Doing your own taxes

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GassYous

GassYous

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  1. Attending Physician
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I've always had an accountant do my taxes and recently thought that maybe it would be better to buy turbotax and do it myself. Thoughts? I figure if I'm going to be gathering the documents anyway, I may as well just do the data entry myself.
 
I have an LLC that I made a few years ago to do some consulting work. Never really took off, but when it came time to do taxes it seemed pretty complex given the structure of the organization (I had a personal LLC that then owned half a partnership that did the actual work with my business partner). It scared off folks like the regular HRBlock tax advisors so I figured I better hire a proper tax specialist to do it. Long story short it ended up costing more than I made that year to have my taxes prepared and it really wasn't that big of a deal to do so in the end.

The point of this story is that I'm a chump.
 
GassYous said:
I've always had an accountant do my taxes and recently thought that maybe it would be better to buy turbotax and do it myself. Thoughts? I figure if I'm going to be gathering the documents anyway, I may as well just do the data entry myself.
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TurboTax doesn’t charge until you file. For this year, you can do shadow taxes on TurboTax and see if the accountant is any better. I did that many years ago and have used TurboTax ever since. My taxes are simple though.
 
I think if you are willing to put in the time and read a bit it is very easy to do. It is also informative and you learn some stuff too. For example any time someone mentions how me spending money on X is fine because I can 'deduct it' I have an internal eye roll because I know almost nobody can itemize successfully these days.
 
When you get audited, it is really nice to just pay your accountant to discuss the return with the IRS. Sure, you are there, but not really having to do much.
 
pjl said:
When you get audited, it is really nice to just pay your accountant to discuss the return with the IRS. Sure, you are there, but not really having to do much.
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If your income is fairly low (below $250k) and you are W-2 then doing your own taxes should be fairly easy. But, if you have an S Corp or LLC then I think having a CPA makes sense.

when I was earning more than $250k as a W-2 I got audited twice using turbo tax. So, I hired a CPA and haven’t been audited in 12 years. FYI, the audit was a time waster and I didn’t owe any more money to the IRS. From my experience I think the IRS is less likely to audit a professional CPA prepared tax return vs a individual for high income earners. In addition, your stress level is lower having a cpa back you up. My cost for a cpa ranges from $350 ( as a w-2) to $950 as an S Corp with 2 employees.

I likely won’t do my own taxes again until my income falls below the $200k level and I’m only doing W-2 work.
 
I've done my own taxes since I started working at age 16. My first year in PP I was on a K1 and used an accountant since everyone else in my group did. The accountant charged me closed to $1k from what I recall. Since then I've been back to doing my own taxes.

Doing your own taxes isn't complex and is perfectly within the capabilities of most physicians. The idea of using a CPA to protect yourself from an audit or save you the hassle in case you are audited is fine, just realize what you are paying for that convenience over a 20-30 year career. It's not a small amount of money.

You learn the tax code doing your own taxes, and what saves you money and what isn't worth the effort. It's worthwhile and I'm glad I do it. All that said, I know the large majority of physicians won't do their own taxes because they equate high income with tax return complexity. That's definitely not the case.
 
For the first time this year, TurboTax didn't work for me. It kept insisting that I needed to file one of my state returns as "married filing separately" and I couldn't figure out how to tell it otherwise. It was a bizarre bug since it's done that state for me correctly for the last 7 or 8 years. Tech support was worthless.

I just filed that return online via the state's free web site. It was surprisingly easy and simple.

I have to believe the audit risk for someone taking the standard W-2 deduction and not doing anything crazy on the 1099 side has to be low. Paying a CPA $1K+ just so I can pay them more to answer questions from an unlikely IRS audit seems unnecessary. I'm not depreciating business vehicles, doing some home office thing to deduct my commute to the hospital, or adopting orphans from federal wildlife refuges. Years ago I paid a CPA but things were more complicated then.
 
