Mo' money?
March 28, 2010 9:07 AM   Subscribe

Is getting your taxes professionally prepared worth the time and money?

My husband and I have always done our taxes ourselves. We don't make much and we usually qualify for the free e-file. This year we owe. I have to admit, I'm starting to be swayed by tax commercials and their promise of finding mistakes and more money. Has anyone found much value in getting your relatively simple taxes professionally done?

Some details: last year we were both full time students, my husband had a pell grant but we paid for my school out of pocket and with a small amount of EE bonds. We both worked. We have no investments outside of a traditional IRA and one small mutual fund. We made no significant purchases and didn't move. No children, no loans, nuthin' exciting. I qualify for an education credit, but that seems about it. What are the odds we're missing something that would take us out of the red?
posted by lizjohn to Work & Money (17 answers total)
i don't know much about tax returns (this was the first year i did mine on my own, and it was really easy), but your question reminded me of this comment.
posted by gursky at 9:11 AM on March 28, 2010

The middle ground: Go spring for a copy of TurboTax or one of its competitors. Cheap, easy, walks you through everything; provides a basic level of reassurance that you're covering all the bases, without the additional cost/hassle of professional prep.
posted by Tomorrowful at 9:40 AM on March 28, 2010 [1 favorite]

The answer to your question really depends on the complexity of your financial situation and the amount of dollar value you place on each hour of your time. I gladly pay an accountant a couple of hundred dollars each year to prepare my tax returns. Your mileage may vary.
posted by dfriedman at 9:54 AM on March 28, 2010

We haven't used a tax professional in decades (yes, that includes the era of DIY on paper.) Judging by your quick overview, I don't see any reason why you shouldn't be able to roll your own, using TurboTax, H.R. Block (formerly TaxCut), or any of the others. Filing your taxes, unless you have some truly absurd complications (which you do not appear to) is dirt simple.

It can take a little time and, software being software, you are sometimes at the mercy at a development team's odd idea of a proper workflow, but it's a fairly simple process.
posted by Thorzdad at 9:59 AM on March 28, 2010

From what you've written, I'd say "no way". Get Turbotax (or use it online here, which I personally prefer because when you come back next year your previous year's data will still be there) and do it yourself. A CPA becomes worth it as soon as you are running a business with employees and writing off part of your house and your car and you have investments of varying types and sizes, etc. With your situation, Turbotax will walk you right through the whole process.

I used them for years until my wife started a business. Now we have a CPA (and in our situation, it's worth it).
posted by crapples at 10:10 AM on March 28, 2010 [1 favorite]

Yeah, I'd slightly revise my comment: based on your description, I would have a CPA prepare your taxes. But personally I find it worth it...
posted by dfriedman at 10:12 AM on March 28, 2010

The first year we did joint taxes w/mortgage and business facets, we had someone do them for us, because it was helpful to see how the documents were organized. The next year (this year), I figured we could copy her template, but once again, judging from the 'I-don't-wanna-do-this' sniping we both exhibited with each other just in *pulling* together the documents, avoiding the drama and 5-10 hours we saved was totally worth it in terms of our relationship.

So I think of it as a gift I give myself.
posted by anitanita at 10:13 AM on March 28, 2010 [1 favorite]

I mean, based on your description I wouldn't have a CPA prepare them....
posted by dfriedman at 10:17 AM on March 28, 2010

Sounds like your situation is very simple. I'm no expert, but unless there's something you didn't mention, I'm not sure you'd benefit from hiring a preparer.

Another middle ground: get free tax preparation from AARP Tax-Aide.
posted by box at 10:21 AM on March 28, 2010 [1 favorite]

Are you a homeowner? Do you itemize your deductions? Do you have any business income (or loss)?

