Outcome Of Hiring An Accountant To Do Our Taxes Vs Using Turbo Tax Or Tax Cut

In this article I present the conclusion of my experiment on whether hiring an accountant to do your taxes is better than using turbo tax or tax cut. If you missed part one of this experiment, please check it out here first before reading on.

Photo Youssef Abdelaal

So the results are in! The good news is that our accountant fulfilled his promise and delivered our tax return way ahead of the April 15th deadline. The bad news is that our experiences with our accountant weren’t exactly positive.

Before I continue, I just want to emphasize that the conclusions I’m making in this article should be taken with a grain of salt and are not indicative of accountants in general. There are thousands of CPAs out there and our experiences represent just a single data point.

To provide some background information, my wife and I have worked with this accountant for a little over a year now to discuss tax strategies for our small business. But this is the first time that we have used him to actually file our taxes and it will probably be our last. Here’s why.

We Got Off On The Wrong Foot

Because our accountant works about 40 minutes away by car, it’s not very convenient for us to talk face to face or to drop things off at his office. During the weekdays, my wife is with the kids and I’m at work. On the weekends, our accountant is not in the office. Pretty much the only convenient way to send our accountant information is through email or snail mail.

For those of you wondering why we chose an accountant that works so far away, it’s because he came highly recommended by a coworker of mine. In any case, since we didn’t want to make the drive up to his office, we decided to scan all of our 1099′s and other tax forms into pdf format and emailed encrypted versions to him for review. That’s when the trouble started.

Because we emailed him an archive of about a dozen password protected pdf’s, his assistant got fed up because she didn’t feel like opening each pdf up and printing them out. So she called and asked us to mail a physical copy of our tax forms to their office instead.

Personally, I thought this was ridiculous. We wasted more time on the phone than she would have spent printing out the forms. Even though I offered to condense all of the forms into a single pdf, she said that she would have to charge us $200 an hour for her to take the time and print out our pdfs.

Needless to say, this left a bad taste in my mouth from the start. But what could we do? We ended up sending her copies via certified mail, but I was pretty annoyed (mainly by the $200/hr threat).

He Was Difficult To Get Ahold Of

Once our accountant received our tax information, things proceeded much more smoothly but what annoyed me was that it was difficult to reach him to ask even the most basic of questions. Since it’s tax season, I completely understand that he’s probably swamped working on many other tax returns outside of ours but it would have been nice to receive quicker responses.

Perhaps it’s because I’m impatient and am used to doing everything on my own, but I like knowing what is going on and I need reassurance that everything is proceeding smoothly. With our accountant, after dropping off our tax forms, we basically didn’t hear from him again until he was done with our return. Outside of a brief questionnaire in the beginning, there was no feedback loop and no additional questions asked.

He Made Errors

Not providing us with feedback during the process was all fine and good as long as he did a good job. But as soon as we received our tax return, we immediately noticed some errors.

For one thing, there was a typo and the cost basis for one of our stock transactions was completely off. Granted, it wasn’t a straightforward transaction, but it should have been entered correctly. To provide some background, the discrepancy was with a stock that I had purchased in several lots which had undergone a reverse split and then finally was acquired by an overseas company. With Turbo Tax, I simply imported everything in directly from Schwab. But my accountant completely missed one of our buy transactions which resulted in a lower cost basis. In short, even though we took a loss on the stock, his return showed that we had a gain.

The second thing he missed was an energy tax credit provided by the government. Because we recently added insulation and drywall to portions of our house, Turbo Tax said that we were eligible for a 1K tax credit. However on the return filed by our accountant, this credit was nowhere to be found. The status of this discrepancy still remains unresolved and we are trying to get ahold of our accountant to discuss whether this credit truly applies. But based on what Turbo Tax is telling us, we should be able to take it as a tax credit.

The final discrepancy that we noticed was that information from one of our 1099′s was not entered at all. We currently leave some of our money in Paypal’s money market fund and there was a minuscule dividend(around 20 bucks) that we were paid during the year. However, we could not find this amount anywhere in the return. Once again, this is something we are in the process of clearing up.