Southpaw said:
The idea of using a CPA to protect yourself from an audit or save you the hassle in case you are audited is fine, just realize what you are paying for that convenience over a 20-30 year career. It's not a small amount of money.
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$500 x 25 years = $12,500

I’ll work for an extra two weeks at the tail end of my career to never have to sit down and do my own taxes over the course of 25 years, and to have someone to point to in the event I get audited.
 
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Urzuz said:
$500 x 25 years = $12,500

I’ll work for an extra two weeks at the tail end of my career to never have to sit down and do my own taxes over the course of 25 years, and to have someone to point to in the event I get audited.
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that’s cool. Shoot me the info in a couple decades if their rates remain flat.
 
Urzuz said:
$500 x 25 years = $12,500

I’ll work for an extra two weeks at the tail end of my career to never have to sit down and do my own taxes over the course of 25 years, and to have someone to point to in the event I get audited.
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You do realize having a CPA doesnt mean your audit ceases to be a problem right (you still sign the tax form certifying it is correct)? If the CPA made a mistake or you forgot to give them some sort of information you (not your cpa) could still end up owing the IRS.
 
pgg said:
For the first time this year, TurboTax didn't work for me. It kept insisting that I needed to file one of my state returns as "married filing separately" and I couldn't figure out how to tell it otherwise. It was a bizarre bug since it's done that state for me correctly for the last 7 or 8 years. Tech support was worthless.

I just filed that return online via the state's free web site. It was surprisingly easy and simple.

I have to believe the audit risk for someone taking the standard W-2 deduction and not doing anything crazy on the 1099 side has to be low. Paying a CPA $1K+ just so I can pay them more to answer questions from an unlikely IRS audit seems unnecessary. I'm not depreciating business vehicles, doing some home office thing to deduct my commute to the hospital, or adopting orphans from federal wildlife refuges. Years ago I paid a CPA but things were more complicated then.
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TurboTax does the same thing for my wife and myself. I think it just doesn't like active duty military filing separate state returns on separate w2 incomes for whatever reason.
 
I used to use a cpa years ago because our taxes were more complicated. Now we are much easier, no foreign investments, no rental property, both w2, and I even stopped doing some 1099 side job stuff. Turbo tax has been my go to for maybe 10 years now. No problems. It’s actually very easy. If I got audited, there’s nothing to find. The only real risk is a home office for my wife, and she actually does have a dedicated exclusive office space, and meets the criteria to deduct one because of the nature of her job and headquarters thousands of miles away.
 
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Turbo tax also offers some audit defense thing. I think it’s $100 or 200 more. I don’t use it because I would defend myself in an audit, because as I said we have simple standard type deductions and no complexity anymore.
I can Xerox a bunch of receipts for them, for free at work 😉
 
chessknt said:
You do realize having a CPA doesnt mean your audit ceases to be a problem right (you still sign the tax form certifying it is correct)? If the CPA made a mistake or you forgot to give them some sort of information you (not your cpa) could still end up owing the IRS.
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Well no ****.

Find a CPA that is honest and will use the tax code to your advantage, and can go to bat for you in case you get audited. I have enough to humility to admit that I have a much higher chance of making a mistake on my taxes than the CPA I use would. So, I use him and sleep with the peace of mind that in the event I get audited, I have someone that knows what they're talking about to vouch for me. Additionally, I don't have to physically sit down and prepare my taxes as well, which saves time.

Again, worth the extra two weeks of work for me over the course of my career.
 
Urzuz said:
Well no ****.

Find a CPA that is honest and will use the tax code to your advantage, and can go to bat for you in case you get audited. I have enough to humility to admit that I have a much higher chance of making a mistake on my taxes than the CPA I use would. So, I use him and sleep with the peace of mind that in the event I get audited, I have someone that knows what they're talking about to vouch for me. Additionally, I don't have to physically sit down and prepare my taxes as well, which saves time.

Again, worth the extra two weeks of work for me over the course of my career.
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Ok that is a value assessment you can make but your comment about 'pointing' at your CPA made me think that you thought you were off the hook for audit problems.
 
My accountant charges me around $300.

