YANMAccountant... but do I need one?
April 15, 2011 12:42 PM Subscribe
My 2010 was the first complicated tax year I've had- bought a house, and wondering whether the HR Block online filing is still sufficient, or if I'll need and want a professional- and if so, where to find a good one in the Capitol Hill/Seattle area this weekend.
I have in the past had very good experiences each year with the HR Block online filing, but this year there's a new wrinkle in my having purchased a home.
My income is simple- single employer, plus stock grants (pre-taxed at 33% and listed on my W-2, so this usually means I get a refund each year) as well as a pittance of a dividend.
The complication is the home purchase/mortgage payments, and the deductions that may be coming to me. I know about the mortgage interest deduction- which already has me in line for a very very nice refund this year- but I'm looking at a couple of forms sent by the lender listing things like "mortgage insurance premiums" and "points paid on purchases of principal residence" (although in the latter case, the points were paid down by the seller as an incentive for selling). Since I also received from the lender a printout of my settlement statement, I am curious which if any closing costs or city and state taxes/fees on that form or otherwise paid by me this past year (for example, $2600 just for a 'new sewer capacity' because it was a newly built home, or property taxes, etc) are also deductible.
The upshot:
My first question is "Hey, is it as simple as declare your income + dividends from stock, then declare the mortgage interest figure and mortgage insurance premiums, and the rest isn't really deductible?" then I can go online and have this done in a few minutes. Or if the HRBlock site is sophisticated enough to ask targeted questions up to and including deductions for state/city taxes and closing costs, that'd be cool too. Filing online is far and away the easiest method, and worth the few bucks.
However, if the online solutions just aren't sophisticated enough and I'd be leaving significant money on the table by filing online, it's worth it to find a proper accountant. Which leads to the question "If I need a professional, where can I find one this weekend, preferably on Capitol Hill in Seattle, since I stupidly left this to the eleventh hour?". I'm not keen on the walk-in places since they seem staffed mostly by people who brushed up on the common filing scenarios, and I'd obviously prefer to talk to someone who can tell me what I wouldn't have known. And if you are a Seattle/Cap Hill accountant, this would be the rare AskMe where solicitation is okay. :)
I have in the past had very good experiences each year with the HR Block online filing, but this year there's a new wrinkle in my having purchased a home.
My income is simple- single employer, plus stock grants (pre-taxed at 33% and listed on my W-2, so this usually means I get a refund each year) as well as a pittance of a dividend.
The complication is the home purchase/mortgage payments, and the deductions that may be coming to me. I know about the mortgage interest deduction- which already has me in line for a very very nice refund this year- but I'm looking at a couple of forms sent by the lender listing things like "mortgage insurance premiums" and "points paid on purchases of principal residence" (although in the latter case, the points were paid down by the seller as an incentive for selling). Since I also received from the lender a printout of my settlement statement, I am curious which if any closing costs or city and state taxes/fees on that form or otherwise paid by me this past year (for example, $2600 just for a 'new sewer capacity' because it was a newly built home, or property taxes, etc) are also deductible.
The upshot:
My first question is "Hey, is it as simple as declare your income + dividends from stock, then declare the mortgage interest figure and mortgage insurance premiums, and the rest isn't really deductible?" then I can go online and have this done in a few minutes. Or if the HRBlock site is sophisticated enough to ask targeted questions up to and including deductions for state/city taxes and closing costs, that'd be cool too. Filing online is far and away the easiest method, and worth the few bucks.
However, if the online solutions just aren't sophisticated enough and I'd be leaving significant money on the table by filing online, it's worth it to find a proper accountant. Which leads to the question "If I need a professional, where can I find one this weekend, preferably on Capitol Hill in Seattle, since I stupidly left this to the eleventh hour?". I'm not keen on the walk-in places since they seem staffed mostly by people who brushed up on the common filing scenarios, and I'd obviously prefer to talk to someone who can tell me what I wouldn't have known. And if you are a Seattle/Cap Hill accountant, this would be the rare AskMe where solicitation is okay. :)
Point being, this will give you time to either research it yourself or find a suitable accountant.
posted by desjardins at 12:57 PM on April 15, 2011
posted by desjardins at 12:57 PM on April 15, 2011
Best answer: I would trust TurboTax before I would trust H&R Block. YMMV. With software like TurboTax, that queries you about your situation, you can indeed do even quite complicated taxes yourself. I don't think that even a few questions about closing costs warrant an accountant, because your income situation is not complex.