Most Of The Work Is In The Prep

My wife and I went into all of this thinking that using an accountant was going to save us time in filing our taxes. But instead, we discovered that we had to do most of the prep work. In fact, we ended up spending several hours collating our business numbers and gathering all of the tax data for the accountant.

One of the reasons we spent extra time was because our accountant wanted our business numbers in a different format than we had them in. In the end, all of our numbers tied out the same way but massaging them into his format took a good chunk of my wife’s time.

In any case, once all of the data was ready to go, entering all of the numbers into Turbo Tax took hardly any time at all. And this prep work was required whether we used an accountant or not. Arguably, using our accountant took more time because after finding the initial error, we went through his return line by line to check for additional discrepancies.

Benefits Of Using Our Accountant

I don’t want to come across as completely negative towards our accountant because we actually really like working with him and will continue to use him as a tax advisor. It’s just that my wife and I were very disappointed with the results.

That being said, one of the benefits of using our accountant to file our taxes is that we now know the right way to file our LLC paperwork. One of our motivations for using an accountant this year was that we converted our business to an LLC midway through last year and it was unclear how to indicate this properly in our tax return. Because we used an accountant, we now know how to do this ourselves from now on.

The other benefit is that our accountant is currently working with us to avoid having such lopsided tax returns in the future. A lopsided return is when you either have to pay a large amount or receive an abnormally large refund during tax time. To provide you with some context, I’ve done a bad job in the past in regards to estimating our income and our accountant is helping us do a better job. This year, we are getting a 10k tax return whereas last year we had to pay 30k in taxes. Clearly, I need some help in this department.

Conclusion

Once again, please take these conclusions with a grain of salt because they reflect only my experiences with a single accountant. But here’s what I have to say about using an accountant to do your taxes versus using Turbo Tax or Tax Cut.

  • An accountant can’t change the past. Therefore, using an accountant is probably not going to save you much money versus Turbo Tax for just filing a tax return. In our case, Turbo Tax did a better job of finding extra deductions.
  • It’s good to use an accountant if something has changed with your tax situation and you are not sure how to proceed. We recently switched to an LLC and needed guidance.
  • An accountant can help you improve your future tax situation by suggesting things to look out for in future returns.


Even though we had a bad experience with this tax return and shelled out $550 in the process, we will continue to use our accountant as an advisor to plan for next year. For those of you with a relatively simple tax return like ours, I doubt that an accountant will make much of a difference. In addition, if you are anal like I am, you’ll end up checking up on all the numbers anyways which means you probably won’t save that much time either. The true value of having an accountant on board is to provide future guidance and answer your tax questions going forward.

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48 thoughts on “Outcome Of Hiring An Accountant To Do Our Taxes Vs Using Turbo Tax Or Tax Cut”

    1. Brandon says:

      Turbotax is a ripoff, I bought the 49 dollar deluxe version, ended up paying 440 dollars in state taxes, and turbotax piled on an additional 139 dollars in fees on top of what I was told I would pay: $49. Turbotax has officially lost my business.

  1. I love having my taxes done by an accountant. I think your statement of it won’t save you much the first time through, but will help prepare you to save more is accurate. The accountant can only enter what you have kept track, but they should be actively telling you things to look for and the best way to approach things. They can also answer questions throughout the year, which can help shape your plans. The other thing to keep in mind is that in March and April you won’t get much attention, but once tax season is over they are willing to really sit down with you.

    The main thing that I like is the lack of stress. Taxes, especially when you have odd situations like business or consulting in home child care and the like are stressful because you don’t know what you are doing or if you are doing it right. For me the peace of mind is maybe the biggest benefit.

    Time wise, the prep time is still there, so it only saves me tax law investigation time(which can be hefty).

    The other thing to note, is the CPA usually like what they do. I hate doing taxes, probably because of the stress and lack of experience and knowledge, but I hate it nonetheless.

    Money well spent in my opinion.

