Doing your taxes: CPA vs DIY

[WiseOne]

I'm curious about what people think about these options - apart from the obvious issue of costs, decreasing as you go down the list.

I've had my taxes done by a CPA for the past several years.  I got started because I had to have it done in order to qualify for a government reimbursement (long story), and then I kept going with it even though at this point I'd rather do my taxes myself.  Having the CPA definitely saved me from a couple of potential nightmares though.  Once when NY state imposed a new temporary tax midyear without telling anyone about it, with penalties for not paying it several months in advance of the tax filing date.  The CPA let me know about it in time to avoid the penalty.  The other time was when I got audited by the IRS, and only needed her to send them some info - saved me immeasurable time & headache.  The other argument in favor of the CPA is that there is a reduced chance of an audit, especially with a complicated return (as mine is).

At least I went with a fairly low-cost and friendly option:  a CPA for a big Manhattan firm who works independently from home.  She does my mother's taxes too.

[Xan]

I feel like if I weren't doing it myself, then I wouldn't have as much control over my finances.  As it is, over the course of the year, for any proposed action I have a pretty good feel for the effect it'll have on the tax situation.  If I outsourced that I wouldn't have a clue.  I mean, I guess I still could, but that would be just as much work as doing the taxes myself.

[Pointedstick]

Once when NY state imposed a new temporary tax midyear without telling anyone about it, with penalties for not paying it several months in advance of the tax filing date.

Hi New York.

My taxes are still pretty simple so I do 'em myself. The more complication you add, the more I think it pays to engage the services of a professional. I use my general distaste for outsourcing anything as an incentive to keep my taxes simple.

[barrett]

Being self employed, I use the cheapest competent CPA I can find. Depending on which forms certain expenses are listed, it can save me a lot. Might even bump up to a more expensive CPA during the years our daughter is in college because I don't yet know know all the tricks. When I am retired, I will definitely do my taxes myself because I can't see outsourcing basic math! Also, the simplicity of the PP should help keep my numbers easy to work with.

[WiseOne]

Being self employed, I use the cheapest competent CPA I can find. Depending on which forms certain expenses are listed, it can save me a lot. Might even bump up to a more expensive CPA during the years our daughter is in college because I don't yet know know all the tricks. When I am retired, I will definitely do my taxes myself because I can't see outsourcing basic math! Also, the simplicity of the PP should help keep my numbers easy to work with.

Definitely the CPA saved me a bucketload the first time around, but now that I know how it's set up I could easily do the whole thing myself.  The CPA is purely a form of "audit insurance" now - doesn't save me any time nor does it uncover magical new deductions.  Plus of course, those occasional little zingers from NY state...that last one was definitely a tax on DIY filers.

[Tyler]

I've always used Turbotax.  It's very easy to use and pretty thorough. 

That said, even when I use software to fill out the forms I make sure I understand what's going on in the background.  I personally enjoy learning how the tax code works so that I can optimize things to my benefit.  For example, learning how to structure portfolio rebalancing and monitor new income to qualify for maximum health insurance subsidies next year is a nice skill to have.  If I was self employed or had a complicated tax situation I'd consider paying a professional to teach me how to act more tax efficiently rather than to simply file my taxes for me after the fact. 

[dualstow]

I like my CPA. I'd hire someone to call telecom customer service all day if I could.

[barrett]

Just counted the pages of my 2013 return and there are 49 of them.

[WildAboutHarry]

I've used a CPA for 20 years or so.  He does the business taxes, so it was a natural (and convenient) for personal.

I am thinking that I might start doing my own again.  As Kinky Freidman said, when he was running for governor of Texas, "How Hard Could It Be?"

I do like the "audit insurance" concept of a CPA, though.

[barrett]

The CPA I used to go to actually offered audit insurance for about $200. I liked that. He just charged too much for the other stuff.

[WiseOne]

I figured between state & federal returns with high complexity (due to the Schedule C & itemized deductions), the CPA costs me an extra $200 over online Turbotax.  Not bad for the "insurance" aspect of it, plus the extra set of eyes.  If I were retired with minimal income, though, I'd probably dispense with it.  The main issue with the audit, aside from the fear & terror aspect, is the sheer time required to deal with it.

[MachineGhost]

Definitely the CPA saved me a bucketload the first time around, but now that I know how it's set up I could easily do the whole thing myself.  The CPA is purely a form of "audit insurance" now - doesn't save me any time nor does it uncover magical new deductions.  Plus of course, those occasional little zingers from NY state...that last one was definitely a tax on DIY filers.

Just remember that a CPA's first loyalty is to the tax authorities, not his clients.  If his license and/or businesshood is threatened, you're the first to go under the bus.  This can be very scary when they're are "negotiating" on your behalf because they have the power (or lack of power) to accept whatever oversized punishment the IRS feels you should get.  It's not as if TurboTax doesn't offer you "audit protection"; its an option you can buy near the end when you're filing your return.  It's provided by independent CPA's as far as I know.  The best audit reduction protection is free anyway.... always file an extension so you're not among the largest group the IRS "randomly" picks audits from.

TurboTax doesn't catch everything; it requires you answering certain questions right that a more "aggressive" CPA does by default for his clients, such as the Earned Income Tax Credit.  At least that was the case a few years ago.  I concur that its best to learn the ropes from how a CPA does it, then fire him.

Also, please do not use the "free" online versions or their storage vaults.  It is a magnet for hackers and given how incompetent that Intuit is in general with their software (and the entire financial industry with their security), you do not want to wake up one morning to find all of your previous tax returns floating around on dump sites to be purchased by criminals.

[img width=800]http://i62.tinypic.com/vcxlcw.png[/img]

[Libertarian666]

None of the above:
1. I almost always do my own personal return using H&R Block.
2. My corporate taxes are done by my tax lawyer.
3. My profit sharing plan taxes are done by my pension consultant.