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Over the last 6 months, I got a new job which came with a significant pay increase, bought a house and my third child is due next month. I've been recommended by a friend to get an accountant seeing so much has changed. I might be in new tax bracket and I should make sure I'm not paying too much or not enough. I've always used TurboTax (pro or premium, the one that asks all of the questions).

Should I get an accountant to sort this all out? Will I miss anything on my taxes this year?

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A reason to get an accountant is to avoid penalties for possible mistakes. That is, if you make a mistake, the IRS can impose penalties on you for negligence. If the professional makes the SAME mistake, the burden of proof for "negligence" shifts to the IRS, which probably means that you'll pay more taxes and interest, but NO penalties; hiring an accountant is prima facie evidence of NOT being negligent.

I would get an accountant since this the first time for you in the present situation, when mistakes are most likely. If you feel that s/he did the same for you that you would have done for yourself, then you might go back to doing your own taxes in later years.

  • The other reason for getting an accountant is that you don't have time to do taxes yourself. – DJClayworth Nov 15 '11 at 14:12
  • Actually my benchmark was always that if I could make more money that the accountant would charge me for the tax return, in the time it took me to do the tax return, it's worth getting an accountant. Also, given the change in David's circumstances I would definitely get an accountant, at least for one tax year. – Timo Geusch Nov 16 '11 at 15:32
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I don't know if I would go so far as to hire an accountant. None of those things you listed really complicates your taxes all that much. If you were self-employed, started a business, got a big inheritance, or are claiming unusually large deductions, etc. then maybe. The only thing new from your post seems to be the house and a raise. The 3rd kid doesn't substantially change things on your taxes from the 2nd.

I'd suggest just using tax preparation software, or if you are especially nervous a tax-preparation service. An accountant just seems like overkill for an individual.

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    I agree unless you suddenly have a lot of new expenses that you would like to deduct as part of your new job then TurboTax is designed to help and will probably be accurate. Your risk for audit increases with your deductions, both size and number of them. – user4127 Nov 15 '11 at 15:47
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    +1 agreed, John. A W2 employee with a house is easy work for TurboTax. As far as time goes, I've seen the checklist provided by accountants/tax guys. The client needs to list every item anyway. If you are gathering these things up, just enter into the software. I'd be very curious to see comments here or anywhere, "things my accountant deducted that I'd have missed." – JoeTaxpayer Nov 15 '11 at 17:35
  • Agreed. Unless I have business expenses or something, I'd just do my own taxes. Since the tax advantage is part of the reason you get a mortgage instead of renting, you should be pretty familiar with the process anyways. – jldugger Nov 15 '11 at 19:23
  • Good question, if anyone found accountant worth the price. Whenever I've had a year with some potentially tricky situations, I'll go through a couple online tax services, which you can do for free w/o submitting, and if they are close then I assume I'm ok. – Andy Wiesendanger Nov 15 '11 at 19:47
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Let me offer an anecdote to this - I started helping a woman, widowed, retired, who had been paying $500/yr to get her taxes done. As I mentioned in my comment here, she got a checklist each year and provided the info requested. From where I sat, it seemed a clerk entered the info into tax software. As part of the transition to me helping her, I asked the prior guy (very nice guy, really) for a quick consult.

She took the standard deduction, but also showed a nice annual donation. Didn't take advantage of the QCD, donate directly from an IRA (she was over 70-1/2) to save on the tax of this sum. That could have saved her $500.

She was in the 15% bracket, with some room left for a Roth conversion. Converting just enough to 'fill' that bracket each year seemed a decent strategy as it would avoid the 25% rate as her RMDs rose each year and would push her to 25%.

To both items the guy suggested that this was not his area, he was not a financial planner. Yes, I understand different expertise. With how simple her return was, I didn't understand the value he added.

If you go with a professional, be sure you have an understanding of what he will and won't do for you.

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