    1. @Happy Rock
      As you have reiterated, the true value of having an accountant is that they can help you plan your taxable finances. Once you know what you are doing though, the actual act of filing your taxes can be done by anyone thanks to software like Turbo Tax or Tax Cut. May as well save some cash and enter it in yourself.

      @Carla
      I actually really like working with my current accountant. Everyone makes mistakes but I felt that he should have been more careful with my return since it was our first time. Do you review you return with a fine tooth comb every year or do you just trust your accountant that he entered everything in correctly?

  2. Thank you for sharing your experience with us. I had my taxes done by an accountant and don’t regret it for one minute. Since I was filling returns for two states, I really needed the assistance. Fortunately, my accountant was wonderful. I hope you’re able to find someone better next year.

  3. Wow, I could’ve written this post! Except my experience was much less positive. Our accountant charged us $1500 to do taxes and quarterly preparation, gave us NO guidance whatsoever unless we wanted to spend $200 an hour for a phone call, would not deduct anything, ANYTHING, not even home office or mileage or medical expenses, and refused to explain how they were doing things as far as tax preparation. Absolutely horrible experience, especially since our taxes are dead simple. Back to Turbo Tax for us, never again will we visit an accountant!

    1. @Wendy
      Wow, sounds like you had a really bad experience. I never got charged to just speak with our accountant. I just wished that he was more available during tax season because I had a lot of questions to ask.

      @Matt
      I agree with you. We’re going to stick with our accountant for another year and see how it pans out. Like I mentioned in the article, my wife and I really like his personality but were just disappointed in finding mistakes in his return.

  4. My experience with accountants is that they really pay off after a year or two of working with the same one. You need to work with them as much during the year as you do during tax time, feeding them info and numbers as they come in. That way, the accountant gets everything and has time to put it in whatever format he needs BEFORE crunch time. Sending a boatload of PDF’s during tax time may not be the best approach for either of you.

    Take time to build a relationship with your accountant during the year and they will prove to be VERY worthwhile…alleviating the pain and pressure of tracking everything during the year. You’ll also learn the quirks of that particular accountant (best communication methods, preferred document formats), and he will learn your quirks, so that when the pressure is on, you both know where each other are coming form.

    Of course, there are good and bad accountants out there so you should not hesitate to fire one if he doesn’t perform to your liking…there are plenty of other ones out there who will be happy to bend over backwards to make you happy.

  5. Fascinating! Did I miss the portion about how much more in taxes did you save btw?

    Nobody cares more about your own finances than you, is a general trend I’ve found.

    Best, Sam

    1. @Financial Samurai
      Because of the mistakes the accountant made, his return indicated that we were getting about 3K less with our return. This discrepancy was mainly caused by the stock error and the tax credit. I’m pretty anal about checking over my work so I think I’ll be doing my own taxes from here on out and use the accountant as just a tax advisor

      1. Did you find that Turbo Taxes numbers were similar to the accountants? I am trying to determine if TT can be as accurate as an account. I am equally as anal as you! LOL :D

      2. The numbers turned out to be very similar except for the clerical error and the one tax deduction that he missed.

  6. From reading your post, it didn’t appear as though you and your wife had a formal face to face office interview with the accountant before entering into an engagement? Is that correct? I know you said that you received a recommendation from a coworker but that initial interview really is important to determining if it’s a good fit. What may work for your coworker may not work for you.

    1. @Ryan
      We’ve been working with this accountant for a little over a year so we’ve had a couple interviews face to face already. He knows about our business and our general finances. What was disappointing was that the tax questionnaire we filled out was completely generic and was not very thorough. I think Turbo Tax’s questionnaire does a much better job of finding obscure deductions because it’s being pulled from a database.

      @Anthony
      What is ironic is that we’ve sent this accountant files electronically in the past so he usually doesn’t mind taking pdfs. I think his assistant just got riled up when she saw all of the files in the archive. For a corporation, I agree that an accountant should probably file for you at least once. But a pass through entity like an LLC is pretty straightforward to file once you’ve done it once.

