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Rich Riddle
03-20-2014, 4:10 PM
Just opened the envelope from the accountant and it has questions that need answered that span over twenty pages, including itemizing receipts, taxes, etc. Why on Earth do we pay an accountant when the accountant most likely simply transposes those numbers into a computer program like an entry clerk? For hundreds of dollars I expect the accountant to figure out where all the receipts belong. Do any of the rest of you have to fill out lengthy questionnaires for your accountants?

Steve Rozmiarek
03-20-2014, 4:16 PM
Yes, but when the IRS inevitably has questions, your well informed accountant is the one dealing with it, not you.

Val Kosmider
03-20-2014, 4:18 PM
That is typical. I usually send them the 'documents', grouped by category, and let them sort through it. They already have all of your personal details loaded in their system of you used them last year.

Otherwise, you can punch the stuff into Turbo Tax for about $100 (includes one state return) and be done with it.

The Accountant Advantage: From the IRS: "Could you please show us the specific adjustments you made to the Alternative Minimum Tax computation as a result of the Tax Loss Carryback"?

Hello Accountant....they knew the exact buzz words that the IRS was looking for. Was it worth $300???? Yes, I have to say it was.

Rich Riddle
03-20-2014, 4:24 PM
That's another thing I don't understand. We always have to pay the alternative minimum tax, so deductions don't really exist for us. Why even bother with calculating deductions when you simply pay them that huge tax anyway? They ought to have a simple form for the "folks we rake over the coals." No need to calculate the deductions when the are all disallowed.

Shawn Pixley
03-20-2014, 6:20 PM
When my taxes were simple, I did them myself. When my taxes got complicated, I determined that having a professional take care of it was money well spent. To each, his or her own.

Moses Yoder
03-20-2014, 7:00 PM
As mentioned, when the IRS comes to my door they get sent down the road to my accountant. Plus, I would guess it is less likely to get audited if an accountant did your forms than it is if you do it yourself. The government in the USA has intentionally made tax returns complicated to provide jobs for accountants. When I ran my own business I ran all the money through one Quicken checking account and filed the receipts by date, one envelope per month.

Eduard Nemirovsky
03-20-2014, 7:06 PM
Unfortunately it is not correct statement, at least my agreement with accountant I am still responsible for any tax problem and miscalculations.
Yes, but when the IRS inevitably has questions, your well informed accountant is the one dealing with it, not you.

Mike Henderson
03-20-2014, 7:29 PM
Unfortunately it is not correct statement, at least my agreement with accountant I am still responsible for any tax problem and miscalculations.
If mistakes are made, or not all income declared, you certainly are responsible. But when questions arise about why certain things were done in calculating the income, deductions, and taxes, your accountant is much better at answering those questions.

Mike

Brian Elfert
03-20-2014, 8:43 PM
Do you really want to pay a professional $100 plus an hour to reconstruct your entire year's worth of receipts in a shoebox?

If you don't have complicated taxes then just use a tax program otherwise pay a professional who understands taxes. A tax professional may find a way to legally reduce your taxes that a computer wouldn't know. H&R Block offers to check your tax return to make sure it is right for free, but I believe they will charge you if they reduce your tax liability.

I'm not convinced most of the mall type tax preparers (H&R Block, Jackson Hewitt, etc) can do any better than a computer program. Most of those folks just do taxes as a side gig and get minimal training. You want to use a professional tax preparer who hopefully does taxes or account as a full time gig.

Bill Cunningham
03-20-2014, 9:29 PM
I think Canada is working towards a simpler tax form..
Line #1:How much money did you make last year?
Line #2:Send it in!

Actually my Daughters father-in-law is a CPA with a Masters Degree. I just give him a spreadsheet synopsis on one piece of legal size paper at the end of the year, and he does mine and my wife's personal taxes and my business taxes all for one low price. Actually I had to ask him to send me a bill. What ever he charges me it's well worth it.. I think the more letters your accountant has after his name, the less likely you are to get audited. There is no point in trying something shady, he's bound to spot it.. I rarely have to speak to anyone at Canada revenue it's been years.. Just as well, because when i press #1 for English I STILL can't understand the East Indian on the other end. :cool:

Wade Lippman
03-20-2014, 9:46 PM
I find it easier and faster to do my own taxes with H&RBlock at Home, then to use an accountant. Even if they were the same price I would do my own.

A few years ago I had an extremely large and complex situation that was way over my head (and beyond anything tax software could handle), so I used one of the more prominent accounting firms. They got it all wrong.
When I pointed out their errors, they told me I was screwed.
I couldn't have done any worse myself, but of course had I done it wrong I wouldn't have had anyone to sue.