I'm personally used to using the Windows software to calculate the fairly complicated salary, retirement, pension, and real estate income and expense needs of my parents (my own are much simpler!), and I would still that that's enough, although there are a few points where I would have liked a professional to lean on. But I don't see you getting your money's worth in savings from a CPA, and you're certainly not going to find one who will do your pretty basic taxes cheaply here on the deadline weekend.
posted by dhartung at 1:08 PM on April 15, 2011
I'm personally used to using the Windows software to calculate the fairly complicated salary, retirement, pension, and real estate income and expense needs of my parents (my own are much simpler!), and I would still that that's enough, although there are a few points where I would have liked a professional to lean on. But I don't see you getting your money's worth in savings from a CPA, and you're certainly not going to find one who will do your pretty basic taxes cheaply here on the deadline weekend.
posted by dhartung at 1:08 PM on April 15, 2011
Best answer: I was in the same position you are when I first filed as a homeowner in 2007. I started running things through TurboTax, got suspicious, quite before I filed. Tracked down an actual meatspace accountant who, yeah, found about $2000 more in refund.
Now, granted, I also bought a new roof that year, had rental income from roommates, and I file in Oregon, so that's two different sets of income tax. Maybe I missed a prompt screen in TurboTax, it's not impossible.
But I still would probably recommend, if you can afford it, going to an actual meatspace accountant this first year after some substantial life change like this is a good idea. If you catch folks
Shorter answer: yes, a portion of your closing costs are deductible. yes, a portion of mortgage interest in deductible. Property tax ought to be deductible, and some fees might be.
You can file an extension online, according to this IRS form: http://www.irs.gov/pub/irs-pdf/f4868.pdf
posted by ivan ivanych samovar at 1:18 PM on April 15, 2011
Now, granted, I also bought a new roof that year, had rental income from roommates, and I file in Oregon, so that's two different sets of income tax. Maybe I missed a prompt screen in TurboTax, it's not impossible.
But I still would probably recommend, if you can afford it, going to an actual meatspace accountant this first year after some substantial life change like this is a good idea. If you catch folks
Shorter answer: yes, a portion of your closing costs are deductible. yes, a portion of mortgage interest in deductible. Property tax ought to be deductible, and some fees might be.
You can file an extension online, according to this IRS form: http://www.irs.gov/pub/irs-pdf/f4868.pdf
posted by ivan ivanych samovar at 1:18 PM on April 15, 2011
ack! posted before done editing!
I was going to say, if you catch a tax agency next week, after the great tax tornado is over, you might even be able to schedule an appointment rather swiftly (well, if they're open, and not at home sleeping for a few weeks)
posted by ivan ivanych samovar at 1:19 PM on April 15, 2011
I was going to say, if you catch a tax agency next week, after the great tax tornado is over, you might even be able to schedule an appointment rather swiftly (well, if they're open, and not at home sleeping for a few weeks)
posted by ivan ivanych samovar at 1:19 PM on April 15, 2011
Response by poster: @desjardins: Thanks, that might be the smart move in any case if it's easy to file, since then I can not feel the time crunch (and I'll bet a meatspace CPA is cheaper on April 19th!). Even without the mortgage interest deduction I was due a refund, as I always end up having overpaid; with it, I know for a fact my refund is >10K so there's no question of owing money.
@dhartung: Thanks; I suspected I don't have a complex situation, but I'd hate to not declare a few thousand in charges (or erroneously declare them) and miss out on a larger refund. I've used HRBlock in the past, but what makes you recommend TurboTax- just a better rules engine?