  7. I have to say that for most people, spending the money on a qualified accountant would seem a great move. There are limitations in having a software try to emulate expertise. You have to have the knowledge to fill out the answer correctly and for me, there is no substitute. I have used an accountant for well over a decade and if I had to do it myself, I would have a serious problem.

    It sounds like you all got off on the wrong foot for many reasons and I don’t think that sending them password protected files helped. :-) Most accountants I would expect want either Excel files, hard copies, or both. This is something that should be discussed in advance (how they want the data). My old accountant told me “if you ever send me a shoebox full of receipts, you can expect it back”.

    I see my responsibility as maintaining receipts and categorizing them to make the process smoother. In the end, I get the best of both world; a professional accountant at a very affordable price.

    As you reference, if someone has a business entity such as a corporate or LLC, it is probably even more reason to use a professional as there are lots more rules that apply.

  8. This is a great post and outlined some of the common problems with accountants that we’re working on solving at TeaSpiller:

    1. “We got off on the wrong foot”. It looks like the problems were around convenience – the accountant being available at your time (off business hours), securely transmitting your information, bad customer service from the accountant (extra charges because of tech phobia on the accountant’s part).

    SOLUTION: Teaspiller would have allowed you to pick the expert that was convenient for your schedule, made sure the expert could access your files securely (via SSL), and made sure to get a flat price for the tax return. We also integrate with partners like Freshbooks and Shoeboxed so that you can share your receipts or financial transactions from you LLC more easily with your accountant.

    2. “He was difficult to get ahold of”. It looks like you wanted to email and schedule calls.

    SOLUTION: Teaspiller allows you to see the expert’s schedule to setup a conf call and you can email basic questions back forth with your expert.

    3. “Human Errors”. So typo on a stock transaction, missing energy credit, missing 1099 information.

    SOLUTION: Similar to Turbotax, the Teaspiller platform would have allowed you to choose the energy tax credit before and communicate that information to your expert directly –even if you were unsure if you qualified. On the typos and error checking, we’re still working on this. We’d like to offer the same bank transaction downloads to accountants that you find in tax software packages like Turbotax next year. BUT we do have the ability for customers to leave public user reviews – and I think that creates the right incentives between the accountant and the customer to make sure that a high-level of quality of tax return (and service) is always given.

    4. $550 for your return. This seems a little high? Did you get this quoted before the work began or at the end?

    SOLUTION: We believe in upfront flat pricing – and most of our experts in our network with great reviews start around 50% that price for your return.

    But would love to get your feedback on our site? Definitely want to see if we can make Teaspiller better — especially if there were any other problems you didn’t outline in the post.

    Thanks!
    Amit

    http://www.teaspiller.com
    “Taxes suck…Let a certified tax expert do ‘em”

  9. Thanks so much for this follow up report. I had been wondering what happened since your first post. I guess taxes are like children – even if you hire someone to help care for them you have to be involved and know what’s going on. The level to which you have to be involved sometimes dictates whether it’s worth hiring anyone at all or just doing it yourself.

    1. @Carmen
      I think that’s a good rule of thumb. Nobody is going to be more careful than you are going to be. If taxes weren’t so important, I wouldn’t have been so anal. Unfortunately, it’s one thing that I’m having trouble outsourcing effectively.

  10. I am very upset with your accountant for not representing the profession well but thanks for doing this study and following through with us. The receptionist not working with you was a little ridiculous as that is the way information is sent nowadays.
    I wish all my clients were as diligent as you in preparing their information! Of course, if they were they would probably end on doing it on their own like you do.

    1. @Tyler
      I was actually waiting for you to provide your feedback. This is only our second accountant that we’ve ever used and the first time having one do our taxes. Do you go through a full blown interview to find the hidden deductions or do you use a questionnaire? From a client perspective, I would have never known about the energy tax credit for our home had we not used Turbo Tax. What was nice about having the accountant though was that he did the follow up to make sure that we qualified though he didn’t find this deduction the first time around.