Michael Weber
03-21-2014, 12:11 AM
No business, no mortgage, so standard deduction for me the last few years. I guess I lead a simple life or maybe I'm missing something.:confused:

Justin Ludwig
03-21-2014, 7:02 AM
I married an accountant. Problem solved.

John Coloccia
03-21-2014, 9:30 AM
My account just takes everything I give him and he figures it out. Why else would I pay him? He's much too expensive to be a data entry clerk. If all I needed was help during an audit, I'd hire an accountant/attorney then. I pay my accountant to handle my accounting.

Rich Engelhardt
03-21-2014, 9:34 AM
Why Pay an Accountant?
Like a few have already mentioned....

I don't pay the accountant to do my taxes, I pay him to keep me out of an audit.

I've had one kidney stone, one root canal, one divorce and one IRS audit.
They are all four equally uncomfortable. The only difference is w/two of them you deal with sympathetic people & w/the other two, demonic blood suckers...

Curt Harms
03-21-2014, 10:09 AM
Like a few have already mentioned....

I don't pay the accountant to do my taxes, I pay him to keep me out of an audit.

I've had one kidney stone, one root canal, one divorce and one IRS audit.
They are all four equally uncomfortable. The only difference is w/two of them you deal with sympathetic people & w/the other two, demonic blood suckers...

Exactly. A good CPA should know how to categorize things to eliminate red (audit) flags.

Brian Ashton
03-21-2014, 11:20 AM
Just opened the envelope from the accountant and it has questions that need answered that span over twenty pages, including itemizing receipts, taxes, etc. Why on Earth do we pay an accountant when the accountant most likely simply transposes those numbers into a computer program like an entry clerk? For hundreds of dollars I expect the accountant to figure out where all the receipts belong. Do any of the rest of you have to fill out lengthy questionnaires for your accountants?


Send them a shoebox full of papers and let them figure it out, they'll only charge you 250/hr to sort it all out. Then you can feel like you got your moneys worth.

Rich Engelhardt
03-21-2014, 11:28 AM
Just opened the envelope from the accountant and it has questions that need answered that span over twenty pagesWow - I just noticed that & it sunk in.

I hope you've had that envelope for a month or two and just got around to opening it.
We get that letter from our CPA in November letting us know it's time to round up all the paperwork.

Brian Elfert
03-21-2014, 12:56 PM
I've been through a state sales tax audit and it was not fun. I swear the auditor went to the KGB school for government bureaucrats. She was mean and nasty. I didn't understand the rules for sales and use tax and hadn't paid nearly enough. The auditor went through the most recent year of records and I self audited the remaining years. I only got away without a penalty because I did the self audit. It cost me about $7,000 in the end.

Ted Friesen
03-21-2014, 1:06 PM
A good accountant can give you ideas of how to rearrange your affairs to reduce future taxes. No software will be able to do that. It comes from having a good relationship with a professional accountant who has the time, experience and ability to help you and letting him or her know, not only what you did last year, but more importantly, what you plan to do in the future. The real value is almost always in planning your future taxes, not preparing the current year's form. And, yes, when the tax auditor arrives, you will want a battle scarred professional by your side.

Someone here asked "Do you really want to pay an accountant to sort through your receipts?". Well if you do, you are wasting his time and your money and if you think that's where the value in a professional accountant is, then you should stick to Turbo Tax or H&R Block, or better yet use the short form mentioned above and just send in what you made last year.

David Weaver
03-21-2014, 1:09 PM
I'd imagine the software will give suggestions in the future, too. I've never used an accountant and never will, but if I was flush with cash and had a 25-person business and didn't want to deal with payroll and withholding and all of that stuff, I'd pay a payroll company and a CPA.

As an individual, I have enough time and energy to figure out what I need to do and how I need to plan on my own.

Kev Williams
03-21-2014, 9:24 PM
Everyone one says "get a lawyer" or "you need an accountant".

Siimple divorce lawyers nothwithstanding: The only time I needed a lawyer was for a simple bankruptcy. I went into the trucking business with a friend, it didn't pan out. Got a lawyer who told me no problem. Except for the fact he failed to take into consideration I was self employed. Court decided I was to sell my share of the business (which didn't really exist) and bring them $10,000 within 30 days. If I'd had $10,000 I wouldn't have had to file bankruptcy...

So much for lawyers...

And the same trucking business left me with mountains of gobbledygook paperwork. I decided maybe I should hire an accountant to figure out my taxes. He only took 3-1/2 years to finish - the business only lasted 3 months mind you- and presented me with the bad news that my trucking business actually made money and that I owed the IRS $9700 in taxes and penalties... Hmm. The truck generated a 3 month income of about $6000 against 3 months expenses @ over $4000 per month. How MUCH over is anyone's guess, which is why I hired an accountant. He income-averaged me down to only $7400 taxes owed on the $6000+ expenses I paid. Or was supposed to pay-- which I didn't have, which is why I filed for bankruptcy...