@ivan: Thanks, that's what I was wondering; if some of these closing costs are deductible- and I don't know which ones- then that tells me I probably want a "meatspace CPA" to find those additional deductions.
Thanks everyone; sounds like filing an extension is the best first move, followed by tracking down a CPA. Does anyone who's reading this in the Seattle area have a recommendation?
posted by hincandenza at 1:23 PM on April 15, 2011
@dhartung: Thanks; I suspected I don't have a complex situation, but I'd hate to not declare a few thousand in charges (or erroneously declare them) and miss out on a larger refund. I've used HRBlock in the past, but what makes you recommend TurboTax- just a better rules engine?
@ivan: Thanks, that's what I was wondering; if some of these closing costs are deductible- and I don't know which ones- then that tells me I probably want a "meatspace CPA" to find those additional deductions.
Thanks everyone; sounds like filing an extension is the best first move, followed by tracking down a CPA. Does anyone who's reading this in the Seattle area have a recommendation?
posted by hincandenza at 1:23 PM on April 15, 2011
We use Dave Liatos for moderately complicated taxes. He's good and well-priced, but he's in Greenwood.
posted by gurple at 1:43 PM on April 15, 2011
posted by gurple at 1:43 PM on April 15, 2011
The nice thing about a CPA or tax preparer (vs a program) is that they may make suggestions as to how to improve your tax profile in the future. Plus, if you develop a relationship with them you'll have someone to go that you trust if and when you need to deal with other big [tax] changes (rental property or vacation home, hiring a nanny or other employee, deductible medical expenses, winning the lottery, etc.).
posted by rosebengal at 1:44 PM on April 15, 2011 [2 favorites]
posted by rosebengal at 1:44 PM on April 15, 2011 [2 favorites]
I am not your accountant, but you can deduct either state income tax or state/city sales tax. Since WA has no state income tax, you can deduct sales tax — just tally up your receipts and use IRS's handy-dandy online sales tax deduction calculator.
I'd second the suggestion to try out an online tax calculator like Turbo Tax. Our situation is similar to yours (new house, investments), but it is complicated by new domestic partnership/community property rules. After we split our incomes and taxes down the line, we were able to use Turbo Tax to do all the calculations for us, and it covered all of our deduction categories.
We have to mail our taxes in by hand, but other than that, HR Block seems like an obvious scam, and the community property issue would double the already high cost of getting the services of a CPA who specializes in GLBT tax law. TT was a relative bargain.
posted by Blazecock Pileon at 1:55 PM on April 15, 2011
I'd second the suggestion to try out an online tax calculator like Turbo Tax. Our situation is similar to yours (new house, investments), but it is complicated by new domestic partnership/community property rules. After we split our incomes and taxes down the line, we were able to use Turbo Tax to do all the calculations for us, and it covered all of our deduction categories.
We have to mail our taxes in by hand, but other than that, HR Block seems like an obvious scam, and the community property issue would double the already high cost of getting the services of a CPA who specializes in GLBT tax law. TT was a relative bargain.
posted by Blazecock Pileon at 1:55 PM on April 15, 2011
We bought a house last year and I took some money out of my IRAs to do it, so I had that as well as the interest deductions to deal with. I did my taxes this year myself using TurboTax, as I have for the last several years; it was straightforward because every institution that has any effect on my taxes sent me the appropriate form. I put those into TurboTax and bam. I also did my fiancee's taxes (very simple) as well as my parents' taxes (Federal and two states) using TurboTax. Took me an afternoon for all of it.
The only real wrinkle was that I got the first-time homebuyer credit last year as a refund on my 2009 taxes; the IRS paid me a bit of interest on that (since they held $8000 of my money until I filed the 1040X to get the credit) and I now have to pay taxes on that interest!