    2. I scan and categorize all my documents as well and email them to my CPA in separate PDFs headed, “Travel” “Donations” “Publicity expense” etc. Doing everything to completion usually takes me a solid three weekends and at least 2 weekdays in the month of February (I file very early). For the amount I pay my accountant I seem to do an awful lot of work getting things shipshape, but it’s always been that way! I know he’s honest, but sometimes paying him that $2000 a year seems staggering. He even once charged me for answering an email question that I thought was really quite simple.

  11. My husband and I found the same to be true with regard to our visit to H&R Block. We did the exact same tax return on TurboTax and ended up getting a refund of over three thousand. While the pros had us owing several hundred.
    Not going that way again.

  12. We had a similar experience with a tax accountant. We didn’t catch a math mistake and got a letter a few weeks later from the IRS saying our return was miscalculated by $1,400 and we were getting an extra $1,400 back. Good of the IRS to catch it, but that left a bad taste in my mouth. Ever since then I have done my taxes on my own. What you learn through the process helps you maximize your tax return.

  13. Brian says:

    Wow, that is insane. You are too kind to your accountant in this review!

  14. AM says:

    Thanks for this article! I’m planning about becoming an enrolled agent and offering booking keeping services to small businesses next year. I was a little afraid this was a blanket “always use the software”, but it’s definitely a primer on how to do business taxes better. I’m planning to offer the gather and prep bit of the work you had to do.

    @Krista – you maybe totally right on your refund, as I know how H&R Block folks are trained (took the class 2 years ago). On the other hand, you might have legitimately owed money and didn’t quite use the software correctly. Tax prep folks have every reason to find you a refund.

    What I’m saying, I guess, is that I might take my taxes to a third party or do some research (irs.gov) and find out why there’s such a wild discrepancy between your version and H&R Block’s effort. The IRS gets really testy when you get a refund you weren’t supposed to get. :(

  15. Great article. I try to do my small business taxes on my own once every few years just to make sure I still understand it and double check the work from my accountant. The thing I love about Turbo Tax is that it gives you examples of each deduction that you can look through to see what might apply. I’ve found deductions that my accountant has never bothered to ask me about…

  16. As an income tax preparer here in Canada .. this should have tipped you off:

    Because our accountant works about 40 minutes away by car, it’s not very convenient for us to talk face to face or to drop things off at his office. During the weekdays, my wife is with the kids and I’m at work. On the weekends, our accountant is not in the office.

    What accountant/income tax preparer doesn’t work weekends during tax season?! :D

  17. I think this is half down to bad experience and half down to just finding the wrong person. Maybe try it one more time and see how it goes? You never know. Personally I would try again but your time is probably a lot more valuable than mine.

  18. After the assistant lodged the $200 threat, I would have been in the market for another accountant. You demonstrated much more patience in regards to the situation then I would have.

    1. @Mark
      The reason that we stayed was because the assistant made the threat. We’ve been working with the accountant for well over a year so we like the accountant but don’t care much for his assistant.

  19. Dan says:

    I have been a faithful user of TurboTax for a few years. This year, I made the mistake of going with a tax accountant. He is charging me between $200-240, and after a couple of phone calls to check on his progress, he told me I was getting back a whopping $34 from the feds and about $180.00 from the state. My wife plugged in the SAME numbers into TurboTax, and she came up with about a $1700 refund from the feds and over $300 from the state. I told the tax accountant not to e-file his figures and my wife promptly processed the TurboTax return. I will pay the accountant for his “time,” but to be honest, I felt that I got ripped off. I’ll use his figures and compare it to Turbotax just to see what he did differently. Guess I’ll call it “tuition” as part of my “education, ” but I’m never using an accountant for taxes again unless my tax situation gets uber-complicated. BTW, TurboTax says my audit risk is low, so I didn’t do anything shady. I truly believe this guy just didn’t do the best job for me.

