Doing your taxes: online or hire an accountant? (1 Viewer)

[Yoshi Sugawara]

So it's almost that time of the year again. I just recieved my W-2 statement, and I decided to go ahead and start my tax return (since I have no other investments, dependents, etc.) online.

I'm a little disappointed with the refund I'm getting so I was wondering - would hiring an accountant make a big difference? I don't have any special situations - I'm not legally blind as of 12/31/02, I didn't win the lottery, I didn't give millions to charity. Do accountants "maximize" your refund?

 

[Greg*go]

I really don't understand how the H & R Blocks out there claim to increase your tax returns so much. Unless you keep receipts for everything, the average person pretty much has to use the itemized deduction.

I used some online site last year, and got my refund fast. I wish I remembered the site to see if I could use it again for free this year. All I remember about it is that I found a link for it at IRS.gov. As far as a tax break, the biggest things you have to look for is seeing if you are available for any type of tax credits. That's where you save a whole heap of money. Education and kids are pretty big tax breaks, they both give tax credits. The site I used last year asked just about everything to see if you are available for any benefits. Plus I did take a personal income tax class while in school, so that really got me over the hump as far as being scared of doing my taxes.

 

[Carl Johnson]

I just got my W2 earlier this week and for the first time I'm gonna have my taxes filed professionally. Every year up until now I've done the 1040-EZ myself and mailed it in but this year I'm using a pro because it's gonna be more complicated this time. This is going my first year using the home mortgage interest deduction and the cost of having a pro do it (just under $100) isn't much more than I would have expected to pay for some otc tax cut software in a retail store. I'm sure I could have figured it out considering my dad who's been doing his own taxes has been dealing with mortgage deductions, child deductions, multiple incomes and marriage for 20+ years longer than I have using just pencil and paper, but I don't hesitate to spend $100 getting anything else reviewed by a professional. Besides, maybe there is some little box i've been overlooking that could get me more money back.

 

[Mathew Shelby]

Just a note, you can "hypothetically" do your taxes for free on the web at turbotax.com. I think you have to click turbo tax on the web (or something similar). It doesn't cost you anything to do them (unless you actually file them). Two years ago, I had H&R Block do my taxes, then for kicks I did them on the website and found another $200 deduction I could use. The moral of the story:
H&R Block-$60 (only as good as the person who enters the info in the computer)
TurboTax-$9.95 (super easy, asks you questions like, "Enter the number in box 13 here", etc. Doing it this way gives me the benefits of the program without actually having to buy the software.

 

[Michael*K]

Another vote for Turbo Tax. I've been doing mine with it for years. Last year a friend asked me to do his after he went through H & R Block. The tax software came up with an additional $110 that could have been refunded to him that the H & R Block tax preparer missed.

 

[LewB]

I've been using Turbo Tax for several years now and have no complaints. I get the 'Deluxe' version for $40 with a $10 rebate. Also included is a $10 rebate to e-file which makes that free, and a rebate to get the state tax programs for free. So it costs $30 plus tax and stamps to get the programs.
The questions that TTax asks along the way make it pretty easy to do your taxes, it will even import your stock brokerage info if your broker is tied in with TTax. I usually take a pass at my taxes early in Feb. If they owe me, I file ASAP and use e-file. If I owe them I wait to pay 'till April and use snail mail.
There is a bunch of hubbub about a software registration that was added to TTax this year. I will only allow you to load the complete package on 1 computer. Bad if your dasd goes bad or you buy a new machine after loading TTax.
As for saving money, from what I understand some if not all of the tax regs. are subject to the interpretation of the preparer, so if you find an 'aggressive' preparer he/she will find more deductions.

 

[MarcVH]

I've been using TurboTax for years now and have complaints. TT is lousy at handling "wash sale" situations, and it forces you to register from a single computer, so if you buy a new computer and then need to re-run it to file an amended return or something you're SOL. For that matter, TT is lousy at amended returns in general. Next year I won't buy it again.

Having a pro help with your taxes can make sense if you have a complicated situation (though I probably wouldn't choose H&R Block.) However, if you really want a pro to help reduce your taxes you should talk to him during the year about how to plan for tax reduction (e.g. can you prepay your property taxes for next year in order to pull the deduction into this year, when it may be worth more to you?) instead of just waiting until April when it's too late to change anything.

As a practical matter, if you don't itemize your deductions (i.e. you're not a homeowner) and you don't have some sort of business, there's probably not a whole lot for a tax preparer to "find" that you couldn't find easily enough yourself.

Just remember, hiring a professional doesn't mean you don't have to worry about or understand anything. You're still the one who signs the return. I know people whose tax preparers have engaged in dubious practices and they have no idea what was done, where those assumptions came from, etc. It's a bad way to fly.

 

[Michael*K]

There is a bunch of hubbub about a software registration that was added to TTax this year. I will only allow you to load the complete package on 1 computer. Bad if your dasd goes bad or you buy a new machine after loading TTax.