BTW, if you have a State Farm Bank account, they give you access to TurboTax Deluxe online for free.
posted by kindall at 2:26 PM on April 15, 2011
The only real wrinkle was that I got the first-time homebuyer credit last year as a refund on my 2009 taxes; the IRS paid me a bit of interest on that (since they held $8000 of my money until I filed the 1040X to get the credit) and I now have to pay taxes on that interest!
BTW, if you have a State Farm Bank account, they give you access to TurboTax Deluxe online for free.
posted by kindall at 2:26 PM on April 15, 2011
Best answer: Does anyone who's reading this in the Seattle area have a recommendation?
Your Man Friday is good people, and they're on Capitol Hill.
posted by Balonious Assault at 3:15 PM on April 15, 2011 [2 favorites]
Your Man Friday is good people, and they're on Capitol Hill.
posted by Balonious Assault at 3:15 PM on April 15, 2011 [2 favorites]
I bought a house last year, and it was if anything more complex than your situation since it was done with a co-owner and we split all the tax breaks and whatnot. And this was back when the First-Time Homebuyer credit was in effect, plus a bunch of Energy Star rebates and other junk.
I just did it using Quicken and didn't have any problems at all. I don't even think that H&R Block is necessary. (Actually I am pretty skeptical that H&R Block is that much better than just punching everything into the Quicken wizard-ish interface yourself; I've heard that's pretty much just what they do for you.) The hardest part for me is gathering all the paperwork into one place. If you've been good about keeping everything organized, it probably won't take more than an evening. At least it did not for me.
posted by Kadin2048 at 5:07 PM on April 15, 2011
I just did it using Quicken and didn't have any problems at all. I don't even think that H&R Block is necessary. (Actually I am pretty skeptical that H&R Block is that much better than just punching everything into the Quicken wizard-ish interface yourself; I've heard that's pretty much just what they do for you.) The hardest part for me is gathering all the paperwork into one place. If you've been good about keeping everything organized, it probably won't take more than an evening. At least it did not for me.
posted by Kadin2048 at 5:07 PM on April 15, 2011
Response by poster: Thanks for the tips/info, everyone! Your Man Friday as it turns out is literally 2 blocks from my house, so I'm going to call them tomorrow. If they can't squeeze me in, I'll file the extension and continue to look for a meatspace CPA; I think the consultation element of "What you could be doing better in the coming year" is as valuable as the filing for this year.
posted by hincandenza at 8:12 PM on April 15, 2011
posted by hincandenza at 8:12 PM on April 15, 2011
Several years ago when my own taxes got very complicated (rental house and company stock options) I opted to go the enrolled agent route.
Have been very pleased with both the expertise and the fact that the majority of the EA's are simple business-from-home type of people. You can search online by location here.
I have certainly compared a few local CPAs to the EAs in my area, and have discovered that for the same situation (i.e. my own) it was 30-50% less expensive to do the return. Of course the CPAs were offering a lot more (financial advice, tax planning advise etc.) and the taxes were only the starting point, but I felt that for my situation it was best to go with the EAs. No regrets, and can come in handy if the CPA suggested may not be able to fit you in.
posted by scooterdog at 6:38 PM on April 16, 2011
Have been very pleased with both the expertise and the fact that the majority of the EA's are simple business-from-home type of people. You can search online by location here.
I have certainly compared a few local CPAs to the EAs in my area, and have discovered that for the same situation (i.e. my own) it was 30-50% less expensive to do the return. Of course the CPAs were offering a lot more (financial advice, tax planning advise etc.) and the taxes were only the starting point, but I felt that for my situation it was best to go with the EAs. No regrets, and can come in handy if the CPA suggested may not be able to fit you in.
posted by scooterdog at 6:38 PM on April 16, 2011
Response by poster: Thanks scooter, but I've already filed an extension (waiting on confirmation it went through) and have talked to the nice people at yourmanfriday who said that they should be able to help me this upcoming week, after the 18th.
posted by hincandenza at 12:27 PM on April 17, 2011
posted by hincandenza at 12:27 PM on April 17, 2011
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posted by desjardins at 12:56 PM on April 15, 2011