  20. Ali says:

    I have a partnership and will be trying Turbo Tax for the first time this year. The accountant that I’ve been using the last couple of years never seems to give a complete answer to the questions that I have or I have to research deductions, etc. and then provide the information to him. When I go in for my appointment he sits in silence plugging in the numbers that I’ve already prepared in spreadsheets and then tells me what I owe. With a small business and then having to shut down half the year due to medical reasons, I just can’t afford his services this year, nor do I feel that he is doing a good job to warrant my business any longer. Maybe in the furture I’ll look for someone new if my business really starts to grow, but for now, I’m going to try Turbo Tax.

  21. Carl says:

    Thanks for this article. Much of what you wrote about sounds very, very familiar.

    I’d been using CPAs for several years to file our combo personal/sole proprietorship returns. But after the first CPA made a pretty significant error and responded poorly to it, and the second left our 1040 filing until the last minute (and thus had me running around transferring funds into retirement accounts to make the deadline), I thought I’d give TurboTax a try.

    We’ve used TT for about four years. It’s been fine, but I think I’ve hit the wall this year after receiving notices from the IRS noting “discrepancies” in our return. It appears we filed correctly, but the IRS is wanting more info. But these notices are stressful.

    What really pushed me over the edge was discovering, quite by accident, that since 2010, I have been obligated to file a separate annual return (known as Form 5500-EZ) for my Individual 401(k). In fact, anyone with a Solo 401(k) that reaches $250k in value has to file that form each year. Trouble is, when I rolled two retirement accounts into that pension plan in 2010, my financial advisor never mentioned this new filing responsibility. Neither did Schwab, which is the custodian for that pension. So here I am, eight months after the 2010 return was due, and I discover that I should have filed. And the penalty for late filing? $25 a day, or $650 a month.

    I’m now talking with my old accountant to at least get me through this 5500-EZ debacle (I don’t think he knew about this little rule, either). But I’ll probably get back on the CPA wagon and accept the financial hit of $650 to $800 a year in exchange for less time spent on taxes, and hopefully fewer notices from Uncle Sam.

    1. Hey Carl,
      Yeah, the one thing that TT is not good at is dealing with special cases like your rollover. I’ll give accountants the benefit of the doubt here and say that they probably would have known about this. Having done business taxes for several years now, TT is good for handling taxes when there’s nothing new. But if there are any special cases or drastic changes, it’s best to consult an accountant. But even still, I’d probably just use the accountant for that one year, do the same in Turbo Tax so I know what I’m doing and then drop the accountant the following year.

  22. THANK YOU!

    I’ve caught some flack for doing my own S-Corp taxes. Everyone said an accountant would save more than they’d cost, but I was pretty sure by the time I got my books in order I’d have spent most of the time and effort, and our profit was so low there was no way they could save me $500 or more.

    Sure enough it took a month to get the books in order (It’s our first year, so there were a lot of one-off items and a new system to set up, then all the paper and Excel records to enter because I didn’t get it set up before we started.)

    The actual taxes took half a day, and if there are errors they are in my books, not in my tax filing (though TurboTax Business is not as good as the regular TurboTax), so an accountant wouldn’t help unless they set up and maintained my books.

    That said, I have a feeling a tax CONSULTANT would be very very valuable, and I hadn’t really considered that option. I will definitely look for someone when the tax season is over.

    1. Hi Shasta
      We actually have a tax accountant on hand that we pay by the hour whenever we have questions about our taxes. We don’t have him file our taxes but just answer questions whenever something comes up. Very useful.

    2. Sage says:

      Shasta,

      I went through the exact same thing our first year filing our business taxes. It was so incredibly time consuming. Mostly the excel spreadsheets. But yes, having a consultant on hand is great. Not only do you get answers, but I feel it eliminates the stress of, “is this right? or is that right?” when hitting that submit button to have your taxes filed.

  23. I have been with the same accountant for some 20 years or so. The main advantage is that because my tax situation is not that simple – I have Schedule A and C – and he has a deep knowledge of the changes in tax law every year, I don’t need to worry that I may screw something up on my tax return. Some of the posts above mentioned mistakes on the part of the accountant. Actually I don’t believe my accountant has ever made one – he really is very good. I, on the other hand, have sent incomplete data to him in before.

