Time to Say Goodbye to TurboTax!!I started using TurboTax in the year 2000 and I’ve used it every year since then.  Going to a tax preparer didn’t make sense – it was expensive and TurboTax made it easy enough to do my tax returns myself.  All the TurboTax alternatives (H&R Block, TaxAct, TaxCut, etc.) are all similar in that can guide you through doing your taxes to make life smoother when doing your returns.

Sure, sometimes I would stare at the screen for hours and try to figure out what the %^& they were asking me.  And sometimes it seemed easy enough that I would go through everything and submit my return pretty quickly because I was excited about my big juicy refund… only to receive a 1099-MISC about a day or two after I submitted the return.

But it just makes sense to do your own taxes to save a few bucks when possible, right?

Well, maybe it did when I first started and was a young kid living in an apartment with nothing complicated to do on my taxes.  However, over the years, life’s started to get a little more complex with family and other “stuff” that grows over time.  Now that I’m older, the simplicity has started to diminish.  Some of the growth in my life now includes…

  • A wife
  • A house to live in
  • A rental house
  • A daughter
  • A duplex

Every year, I noticed that my returns were becoming slightly more difficult and time-consuming to do.  I’ve managed to muddle my way through them though every time, but I never finish them thinking “well, that was a slam dunk!” – it’s more of a “yeah… that should hopefully be good.”  Because the complexity just increased subtly over the years, I really didn’t notice just each time I did my return.  I’ve been like the boiling frog anecdote that says if you put a frog in cold water and slowly turn up the heat, it doesn’t notice and will be cooked to death.

My game plan is to possibly buy another two duplexes before I quit my job so my tax returns are only going to get more complicated over time.

Well, I’ve had it and decided to jump out before being cooked to death!!  I stopped about ¾ of the way through my current TurboTax return and finally decided I’m calling it.  I started doing some digging and talked to one of my financial mentors to see who he uses.  His accountant is actually pretty pricey, but I want to work with someone who knows things inside and out to get a good baseline going.

Here are my goals:

  • Check my work – I’ve done what I know and answer the questions TurboTax asks, but I’m no accountant and I’m sure I’ve missed some things that could have saved me more money if I knew where to look.
  • Get advice for how to structure everything – I’m looking for someone to say, “Jim, if you change the way you do this, you could save a lot more on your taxes every year.”  There are probably a number of things I should change and I need someone to give me some guidance on what to do differently.
  • Future strategy help – This is a pretty big bullet point for me.  Similar to the previous one except I need to look to the future so I know what direction I should be going.  For example, I’ve haven’t dug into this yet, but what should I be thinking about now to help on my daughter’s financial aid for college?  We’ve got a number of years left until then and I should be done with my full-time job at that time.  Will eliminating my W2 income help her out tremendously or will rental income come into play?  And if the rental income does play a part, what are some ways of fixing that?  Maybe changing the structure and handling of my LLC makes a difference or maybe it doesn’t.  This type of planning is critical for me.

In a nutshell, although TurboTax is a great product and has served me well, I’ve grown beyond it… and this is a good thing!  It means that I now have enough assets to warrant bringing someone in to help.  And with that should come the guidance I need.

Depending on how this first time around goes with the accountant, I may or may not stick with him.  If it becomes worthwhile because I end up coming up with thousands of dollars I wouldn’t have had otherwise or the advice is just outstanding, then it’s probably worth the cost.  However, if it’s not really that mind-blowing or cost-saving, then I will likely look at going to someone else for next year’s return.  Regardless, I’m done trying to do this myself.

I’ll let you know how my first professional accountant visit goes as soon as my return is done.

So goodbye TurboTax – our time together has been great… Ok, maybe just good.  But I’m moving on to bigger and better!!

 

Do you do your own taxes every year or do you use an accountant and why?

 

Thanks for reading!!

— Jim

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Why I Dumped TurboTax for an Accountant

20 thoughts on “Why I Dumped TurboTax for an Accountant

  • March 3, 2016 at 9:15 am
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    I guess I do both. I’m a CPA who prepares his own taxes! Best of both worlds!

    Seriously, both TurboTax and accountants play a role in tax prep. Everyone has to find what works for them!

    John

    Reply
    • March 3, 2016 at 3:06 pm
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      Boy, I sure wish I had the skills of a CPA! I met with my new accountant and he did answer a number of questions that I had regarding strategy so that was already helpful. I’ll do a new post once I get back my return as to how it went.