Generally taxes aren't difficult. Just tedious.
Not worth the hassle to do it myself.


I do have a general idea of my tax liability though.
 
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Where is everyone finding such cheap CPAs? The ones I reached out to all quoted around 1300-1500 dollars for a straight W-2 tax. Granted I am in the bay area and things are more expensive but 300 dollars seems a bit cheap.
 
nimbus said:
TurboTax doesn’t charge until you file. For this year, you can do shadow taxes on TurboTax and see if the accountant is any better. I did that many years ago and have used TurboTax ever since. My taxes are simple though.
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I've done the same thing with H&R Block. One year I even filed Federal using them, but self-filed for my state (for free) after using their software to compare. I think it's a good exercise to understand how tax credits and deductions work, or usually, DON'T work when you are making W-2. Kids, mortgage, etc, IRS will still get you. Sure, you will save $80 (Online) to $300+ (CPA). But what's a whole Saturday worth to you? Now that I have locked down the number of dependents and mortgages I will probably just use the software from now on.
 
codeb1ue said:
Where is everyone finding such cheap CPAs? The ones I reached out to all quoted around 1300-1500 dollars for a straight W-2 tax. Granted I am in the bay area and things are more expensive but 300 dollars seems a bit cheap.
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Oh hell no. You should be smart enough to learn to do your own tax in one weekend and save that dough. IRS instructions are the worst, but you can fill one out on Turbo or H&R, follow along, and compare with your own.
 
codeb1ue said:
Where is everyone finding such cheap CPAs? The ones I reached out to all quoted around 1300-1500 dollars for a straight W-2 tax. Granted I am in the bay area and things are more expensive but 300 dollars seems a bit cheap.
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Use someone not in the bay area. Ask around for recommendations.

My CPA is in southern California which is a HCOL area although not to the degree of the Bay area.

The CPA I use is based on word of mouth/family recommendations. I have never met him. Only talk to him on the phone. I mail my documents and he does the same. Works out well.
 
Even with an S Corp, Turbotax is no biggie. Just plug the numbers from your K-1 in under the S Corp section. Brokerage forms can be download straight to the software. W-2 can be entered with a snapshot from your phone. Just have to make sure that things went in correctly. And yes, maybe a bit of a learning curve the first year or two, but some weirdos like me find this stuff interesting.
 
I have done my own taxes since I started working after high school. The online software works pretty well, especially for simple tax situations. Through the years my taxes have become more complicated, but in a stepwise fashion that allows for a little bit of learning each year. I like knowing the why behind my tax bill, and completing my own taxes gives me [a sick] personal gratification. I haven't looked into a CPA, although I've been tempted. From a purely financial standpoint, it may be cheaper to work the extra day, but if everything flows well you can save a bit of money.

I have learned to manage W-2, K-1 for wife, backdoor roths, investment accounts, itemized deductions, 529 account, state taxes (simpler than federal), et cetera. You can find instructions for all lines on the IRS website, and some simple internet searches can also prove helpful.

If you have already submitted you taxes for the year, you could try doing them yourself online (but don't submit them, of course) to see how hard/simple it is for your situation. You may be pleasantly surprised. Good luck
 
What exactly is it about doing taxes that people hate, even with the different platforms like H&R block and Intuit?
Seems like there is a prime opportunity for someone with tech know-how to develop a much easier and intuitive way and make bank in the process
 
I have always done my own taxes since I started working at age 14, currently using credit karma. It's 100% free. Honestly, with all of the time that we sit in the OR (I am MD only, no supervision), it doesn't even cut into my free time. And I have learned a lot from doing it myself for 20 years which informs my decisions for the upcoming year.
 
Everyone's asking the wrong question of their CPA. If your question is "Can you do my taxes for me at a rate that makes sense?" - If your situation is fairly basic, then no, it's not economical.

However, the real question should be "What can you do to help me minimize my tax burden in the upcoming years?"

That's going to net you much bigger savings. It may also complicate your life. So make sure you're on the same page with your CPA about how complicated you're willing to be, and especially how far you're willing to wade into the gray zone.