    The main drawback has always been expense. My accountant is not cheap. A yearly bill from him is around $1800 – $2000. At the moment, because I’m being audited and he is representing me, the bills from him just keep coming and I may end up paying twice my usual amount by the end of this year. It really makes me want to go back to the simple days of just sending in my W2. I honestly don’t want to go through another painful year like 2012 has been. It isn’t my accountant’s causing, but seriously, the bills are killing me.

  24. David says:

    I’m curious about how you handled the LLC on your taxes.. Especially the conversion mid year. Also wondering if you had to file state corp taxes. That’s the biggest hurdle for me in converting to LLC.

    I’ve always done it the turbotax way. I went to an accountant once for advice, but he wanted me to buy properties and have multiple businesses… Where I just want to concentrate on my core business and keep my taxes relatively simple.

    1. Hi David,

      We have a single member LLC so we use Turbo Tax Home Business which makes things fairly easy. In term of the state filing, turbo tax takes care of everything so there isn’t much else to do. However, for California there are a couple extra forms and LLC fees that go along with it that you have to mail in separately. Overall though, filing taxes for a single member LLC in Ca is pretty painless. But your state might be different.

  25. Sage says:

    Steve,

    I have to thank you so much for your “experiment” and sharing it here. I have worked as a Staff accountant and Bookkeeper in the past. While this in no way makes me an expert by any means when it comes to taxes, I have always felt that it gives me an upper hand when doing taxes via Turbo Tax versus hiring someone to do them for me. Two years ago, my husband and I started an LLC. I used Turbo tax Home and Business and also did the audit defense. I made an error when it came to entering the information for taxes paid (I had been paying estimated taxes for our LLC quarterly, but with our employees and not under our social security #-Oops). I realized this error when we started getting letters in the mail from the IRS requesting the paperwork to go along with the EFT payments. I called the IRS and have to say, they were so incredibly helpful, that I left with a good feeling and understanding of what I needed to do for this past year and moving forward. It was everything an accountant would have told me-and it was free.

    Now, on another note, my mother is an accountant. She had offered to help with our taxes, but, as she has her own taxes to do and her company’s taxes to do, I didn’t want to put too much of a burden on her shoulders adding mine to the pile when I clearly thought I had a handle on it. I asked her a few questions, and, in the end, made mistakes because I didn’t ask the questions correctly. This would have happened if I paid an accountant to answer my questions rather than having one do them for me. I now have to amend the previous year’s taxes and will not be getting much in the way of a refund this year (the refund may just cover what we owe IRS after I amend 2011). Last year, it would have been wise for me to have had an accountant (or listened to my mother and let her do them) while allowing me to sit in so I could know what to do from then on.

    But, I learned anyway and am still using Turbo Tax. You are right, also, about the misconception that people have regarding being responsible for their numbers. Many people feel that if they get audited, it falls on the accountant 100%. Obviously, if we are giving the accountant the numbers, there is not much responsibility on their shoulders.

    This article was really well written and I can honestly say that, while I support the idea of using an accountant to do your taxes, if you have an understanding of taxes, Turbo Tax can certainly be a good fit for you.

  26. Gwendolyn says:

    I am a CPA in Oregon and I love finding reviews of accountants. Helps me to improve.

    My main job is to tax plan throughout the year, I have people meet me quarterly so when the tax return is done there are no huge surprises. Thats where my skill comes into play.

    For people that just come to me after the year is over there is only so much I can do but its a start for planning the next year.

    I am curious (since you are in California) is there any reason you are not an S-corp? A single entity LLC still pays self empoyment taxes on every single dollar of net income. I always like to hear what advice other CPAs give.

    Thanks!