If your answer to all of these is "no", then there's probably not much else that an accountant can do for you. Look at it this way: at least you didn't give the government an interest-free loan this year....
posted by mr_roboto at 10:47 AM on March 28, 2010

I would recommend a tax preparation program like TurboTax. It will step you through all of the various forms and make sure that you don't overlook savings like the Making Work Pay Tax Credit or deductions for student loans. Check your credit union website and you may find that you can get free or discounted versions of TurboTax. I prefer doing my own taxes because then I understand every detail of my taxes and how to minimize them in the future.
posted by JackFlash at 10:53 AM on March 28, 2010

I don't have a complicated tax situation, and I'm still using my CPA, who I started with back when I was a sole proprietor paying estimated quarterly taxes. Every year I say this is the year I'll stop paying her and I'll do it myself, and every year I end up faxing her my docs and not stressing about my taxes one bit. A couple of weeks later I get a phone call, I go and sign, and I write a check. Happily. I consider my valuable free time and zero anxiety level to be worth the money I pay her.

And the cost of 2009 tax prep is deductible on my 2010 tax return.
posted by ImproviseOrDie at 10:56 AM on March 28, 2010

I've done taxes professionally (but I am not your tax professional). What mr_roboto said. Your situation is not especially complicated. (In your case, owing is probably a matter of not working enough to have had sufficient withholding. In other words, if you had the taxes withheld via any W-4 you filed, you would still be paying the same amount of taxes but would not perceive that you "owe" on April 15.)

The only thing I'd suggest here is that you review the Hope and Lifetime Learning Credits, but you imply you know about that already.

Since you're not sure, though, you might benefit from the peace of mind of having had someone else look at things. I'd still imagine you qualify for a free e-file through one group or another, as their criteria are all different.
posted by dhartung at 11:38 AM on March 28, 2010

Several years ago when I was running my own freelance business and going to school and both my husband and I were on an off unemployment, we found we owed the tax man big! After all, our income come tax time had changed drastically but the taxes were due on the previous year and we had underpaid. (We were early 20s at the time -- we're a bit smarter now, I hope!) In any case, we freaked out and we owed enough that we figured a trip to an accountant was in order. Sadly, we still pretty much owed what we thought we owed (we were using TurboTax then as we are now). So, in that case, we paid an accountant to tell us what we already knew. But, I consider it money well spent because the torment we would have put ourselves through not knowing if we could have saved big would have been terrible.

So, I'd say, depends on how much you owe. If you haven't used TurboTax, I'd recommend running your numbers through that and seeing if you come up the same. If what you owe is a huge amount (ours was, like, 4k) then it may be worth it to get a second opinion.

Also, we ended up paying that off over about four years. No biggie, in the grand scheme of things. Payments are an option.
posted by amanda at 12:33 PM on March 28, 2010

For the spending-challenged, let me put in a plug for my personal favorite, the perennial loser in the tax-prep-software sweepstakes, TaxAct

You can download their federal tax program for free (other free solutions are web-based).
I have used free TaxAct for about the last six years, since TaxCut stopped giving out free software.
The free program requires registration (but I have never gotten messages, much less spam, from them), and has a fair amount of 'This feature requires the paid version. Why don't you give us some bux?" but these are mostly advice features--the main line of the program is free and quite usable.

The main annoyance of the free version is--it won't load unchanged data from last year's return. So you get to retype bunches of stuff.

The good part is--there's not TOO much 'are you a farmer with a Railroad pension' type questions to keep on saying 'NO!' to. Or maybe you are a farmer with a Railroad pension; how would I know?

It deals with the $20 a year I pay to the Netherlands as tax on some Philips Electronics stock I keep forgetting to sell, so it does the details.
posted by hexatron at 3:25 PM on March 28, 2010 [3 favorites]

Well, we just finished and filed with TaxAct. We still owe, it still stings, but at least we're not paying someone else to tell us that. Thanks all!
posted by lizjohn at 7:32 PM on March 28, 2010

Just to confirm that you made the right decision, I had a similar experience this year. My taxes are relatively simple, but I found myself owing a substantial sum and kind of freaked out. An accountant-friend-of-a-friend took a very in-depth look at my situation, including my itemized receipts from the entire 2009 fiscal year, and wasn't able to save me anymore than free-filing through Tax Slayer. So no, I'd be pretty sure you wouldn't have saved any money by going with a professional.
posted by booknerd at 10:17 AM on March 29, 2010

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