:

    My husband’s family, including us, all do our taxes on Turbo Tax – with the exception of the year that we bought our house and weren’t married yet. This year I wondered about whether to go back to a professional because we spent quite a bit on medical expenses yet (IVF) and will be able to deduct it. We did a bit of trial with Turbo Tax and it appears it will be easy to enter the deductions, so I guess we’ll stick with the software this year.

  7. Leigh Says:

    Unrelated but the “Where’s my trust fund” blog seems to have gone away. I know she hasn’t written much in a while, but she had some good old stuff and I miss her voice! I was looking for her blog to send her article on how much to save for college to a friend…

    • nicoleandmaggie Says:

      I noticed that in January when she didn’t do her annual update. :( Also not some other company owns the site. :( :(

      She had some really good posts. I think she had the best 30 days to better finances available on the internet.

  8. Linda Says:

    Thanks for all the tips! I got lazy this year and just sent everything off to the accountant anyway. I think I could use a program like Tax Act, so maybe I’ll make that a goal for next year.

  9. Revanche Says:

    I’ve done everything: pencil and paper, filing myself for free, filing with software, using a tax professional. These days things are complicated enough that I don’t want to take the time (hours!) to pore over the taxes myself anymore and I pay someone a lot to do them. It was taking many many painful hours for no logical reason and the loss of time was driving me to the brink.

    I’d like to save that money instead but haven’t wanted it as much as I wanted that time.

    I don’t know how you avoid spending the time on pulling it all together yourself for the tax professional though. How else are they going to get your numbers? If there’s a better way to save that time as well, I’d love to hear it!

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