  27. I quit using a CPA in the 90′s when we used one for 2 years and he made the same mistake 2 years in a row. He had us paying federal and state taxes on savings bonds that we cashed in. I was working 2 jobs at the time and my husband was on 100% disability after a automobile accident.
    I have now done our taxes for over 50 years. 2 years ago my husband passed away and I disclaimed the traditional IRA’s so that the children could have them now as I am about ready to do my RMD’s and have my own IRA’s. During the year of passing I took his RMD and converted 40,000 to a Roth as we have been doing for a few years and I did not know how to divide the basis the following year to go with the traditional IRA’s. After doing my taxes last year I took the information to the CPA who did our township audit when I was treasurer and he redid my taxes and he made the mistake of taking my basis out of an inherited IRA from my mother. But he did do my basis correctly for me.
    I know enough about taxes and do trust Turbo Tax completely. They have CPA’s and tax lawyers to help you when you have a complicated question.
    I should have just called them to help me with the basis. It could have saved me $125. But I also had the confirmation that I had done that years taxes correctly.

  28. I am a CPA in Canada and I find this article very interesting. It would be helpful to everyone if people understood the role of an accountant when it comes to taxes.

    1) Doing someone’s taxes and doing their book-keeping are two different things. For example, you weren’t happy with the results of the stock purchases and the calculation of the adjusted cost base. Well, that means you didn’t like your accountant’s book-keeping, not their tax treatment of the results of the book-keeping. Your accountant may have had a junior staff member do the book-keeping before he did the taxes. Since you didn’t do the book-keeping of your stock purchases and sales, your accountant (or his staff) had to do it in order to complete your taxes. If all you want is your taxes done to save time, make sure your book-keeping is done by a good book-keeper, or the accountant will have a junior staff member get it done.

    2) Accountants are one of the only professions that get paid to attest to the truth. When we put our signatures on financial statements we say a) we don’t believe there is anything false or misleading in a Notice To Reader, b) we don’t have a reason to believe that the financial statements are not done according to Generally Accepted Accounting Principals in a Review Engagement c) we have audited the financial statements and their are no material mistatements in them in an Audit Engagement. In terms of taxes, for a) and b) we will need to calculate tax liabilities and expenses, both future and current to attest to their accuracy, so, we generally need to do the tax return. How else are we supposed to know if they’re accurate or not? I can tell you that our working papers to test the accuracy of a tax return are so complex that doing the actual return is 1/10th of the work of testing the return.

    3) If you don’t need assurance like a Review Engagement or an Audit Engagement, your book-keeping and your book-keeping is perfect, you may not want to use an accountant to do your taxes, unless… you require a TAX EXPERT. For example, perhaps you are a business that creates and owns intellectual property like patents and copyrights and do extensive research and development and want the tax credits that go with that; perhaps you are raising investment capital and need to comply with state or federal regulations; perhaps you have employees that are part of a skills and training program that you can claim tax credits for and need to file for these credits correctly; perhaps you are just starting a business and want to know whether your or a family trust should own the business and what the tax benefits of either way are.

    The best use of an accountant for tax purposes is in an assurance situation (where the accountant pretty much has to do the taxes to sign off on the degree of their accuracy), complex issues, and planning for the future. Using an accountant for book-keeping and identifying smaller issues is like using a lawyer when a legal secretary will do. The legal secretary will do a better job of legal secretary work than the lawyer, but the lawyer will do a better job of legal work… and they’ll also be liable for their work and covered with errors and omissions insurance… like just like accountants and book-keepers.

    Hire a book-keeper for book keeping, an accountant for accounting issues (assurance and attesting to the accuracy of your statements), and tax experts for complex tax issues (which are specially trained accountants and lawyers). Like GP doctors refer patients to specialists, accountants also use specialists when the come across complex issues. Bad accountants try to do everything by themselves. Good ones work with a network of specialists they trust.

    Lawyers have legal secretaries and use legal specialists, Doctors use nurses and specialists, Accountants use book-keepers and tax specialists. Does this help?

  29. It seems to me that what you really need is a bookkkeeper to keep your data tidy throughout the year. This would provide you with a clear vision of what your numbers look like on a monthly basis, and detailed reports to send to your accountant/tax preparer during tax season.

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