[Tax season filter] Should I use a tax preparer?
February 14, 2022 11:20 AM   Subscribe

I've always done taxes with TurboTax, and actually kind of enjoy the process, but I'm wondering if I should switch to a paid preparer. Specific situation outlined below the fold.

My incentive for considering the switch is that I've been getting notices from the IRS the last three years because of these issues:

- Not reporting dividends on an old account I forgot about, or my husband not picking up a small-amount 1099 form from his work mail. This feels like something a tax preparer can't really help with since it's on us to remember to grab all relevant forms -- but perhaps we could establish a multi-year relationship with one who would keep track of our finances?

- The IRS thinks my backdoor Roth (which I've been doing successfully for years) was a taxable distribution. This should be something a tax preparer could guard against, but I'm also 99% sure I did the filing process right, so who knows?

- My employer over-contributed to my HSA and then reverted the contributions, so the IRS thinks I made taxable distributions. There was nothing wrong AFAIK from my end when I filed, but I imagine a tax preparer would know how to proactively address any potential issues due to such snafus.

More importantly, I assume a tax preparer would be able to communicate more effectively than me with the IRS if they do send a notice or conduct an audit.

The downside would be the cost, and I think I'd feel a bit in the dark about our finances and tax planning strategy if I wasn't doing it myself.

If you've switched (especially after self-preparation issues like mine), and if you're the kind of person who doesn't mind doing taxes, was the experience positive?

Should I be looking for CPAs or EAs or something else?
posted by redlines to Work & Money (3 answers total) 3 users marked this as a favorite
 
I vote no?

Every year I think we're closer to pulling that trigger, then we don't, for reasons similar to you. I end up needing to learn about specific issues, I learn the thing, do the taxes, and it's done. Really it's better to know and own your stuff - that's the biggest factor for me.

As you say, a tax prep person can't remember things for you. TTax is somewhat helpful here if you pay attention to the last-year, this-year columns on the main category pages, which should help prompt you. You can make it a habit to look through last year's return before you start this year's, to get you started on a list of things to remember.

As long as you're doing the backdoor-Roth entry correctly*, a tax prep person can't do anything differently. Same idea with reversing over-contributions, it depends on the coding, but if you did all you can do, I don't think a tax-prep person has a magic wand.

Also, I have contacted people over the years to test the waters, and it seems like our fish aren't worth their frying oil, so it might be harder to switch than you (or I) think. My multi-year relationship is with TTax, which diligently remembers our carry-forwards.

Anytime I've needed to interact with IRS people in the past they've been incredibly helpful and kind, so I'm not really worried about needing a representative for a notice or audit.

*just to cover this, even tho you probably already know: in TTax, fast forward to enter the non-deductible contribution first. Then go back and enter the 1099R, making sure to check the boxes for the codes (2, IRA/SEP). A question after that should confirm that you converted to Roth. You should get a popup saying "congrats, no extra taxes due".
posted by Dashy at 4:09 PM on February 14, 2022


I vote no also. I think you might be over-imagining the level of skill and also diligence/organization you will get from a tax preparer. Maybe just make yourself a checklist to help with the forgotten 1099 type situations? (if you didn't already). If you do want to try a professional, I'd go the CPA route - not EA - more training required for the certification.
posted by bluesky78987 at 7:40 AM on February 15, 2022


Pay one to look over what you’re preparing and advise. If you get an IRS letter, they can also review that or write the letter and you can keep the template. Go to a well reviewed local place rather than the branded tax prep chains.
posted by michaelh at 10:29 AM on February 15, 2022


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