13

I've always been curious whether an in-person "tax man" would be able to save me any more money on my taxes. They normally charge more, so I've never done that.

I have noticed that some softwares are able to squeeze out more money than others, but something like Turbo Tax is usually the best.

  • I haven't selected an answer yet because I'm waiting to see if anyone prepared their taxes with both and found any differences - not a year-to-year comparison, but comparing the same tax year. – BotNet Feb 13 '11 at 18:30
8

If you have complicated taxes (own a business, many houses, you are self employed, you are a contractor, etc etc) a person can make the most of your situation.

If you are a w-2 single job, maybe with a family, the programs are going to be so close to spot on that the extra fees aren't worth it.

I would never bother using HR Block or Liberty or those tax places that pop up. Use the software, or in my state sometimes municipalities put on tax help days at the library to assist in filling out the forms.

If you have tough taxes, get a dedicated professional based on at least a few recommendations.

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    If you're like me, and have a variety of stock option, RSU and employee stock purchase plan transactions whose value is split among income, short-term and long-term capital gains (depending on the specifics of how you sell them) then that's something TurboTax isn't really good at figuring out. – fennec Jan 16 '11 at 2:05
7

Generally speaking no person or program is really going to be able to help you lower your current tax burden, most tax decisions are done well before you reach the tax time. You either qualify for the deduction/credit or your don't.

Where a good accountant will really be able to help you out is in planning that will limit your future tax burden. Particularly if you run a small business or are very wealthy you will probably want to consider using an accountant. I would always avoid the large scale tax prep places like HR Block they provide the same or lower quality service for a higher price than the software.

I run a small business and do my own taxes using turbo tax, but my business isn't overly complex Sole prop, no employees, couple 1099's simple expenses (nothing to amortize) etc.

  • stoj, you make a good point, but tax laws change from year to year and many times the software suites and brick-and-mortar services either don't ask enough about your current scenario, or don't incorporate all the changes into their products. I've seen first hand that one suite saved me more than another, so your statement isn't entirely true. Theoretically they should be the same, but in actuality they are different and I'm inquiring about these differences. – BotNet Feb 13 '11 at 18:20
  • +1 for emphasis on planning for future tax liability. – Nathan L Feb 3 '14 at 17:45
6

I did my own taxes previously using both H&R Block Tax Cut and TurboTax. When I had a simple return and was single, it worked great. Once I got married it was a little more complicated. When I started a small side business, I switched to an accountant. He does a great job of adjusting deductions between my wife and I and filing separately. This minimizes the amount of taxes we have to pay. It has been a few years since I used the software, but I did not see the ability to easily make adjustments like that.

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    By worked great what are you referring to? The thing I was interested in is if there are any more savings that an in-person agent actually provides. Is it worth the time/money? I wasn't as interested in how a person's experience was subjectively – BotNet Jan 25 '14 at 21:57
  • By worked great, I mean it quickly got my return completed and it was done accurately. It wasn't as efficient as a paid professional when you started to get into some more complicated deductions and alternative ways of claiming them. – SchwartzE Feb 6 '14 at 19:46
4

I have fairly simple tax returns and my experience was that TurboTax software produced roughly the same result as human accountant and costs much less. The accountant was never able to find any deductions that the program couldn't find.

Of course, if you have business, etc. you probably need an accountant to help you navigate all the rules, requirements, etc. But for simple enough cases I found that the additional pay is not justified.

  • This was my experience, too, with an H&R Block human accountant. She basically just used H&R Block's tax software to prepare my return, while charging me more, taking significantly more time, and offering less helpful information compared to TurboTax. As StasM says, if you have a more complex situation, a real accountant may be a very good idea. – ChrisInEdmonton Jul 7 '11 at 16:21
3

I've done my taxes using turbotax for years and they were not simple, Schedule C (self-employed), rental properties, ESPP, stock options, you name it. It's a lot of work and occasionally i did find bugs in TurboTax. ESPP were the biggest pain surprisingly. The hardest part is to get all the paperwork together and you'd have to do it when you hire an accountant anyway.

That said this year i am using an accountant as i incorporated and it's a whole new area for me that i don't have time to research. Also in case of an audit i'd rather be represented by a pro. I think the chance of getting audited is smaller when a CPA prepares your return.

2

A CPA or Enrolled Agent can be helpful, especially if you have a complicated situation such as owning your own business.

The people at a lot of tax-prep places don't have many qualifications (they are not accountants or enrolled agents or certified financial planners or anything else). They are just trained to enter stuff into the computer. In that case, you can measure their value according to how much you prefer talking to typing. But don't expect them to get it right if your taxes involve any judgment calls or tricky stuff.

I think a good strategy is to try TurboTax (or whatever program) and if you get stuck on any of the questions, find a pro to help.

  • owning a business is not a complication - turbo tax handles that easily. – Tim Jan 18 '11 at 0:42
  • What I mean is that there's more room for an expert to find tax ideas you might not have thought of, if you have a business to work with. There are a lot more possibilities once you start considering benefit plans and different corporate structures and timing of expenses and so on. (I guess this is more something to do at the start of the year, rather than at tax prep time.) Anyway that's what an expert can help with, TurboTax can always fill out the forms (modulo the occasional bug). – Havoc P Jan 18 '11 at 17:13
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    businesses also have more complex judgment calls (and rules) about what deductions are allowed and so forth. – Havoc P Jan 18 '11 at 17:14
  • that is a different question entirely. If you have a real business that business should have an accountant. but you don't need one for personal taxes. – Tim Feb 22 '14 at 22:33
2

It depends on the person. i will take turbo tax over any mediocre or poor accountant ANY DAY. You get consistent, accurate tax preparation with the software (desktop - not the online version)

I was in a housing rental partnership with my brothers and one of them insisted on using his accountant... what a mistake.