      — Jim

      Reply
      • March 3, 2016 at 3:17 pm
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        Maybe once you get the tax strategy finalized, you can handle it in future years. Of course Congress will then change the laws, so back to the CPA! Oh, well…

        Even though I’m a CPA, I sure do wish we had a simple flat tax. One low rate, no deductions, maybe a decent sized personal exemption per person to help the disadvantaged. Probably never happen…..but you gotta have dreams!

        John

        Reply
        • March 3, 2016 at 3:36 pm
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          Haha – that’s true!

          I agree wholeheartedly that the tax system needs to be simplified and I only see the mess from the outside – I couldn’t imagine the ridiculousness you have to know as a CPA!

          — Jim

          Reply
  • March 4, 2016 at 12:27 am
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    I’m still using software (switched from Turbotax to TaxAct last year). My tax is not that complicated yet.
    Yes there are times when I look at the software screen and I realize I have no idea what it’s talking about. Which is frustrating, but it always turned out fine after a bit of search in google.

    Reply
    • March 8, 2016 at 1:32 pm
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      Sorry about the delay Charlie, your comment was stuck in the old spam filter for some reason.

      That’s exactly how I always feel – I could do a little bit of searching on Google and be fairly confident (though not 100%) that the answer I found was what I needed. And yes, frustrating is the word for it!

      — Jim

      Reply
  • March 4, 2016 at 1:29 pm
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    I’m a firm believer that a good accountant is a key piece that everyone should have in their tax and retirement strategy. My CPA has saved me tens of thousands of dollars the past few years. As my portfolio grows, he will save me even more. For most, saving a few buck now by using Turbo Tax will end up costing tons of money in the long run.

    Reply
    • March 4, 2016 at 2:45 pm
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      Your definitely smart by using an accountant to get that help in strategy planning. Doing my own taxes was just something I’ve always just done, but this is the first year I really thought “hey, I’m starting to build something good here.” So hopefully an accountant can help me save tens of thousands over a few years too!! 🙂

      — Jim

      Reply
  • March 4, 2016 at 3:38 pm
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    I have worked in finance and accounting for many years and could prepare my tax return on my own, but I have used both Turbo Tax and an accountant for a long time.

    It’s relatively easy and inexpensive to use Turbo Tax if you are already tracking everything in Quicken or QuickBooks. The Turbo Tax numbers give me a feel and let me play with the numbers.

    But I have my accountant prepare and file my actual return. Not only do I get access to his expertise, but I also have an advocate that can represent me in any interactions with the taxing authority (IRS, state, etc.).

    Reply
    • March 4, 2016 at 4:01 pm
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      I do love me some Quicken!!

      You know, I didn’t really think about the representation, but that’s an excellent point… and one I hope to never use!

      — Jim

      Reply
      • March 4, 2016 at 4:39 pm
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        Just to clarify, the representation isn’t always for bad things.

        Your accountant can also help with things such as checking on refund status, setting up payroll tax accounts if you have employees, and changing your reporting from annual to quarterly if needed.

        I also used my accountant when I refinanced our mortgage. He worked directly with the lender to get them everything they needed saving me time, but also adding credibility.

        Reply
        • March 4, 2016 at 5:34 pm
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          Using your accountant on pulling things together for a refi would be an awesome perk!

          — Jim

          Reply
  • November 8, 2016 at 10:49 am
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    I haven’t seen a reason “to graduate” from the software yet. I’ve used TurboTax the past couple years because it had my rental property data in it already, but since I sold it last year, I could go back to doing it myself, but with the option to import all my investments an bank info, it’s worth the $60 or whatever it is in time saved.

    I typically get skeptical when people say their accountant saved them thousands of dollars. What kind of stuff do they have going on that an accountant could identify something that they couldn’t? I ordered one of those JK Lasser Tax guides a few years ago and it seemed pretty comprehensive.

    I definitely had to devote a lot of hours to figuring out the proper way to handle unloading a property that was a rental for part of the time, but also qualified as a personal residence for part of the time , but I had plenty of free time to research that. I can understand outsourcing the process for lack of time (or lack of interest), but I don’t buy that accountants can magically find their clients free money.