And as above, while it's true that you will be on the hook for your CPA's mistakes, you better believe that they'll be able to fight for you in tax court (if the IRS even pursues you that far) way better than you ever could.

And just like every year when this topic comes up, I'll add that I'm biased as I'm married to a CPA.
 
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Ive always used Turbotax, its very easy. I decided this year to have someone else do them; H&R block. They got me an additional 6k in return, cost me 200 bucks...
 
Ya did it first on Turbotax like I normally do. Im still trying to figure out what they did to yield such a big difference. I consider my taxes pretty straightforward. W2s, IRAs, HSA, mortgage, student debt, 2kids. The main reason why I wanted someone else to do it was to make sure I was doing the Roth conversion correctly. Maybe I was entering that wrong in Turbotax? Not sure but glad I had someone else look at it.
 
Tramadeezy said:
Ive always used Turbotax, its very easy. I decided this year to have someone else do them; H&R block. They got me an additional 6k in return, cost me 200 bucks...
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Very interesting. AFAIK H&R Block uses software very similar to TurboTax. Did you find out what you were missing?
 
I have used TurboTax for years with the additional audit protection. Our group has a CPA that gives each of us a W2. After downloading the W2 the rest is easy. One thing I can tell everyone is that despite changes in the tax laws the effective rate that I have paid as a percentage of my income for federal taxes has hardly budged since the Clinton administration. Reagan tax cuts were the last meaningful decrease. The Trump tax cut was totally offset by the loss of deductions that went with it. Payroll taxes are a different story. The FICA max in 1984 now looks like a true pittance.
 
I pay an accountant and it is money (<$1000 per year) well spent each year. The fee is tax deductible (because obviously the accountants got that into tax code) and helps me minimize taxes each year by having a professional provide advice to me but also minimizes the risk of an audit.

(my returns are moderately long and mildly complicated, if you just have a flat W2 income it is probably not worth it)
 
Mman said:
I pay an accountant and it is money (<$1000 per year) well spent each year. The fee is tax deductible (because obviously the accountants got that into tax code) and helps me minimize taxes each year by having a professional provide advice to me but also minimizes the risk of an audit.

(my returns are moderately long and mildly complicated, if you just have a flat W2 income it is probably not worth it)
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www.thebalance.com

Tax Preparation Fees Deduction: Who Can Still Claim It?

It used to be that you could deduct tax preparation fees as an itemized deduction, but only self-employed taxpayers can do so through 2025, subject to certain rules.
www.thebalance.com www.thebalance.com
 
So I used turbotax. It was fairly easy except I messed up characterizing the backdoor roth conversion and accidentally doubletaxed myself. So I had to amend the return but otherwise ok. Wasted a weekend though.

Thanks a lot for the advice!
 
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chocomorsel said:
That’s one of the main problems with this country and how taxes are done. And people are OK with this? It’s like they basically buy their way to no taxes because they provide jobs. It’s BS.
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i think the low tax rate for capital gains from investments is also a move that strongly favors investors and rich guys, and does little to help the average citizen
 
For those of you who do your own taxes, how long does it take you to put it all together? Is it literally a matter of consolidating the information, W2 forms, investment forms, etc? Or something else? What would make it easier?
 
coffeebythelake said:
For those of you who do your own taxes, how long does it take you to put it all together? Is it literally a matter of consolidating the information, W2 forms, investment forms, etc? Or something else? What would make it easier?
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I generally just enter each form into whatever program I am using that year as I receive it while watching tv then do a full once over at the end.
 
coffeebythelake said:
For those of you who do your own taxes, how long does it take you to put it all together? Is it literally a matter of consolidating the information, W2 forms, investment forms, etc? Or something else? What would make it easier?
Click to expand...
Even before all of my documents arrive, very early in the process like early January I go into turbotax and fill out as much as I can without the exact numbers. I enter all the other info and go through all the other questions. That process takes about 1-2hours. Thats one day.