Must only be an issue for Windows systems. I use the Mac version, never had to register and I have it running on three machines.

 

[Yoshi Sugawara]

Thanks for the replies - I use TurboTax on the web as well. It's easy to go through - no hassles, no "subtract box 45-51 from 42a".

I find myself answering "No" to a lot of questions, so it doesn't appear I qualify for any special tax credits. So does it sound like TurboTax on the web would be better for me than to go to a tax preparer?

 

[nolesrule]

If all you have are W-2s, 1099s for bank and investment interest/dividends (Schedule B), college loan interest and/or IRA contributions then you might as well do it yourself, because there would be absolutely nothing a tax professional could do to decrease your tax liability and it wouldn't be worth the fee.

You would have to have various qualifying itemizations over whatever your standard deduction would be in order to get any benefit from itemization. That's where the pro comes in because they might suggest something you neglected to include. They also come in handy for capital gains/loss calculations, self-employment/sole proprietor tax returns (schedule C) and other less common situations.

Whether you use a software product or fill out forms by hand is up to you.

 

[Chris PC]

In Canada I use H & R block. You gotta sit down with them and ask questions. They do ok, but I've never checked it all out and compared their results.

 

[Greg_R]

I use the web version of TurboTax... this allows you to access your account via any computer (as long as you know your password!). TT covers all of my issues (house loan interest, student loan interest, stock sales, etc.).

 

[Clinton McClure]

The only thing I don't like about TT is it won't allow me to claim the dead hitchhiker buried in the basement as a dependant.

On a more serious note, I'll stick with H&R Block again because of my stocks and having several different jobs this year, I have a grand total of 5 W-2 forms.

 

[Adil M]

This is going to be my first time doing taxes, b/c I always got paid "under the table" or just didn't do taxes. I'm a student and working technically fulltime and getting taxed about 34%. Something doesn't add up here. That just seems like a hell of a lot to me. I have no benefits or any of that other garbage.
Anybody got any tips for me? I'll probably get a pro to do it, but I'm kind of iffy based on this thread. I sort of *blush* want most of my damn money back. Besides some stocks I invested in years ago. That's it. My sister was in the same situation as me and said she got almost all of her money back. Is this possible or should I call her on this claim? Thanks fellows.
And yes, in this situation I am that clueless.

 

[Jim_F]

I used the 1040EZ and Telefile until I bought my house. Since then, I've been using TaxCut Deluxe. It's pretty straightforward and I get my refund via direct deposit by mid February.

 

[Tom Fynan]

I've used TurboTax for several years, with no complaints. I did an experiment last year, because I thought my taxes were getting complicated - I became a partner in my medical practice, and had lots of new deductions and expenses. So I did my taxes on TurboTax, and then went to an accountant. The refund I calculated with TurboTax was within $10 of the refund the accountant came up with. This year I'll stick to TurboTax, and save the accountant's fee.

Tom Fynan

 

[Clinton McClure]

A couple years ago, I was an hourly employee with a manufacturing company and was being taxed @28%. I worked 40 hours a week at regular pay, every other Saturday at 1.5x regular pay and every other Sunday at 2x regular pay. I received a promotion and became salaried (NEVER do this by the way) and my taxes raised to @33%. The interesting bit of it all was my gross income was now lower (by almost $5000/yr) than my previous gross income when I was hourly. (When I went salaried, I still worked all the previous overtime on Saturdays and Sundays but was no longer paid for it.) I'm guessing that for some reason, I made less money and fell back into a higher tax bracket. Gotta love the American taxation system.

 

[MarcVH]

Are you talking about how much your withholding was, or how much tax you paid? How much money you get withheld from your paycheck is just an estimate. What matters is how much tax you end up paying when you file your 1040.

 

[Michael D. Bunting]

Turbo tax online for me this year...actually just completed doing it a few minutes ago. Small refund for me and the wife this year, mostly due to the fact that I was tax-free for nearly half of 2002.

We just purchased our first new home and our first mortgage payment was in January of 2003 (this past month!), so next year, I'll probably need to hire a professional to figure out all the mortgage mumbo jumbo that goes with a new home purchase.

I have heard you are supposed to come out way ahead on taxes when you buy your first home...is this correct?

 

[Carl Miller]

I really don't understand how the H & R Blocks out there claim to increase your tax returns so much. Unless you keep receipts for everything, the average person pretty much has to use the itemized deduction.

H&R Block makes the bulk of it's money preparing refund returns for low income people. Their claim you're referring to revolves around making this specific customer base aware of things they weren't previously aware of.

Earned Income Credit, Child Tax Credit and Additional Child Tax Credit are the 3 biggest things they help people "find". It's just a matter of their prime client base not being educated enough, or confident enough to find out about (or understand) these things themselves.