So much for Accounts.

That was in 1981, and I've never, and WILL never, hire another lawyer or accountant as long as I live.

Thank you Quickbooks and TurboTax.

Ed Aumiller
03-21-2014, 9:52 PM
Had an accountant for years... Paid him a lot for many years... Went on a vacation in 1999 and won about $300 in Biloxi, MS.... Accountant had ALL info...

Accountant filed state & federal taxes.... 6 months later, received notice that state wanted another $125 (because forms were not filed in proper order)...

Asked accountant about it... he said state was PROBABLY correct... paid the $125... the next fall, received notice from accountant that he would be "extremely busy" come tax time....

His mistake, so he quit doing accounting for us.. !!!!!

Bought Turbo-Tax (or similiar program... now use Turbo-Tax for last 6-8 years) and only took about 4 hours to enter all info (we are in the rental business) and only costs about $100 a year versus almost $500 a year 14 years ago..

So over last 14 years paid $1400 instead of $7000....

we always have everything organized (Love Quicken, can't remember other program used back then but very similar) and he basically only had to move our numbers into his program..

Was audited one time by IRS, had copies of everything and did not have a problem... but that was in 1975...

Wade Lippman
03-22-2014, 11:36 AM
That was in 1981, and I've never, and WILL never, hire another lawyer or accountant as long as I live.


Hopefully you won't have to. But there are circumstances in which you can't do it alone, even with Quickbooks and TurboTax.
Many professionals are outright incompetent, and even the better ones do foolish things. But don't we all?

Rick Potter
03-22-2014, 2:26 PM
If you have reasonably simple tax reporting needs, I would go with a self system....did for years. If you are self employed, own part or all of a business, have rentals, disability income, support family members, have child support issues, a recent inheritance, or some unusual income sources, it's time for a pro.

In my case, life has gotten quite complicated in the last 15 years. I have an accountant I have used for that long, who has saved me his fee with regularity. We only claim what is correct, and somehow he makes it work out. Until just a couple of years ago, my wife (who was an accounting major) figured out the taxes before we went to his office. He always found extra deductions more than what we paid him.

We don't even try to prefigure now, but we do have everything ready with subtotals for him when we go. Three weeks ago, we went and again found that he had figured quarterly amounts pretty close, and we got a few bucks back....always a relief.

By the way, about the audit possibility, he charges $90 extra to guarantee no audit, and represent us just in case.

Rick Potter

PS: I am not talking about places like H&R Block here.

Kev Williams
03-24-2014, 7:48 PM
I've been self employed since 1975. Have no employees so it's easy. We have $X.00 in in sales, and $X.00 in expenses. Add up the sales, subtract the expenses, claim the difference on our personal income taxes. With mortgage interest so low, and (thankfully) not enough medical bills to add up to much, we don't have enough deductions to itemize. I've had accountants tell me we don't need an accountant.
;)

Brian Elfert
03-24-2014, 9:00 PM
I was just looking at my taxes today. If it wasn't for my mortgage interest and property taxes I could probably file a 1040EZ. (I was trying to figure out how much extra tax I would pay if I started renting instead of buying a house.)

Rich Engelhardt
03-25-2014, 9:35 AM
(I was trying to figure out how much extra tax I would pay if I started renting instead of buying a house.)
They keep talking about dropping the deduction for house interest.
IMHO - that's going to happen within a few years.

Brian Elfert
03-25-2014, 11:56 AM
They keep talking about dropping the deduction for house interest.
IMHO - that's going to happen within a few years.

Most of what I've read about this recently is they want to cap the amount of interest that can be deducted. The amount would be high enough that the average mortgage holder won't be affected.

The mortgage interest deduction is another one of those third rails of politics like Medicare and Social Security. Nobody in Congress really wants to touch it because there is a good chance they would lose the next election if they vote to eliminate it. Short term eliminating the deduction would probably send the economy into a recession as home values fell and home sales dropped dramatically. On a decent suburban home it could easily increase the monthly cost to own a home by $150 to $300 a month. Long term it might be better for the economy to eliminate it. Canada doesn't have mortgage interest deduction and it could be argued that their housing market is in better shape than the USA.

I save almost $400 a month on my federal and state taxes because of the property tax deduction and the mortgage interest deduction.

Rich Engelhardt
03-25-2014, 2:00 PM
One big problem with the housing market & the tax write off is a lot of kids coming out of school have student loans to pay off instead of putting down money towards a house.