Then when the documents have all come (usually I just check online at the various websites), I spend another 1 hour entering the exact numbers into the missing boxes. Then I stare at turbotax and obsess about it for another 1-2 hours. Then Im done for that day but I dont send it yet.

I give it about a week of doing nothing, but ready to send. During the week I go through it all a couple more times just to make sure I got everything done the way I wanted and no more optimization can be done. But I usually dont make any changes in these final pass throughs. Then eventually when I convince myself there is nothing further to do and all the documents and numbers are in - I send. I send it out as soon as the government is able to accept them with this method. BY that time I have all the info complete and have gone over it multiple times..
 
Hoya11 said:
Even before all of my documents arrive, very early in the process like early January I go into turbotax and fill out as much as I can without the exact numbers. I enter all the other info and go through all the other questions. That process takes about 1-2hours. Thats one day.

Then when the documents have all come (usually I just check online at the various websites), I spend another 1 hour entering the exact numbers into the missing boxes. Then I stare at turbotax and obsess about it for another 1-2 hours. Then Im done for that day but I dont send it yet.

I give it about a week of doing nothing, but ready to send. During the week I go through it all a couple more times just to make sure I got everything done the way I wanted and no more optimization can be done. But I usually dont make any changes in these final pass throughs. Then eventually when I convince myself there is nothing further to do and all the documents and numbers are in - I send. I send it out as soon as the government is able to accept them with this method. BY that time I have all the info complete and have gone over it multiple times..
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I was taught this workflow by a CPA family member. You aren't diffusing a bomb with the need to go super slowly but there is no reason to do it in 1 hour and send immediately. You don't have anything to gain by not taking a couple day break from it and then reviewing it with fresh eyes.
 
Neopolymath said:
I was taught this workflow by a CPA family member. You aren't diffusing a bomb with the need to go super slowly but there is no reason to do it in 1 hour and send immediately. You don't have anything to gain by not taking a couple day break from it and then reviewing it with fresh eyes.
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Wasn’t mentioned by Hoya, but I’ve also found (as I’m sure most of you guys have) that it gets much easier year after year if employment is stable, you live in the same house, same kids, same investment accounts, etc. The system is reasonably smart and you end up just updating new #s often.

Much harder in years where you have big life event changes/live part of the year in one state and part of the year in a different state and so on.
 
okayplayer said:
Wasn’t mentioned by Hoya, but I’ve also found (as I’m sure most of you guys have) that it gets much easier year after year if employment is stable, you live in the same house, same kids, same investment accounts, etc. The system is reasonably smart and you end up just updating new #s often.

Much harder in years where you have big life event changes/live part of the year in one state and part of the year in a different state and so on.
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When I have a life change such as a spouse getting a new job with complicated compensation, I will do taxes myself and then pay a CPA to do them as well that first year so I can compare. Naturally, I learned that on this forum.
 
For 8 years I did my own taxes using turbo tax and also used a CPA. I wanted to see how I did vs the CPA. Typically, the difference was about $100 in total taxes. But, it took me about 4-5 hours to do the work with turbo tax. For the past 3 years I simply turn my info over to my CPA and he does it all. For a W-2 with a little 1099 Side work the cost is well worth it. ($450). I also believe having a CPA do my returns provides a better firewall against audits vs TurboTax.

For those who have a simple W-2 with minimal stock trades/investments and no 1099 work I think H and R block or TurboTax are just fine. FYI, about 10 years ago I used to pay H and R block around $200-$250 to help me with my returns IMHO, my CPA is a much better value at $350-$450.
 
So this year I did my taxes with freetaxusa. Free federal filing and 15$ per state which becomes 13.5$ when you use the 10% off coupon. Took me about 2-3 hours because I had to input everything myself instead of having it being imported like with turbotax. I liked it and recommend it for people with simple tax returns.
 
Our group has an accountant that takes care of our PC taxes and we all get W2. I do my own taxes because IMHO as a W2 employee they are simple and straightforward. If I had a side business or owned rental property I would use an accountant.
 
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