    Reply
    • November 8, 2016 at 11:25 am
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      Sounds like you’re much better at doing your taxes than I am! 🙂

      When I switched over, I had run everything through TurboTax like I always do, but just didn’t finalize it (saving the cost). That’s when I got the accountant involved and he helped me figure out some things. For instance, I have always erred toward the side of caution on deductions, but owning the rental properties actually allows you to deduct things you’re legitamely using through the properties (tools, mileage, etc). I wasn’t doing a lot of this.

      Without the other businesses, I would still be using TurboTax and probably be just fine. But where I’m at now, the accountant definitely helped on some of the complexities and the discussion/advice was well worth the price for me.

      — Jim

      Reply
  • January 12, 2017 at 12:05 am
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    I used Turbo Tax and then had an accountant for 2 years and am now back to Turbo Tax. Part of why I left the accountant is that I found that the prep work for the accountant was similar to the prep work for Turbo Tax. Plus I am pretty straight forward- W2 job, primary home, wife and kid. The most complicated I get is a 1099 Misc and a backdoor Roth. I was able to muddle through both of these last year. This year I will also have sold a house, bought a new house, and now started a website. Will this complicate matters, probably.

    If my website ever starts making a decent amount of money (as opposed to the 6 cents I have made thus far) then I will likely start with an accountant again.

    – EJ

    Reply
    • January 12, 2017 at 2:44 pm
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      That’s interesting to hear. This would be year number 2 for us using an accountant and he’s already mailed us all the prep work to fill out that you’re talking about. It made me wonder if I should still do it or just go back to TurboTax now that I have his work from last year as a baseline.

      However, I talked with my wife and I think we’re going to use him again as everything is getting more complicated with multiple businesses. I also like that I can hit him up anytime throughout the year to ask for advice on future planning or other questions that might affect my tax situation.

      Hang in there on the money part of the site… it usually takes a long time to build that up where you’ll start seeing results. I’m wrapping up my second year and just starting to see some progress! 🙂

      Cheers!

      — Jim

      Reply
  • May 19, 2017 at 9:41 pm
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    I’ll be curious to see the findings on this for people with rentals and duplexes. My husband and I are kind of in between assets/complexity with the whole Turbo Tax vs accountant debate with our rentals.

    I think my husband and I spent 3 weekends trying to figure out what the fj$@# we was reading as well. Not fun!

    Reply
    • May 20, 2017 at 5:40 pm
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      Hi Lily – so this post was actually from last year and I used and accountant and I’m so glad I did. I learned a couple ways of doing things that I should have been doing differently and I also learned that most of what I was doing was correct. I also got some planning advice that I definitely needed.

      That said, I went to do my taxes this year and they had me filling out a web form to get things rolling. I was about halfway through it and then shook my head – it was basically TurboTax, but with a much pricier cost. I bailed and did it myself on TurboTax. I now feel much more confident in what I’m doing and will probably just bounce back to an accountant on years when I have major changes.

      Good luck to you guys!! 🙂

      — Jim

      Reply
  • February 3, 2019 at 5:26 pm
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    On behalf of accountants, thanks for switching😊

    TurboTax is a good program, but sometimes you just need to know how the return flows and what box to check (i.e. depreciation, credits, etc.) CPAs typically see hundreds of similar situations to yours, are required to do 80 hours of education biennially, plus most do much extra toward educating themselves on issues their clients face.

    You would have done fine with preparing yourself, it’s just whether the time preparing is better spent elsewhere. If your CPA was a referral, they most likely do a great job, otherwise your friend would have added some disclaimers.

    Since you mentioned the cost, I’ll give you something to compare. It’s not what I charge, but I am no longer in public accounting or have a staff, I just do as a side hustle.

    Most CPAs charge about $160 an hour but will only meet with you and review the return. The person doing the bulk of the prep for a return like yours will not be a CPA most likely, and be billed out at $90/hour. All told, you will have about 2.5 hours in 1st year prep and 1.5 hours in partner time – $450-600 fee. If they priced in YE planning (important for you if you need an open line and not be billed by the hour when you call with future plans), you are probably looking at about $800-900.

    Most old-school CPAs live by realization. A 100% would be the billed rate = time spent. The first year is typically a little under 100%, but subsequent years are typically 120% or better.

    Hope this little extra insight gives you something to chew on. Good luck in your rental plans, having rentals for me was like doing taxes was to you😝

    Reply
    • February 4, 2019 at 8:09 am
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      That’s a lot of great info – thanks, Cory! Love the comment on the rentals vs doing taxes, too! 🙂

      — Jim

      Reply

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