I have been using turbo tax for 10+ years and have always been happy.

It handles my non trivial situation with ease:

  • multiple K-1/businesses
  • investments
  • living/income in two states
  • multiple W-2s
  • 7+ rental incomes
  • etc

I am happy with it but have to admit I don't have a good accountant to compare it to. I see no reason to go to an accountant except for planning purposes. Just for tax prep it is more than worth it and more than you will need.

0

Unfortunately, if your taxes are too complicated for the 1040EZ form, then your tax situation is effectively unique and you need to try both options and see for yourself which one is better.

If you do your taxes yourself, you may be more likely to do a more thorough job in digging everything up. You might even find that you can deduct some things that you hadn't thought of before.

On the other hand, whenever I've gone to a tax professional, it's always been pretty much an all-or-nothing proposal. You sit down with them and hand them your records, they ask a couple simple questions, and they either give you your completed tax return on-the-spot or they have you come back in a week for a brief review of the final numbers. If they don't prepare your return on-the-spot, you can usually send additional items later on if you think of something that you forgot the first time around, but for the most part it's still a one-time shot.

That said, I'm beginning to think the difference in monetary cost of completing even a mildly complex tax return is going to be insignificant, and the main factors to consider are the value of your own time and how much of the tax code you want to learn (because, in my experience, the software always refers to additional IRS forms or codes that are not automated in the software). In theory, your tax return should be the same regardless of whether you have a tax professional do your taxes or, if you do them yourself, which software you use. Given the same inputs, you should get about the same outputs. Even though that theory doesn't always hold exactly true, all the options should get you in the same ballpark--close enough that it doesn't make much difference in the grand scheme of things, unless your tax return is done incorrectly (e.g., you choose the wrong filing status or forget to take a major deduction).

Suppose you're married and you or your spouse is a partner in an LLC. Maybe a tax professional wants to charge you $500 for your tax return (this will vary based on your circumstances). You could alternatively buy the tax software for $40-$300 and spend 20+ hours navigating through the interviews and reviewing tax codes for the decisions and worksheets that are not automated in the software. Depending on how much time you personally have to spend on the tax return, one option might be better than the other. Maybe you have to pay your in-house accounting person to use the tax software, or you have to pay an employee to cover for you while you use the software. Keep in mind that the tax professional and the tax software are probably deductible, whereas your time may not be. In the end, even if you save money up front, it might be a wash on the following year's tax return, especially after you consider the uncompensated time that you could have spent with your family, on your business.

  • I think you hit it when you said in theory, your tax return should be the same, but the fact it is not is why I posed the question. Obviously, no person's taxes are going to be the same, but the software used works certain tax laws in place, they may miss deductions or interpret the laws differently -- yes, laws are subject to interpretation. Therefore, I was looking for cases where a person checked with a place like HR Block and also used their own software. I've tested various tax softwares like Turbo Tax and Tax Slayer and have noticed a difference, when there shouldn't have been one! – BotNet Jan 25 '14 at 22:04
0

so far the only thing that I can think of that would make me want to go with H&R Block is the guarantee that they offer ( for a fee ) that says they will help you if you are ever audited for a tax return that you filed through them, but I think that is given for both the software and the in person tax preparation.

so I guess if you like to ask lots of questions and get the answers nearly immediately I would go with an in person tax preparation person, if they can't answer all your questions then that is something else to think about all together.

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    You can just pay $40 on TurboTax to get the same protection, its like buying insurance. Just saying. – GµårÐïåñ Feb 3 '14 at 18:47
  • I agree. But if I want a human interaction while i am filling out the taxes and have a question. That would be the only reason to actually go to a tax preparer rather than file it myself – Malachi Feb 3 '14 at 22:05
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    True, but keep in mind that they don't know any more than you necessarily. They are hired often with no experience (as is clearly stated in their hiring ads) and simply taught how to use their software, which takes no more intelligence or experience than using TurboTax or any other software for that matter. They are not all experts and it would be a huge mistake to assume they are. I was told when I applied that I was overqualified since I have a degree in law and have handled business and personal taxes (not 1040EZ) for more than 20 years. Go figure and I always do my own and others' too. – GµårÐïåñ Feb 5 '14 at 3:29
  • @GµårÐïåñ you do have a point there, but I would think they would know how to do them better than I would seeing as how they do so many more than I do a year. the ones that I have talked to know some Tax stuff some of them had the tax books on their desks and stuff. I agree with you though. – Malachi Feb 5 '14 at 6:06
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    When it comes to quantity, I could see a point that it might improve their ability to spot things, but unfortunately that works the other way too, repetition can make them complacent and miss things too. If you went to a real CPA who specializes in taxes, then yeah I am with you 100% but HRB, I have to say I would still vote approach with caution. – GµårÐïåñ Feb 5 '14 at 6:23

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