Are Tax Guys Worth It?

Depends on how complicated your taxes are. For 90% of people TurboTax is probably fine. For small business taxes or something like that I'd probably pay someone.

Many times I have attempted to use turbo tax to DIY. Every time I am disappointed in the result. In my experience pro tax prep is worth it to maximize return and also free up time/frustration.

So here is what I tell people. You should consider hiring a tax pro if one of the following are true.

1) You absoloutely have no desire or ability to use the online programs to fill out your tax return. By ability, I mean, you can turn on and use a computer. Some people have insanely easy returns and yet have no desire to do it themselves, or doing it themselves will cause them untold stress. Best to just pay someone a couple hundered to avoid the stress.

2) You need to determine the numbers to put on the returns, by using information that doesn't come on a neat tax form such as W-2, 1099-INT, 1099-B, 1098, etc. This includes most businesses and farms, and rentals are included in years or purchase and sale, and years in which you make renovations / purchase new assets (unless you understand how depreciation works... for example TT does a terribe job with bonus depreciation... I've seen way too many people opt out which 99.9 percent of the time is a stupid idea).

3) You have multi-state issues such as moving from one state to another during the year, or you work in one state in live in another state, or you work in multiple states.

4) You feel that if you paid someone to do it for you, the amount of time you saved could result in bringing in additional net income, and that additional net income is more than the cost of the tax pro.

In my wild guess... 20-30 percent of Americans fit into one or more of categories 2-4. Probably another 10-20 percent fit into the first category.

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So here is what I tell people. You should consider hiring a tax pro if one of the following are true.

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#5 You feel that you’re too pretty to go to jail.

Kidding aside, my guy has been a godsend. He’s brought me many times more in tax saving advice than I’ve ever paid him.

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Some people have insanely easy returns and yet have no desire to do it themselves, or doing it themselves …. Best to just pay someone a couple hundered to avoid the stress.

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This is me. I did my own for decades. They are quite simple, but I just hated screwing with it. The first time I dropped off my papers with a CPA, I drove away with a huge smile. Let him do them every year since.

It probably doesn't take me more than 30-45 minutes to do my taxes. That's just not worth me paying someone to do them but to each their own. I have the normal stuff to input - multiple W2s, stock trades, mortgage interest etc.

They all use some form of software. TurboTax is fine as are most of them.

Turbo Tax doesn’t even let you view your return until you pay them. That is insane

As a tax guy I’ll say this….

If all you have is W2, child care, stock sales, social security, or maybe a really really basic Schedule C we really don’t provide that much benefit besides just taking it off your plate and that extra layer of comfort knowing it was done right. I straight up tell new client inquiries this time of year that there’s not much that I can help with besides doing the return as you’d likely end up with the same result at TurboTax. But I’d be more that glad to assist those folks at our firm minimum fee for a 1040.

Now, if you have a rental property, rental of your home, significant Schedule C, K-1s from partnership or S-Corp I’d say it’s more than likely if you are self preparing you are doing something wrong. I say this because 90% of the new clients I pick up each year with something in that category, I review the prior year return and there’s a glaring issue. For example, this past week I reviewed a TurboTax return where the guy was renting out a portion of his home on AirBnb and he was depreciating his entire home over 29.5 years.

If you have something in the categories I mentioned and don’t understand the following terms and are up to date on the changing rules every year, hire a professional:

Depreciation
Depreciation recapture
Bonus depreciation
De minimus safe harbor election
Basis
Inside basis
Outside basis
Passive activity loss limitations

For example, this past week I reviewed a TurboTax return where the guy was renting out a portion of his home on AirBnb and he was depreciating his entire home over 29.5 years.
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ALL tax strategy works unless you're audited!