Kev Williams
03-26-2014, 2:05 AM
Anyone else old enough to have had a 13% mortgage back in the early 80's? The only selling point realtors had back then was the tax write-off on the interest.

$300 large at 4.25% for 30 years will run you $1476 a month P&I, with total interest of $231,300
$300 large at 13% for 30 years runs $3319 a month, with total interest close to a cool million, $894,700... :eek:

If they ever DO eliminate the home interest deduction, you can bet your sweet bippy that mortgage interest will skyrocket soon after.

You read it here first! ;)

Curt Harms
03-26-2014, 8:25 AM
Anyone else old enough to have had a 13% mortgage back in the early 80's? The only selling point realtors had back then was the tax write-off on the interest.

$300 large at 4.25% for 30 years will run you $1476 a month P&I, with total interest of $231,300
$300 large at 13% for 30 years runs $3319 a month, with total interest close to a cool million, $894,700... :eek:

If they ever DO eliminate the home interest deduction, you can bet your sweet bippy that mortgage interest will skyrocket soon after.

You read it here first! ;)

Didn't mortgage rates get as high as 20% in the early '80s? Pretty sure those were refinanced;). I think totally eliminating the home mortage deduction will be politically very difficult if not impossible. Limiting it to one primary residence and a mortgage amount based on average home selling prices for a certain area would be a pretty easy sell I think. Well, except to realtors and mortgage companies and builders of McMansions and .........

David Weaver
03-26-2014, 9:11 AM
Rates would go the other way - there is already a huge glut of corporate and lendable cash and nobody seems to want it. That would create an even bigger problem of more people wanting to lend money because they weren't spending to need to borrow.

Some combination of decreases in house prices would be combined with it, which would have municipalities and schools in a hustle.

Brian Elfert
03-26-2014, 9:40 AM
One big problem with the housing market & the tax write off is a lot of kids coming out of school have student loans to pay off instead of putting down money towards a house.

Young adults with student loans to pay are going to going to have problems coming up with money to buy a house regardless if mortgage interest is deductible or not. The only way eliminating the mortgage interest deductions helps them is if housing prices drop significantly making them more affordable. In my case, if they drop the deduction housing prices would have to drop close to 25% to make up for the loss of the deduction.

David, property tax rates can be increased if housing values drop. The county assessment of my house dropped by at least $50,000 during the housing crash and my assessment is now back to what it was before the housing crash. My property taxes are close to $2,000 more than before the recession.

Rich Engelhardt
03-26-2014, 9:53 AM
Young adults with student loans to pay are going to going to have problems coming up with money to buy a house regardless if mortgage interest is deductible or notThat's sort of my point.
If they can't come up with the money, then they don't care because the deduction has nothing to do with them. If it goes away, they won't care. Matter of fact, people being what they are, too many will figure if they can't have it, no one should be able to have it & support getting rid of the deduction.

Steve Rozmiarek
03-26-2014, 5:30 PM
Rates would go the other way - there is already a huge glut of corporate and lendable cash and nobody seems to want it.

David, I usually agree with you, but not on this one. It's not readily available to lend. Banks have to prop up their balance sheets to comply with new regs, thanks Franks/Dodd, and they won't take on any risk at all. My small business is on the ropes because they moved the target on me again to be a borrower in good standing and we got hit by a disaster, which makes it so I can't borrow to grow. As inflation happens, I have to grow to break even. 8 years ago when I started, I needed 10% equity to borrow a little money. That was easy money. Now, I need to have two full year's profits as working capital, plus 50% or better equity to even be considered. Exactly how the heck is a startup small business supposed to pull that off???? Heck, how is an established one supposed to??? If anyone has answers to that on, please contact me!

The only way I know how is to try to pull assets that had left the active business world to retire back in. It's horrible for all involved, and don't believe that line that there is plenty to loan. I guess it's right, but the caveat is that they just won't.

Howard Rosenberg
03-26-2014, 6:24 PM
It's sort of like the analogy I use -

I own a drill.

But I don't do my own dental work - I go to an expert.

There are a lot of ins and outs when it comes to taxes.

If you look at paying your account as an investment (in your mental and future) you won't see it as a burden.

Especially if the Feds come after you for an audit.

Good accountants know how to maximize deductions and still keep you on the straight and narrow.

Howard

Brian Elfert
03-26-2014, 7:22 PM
That's sort of my point.
If they can't come up with the money, then they don't care because the deduction has nothing to do with them. If it goes away, they won't care. Matter of fact, people being what they are, too many will figure if they can't have it, no one should be able to have it & support getting rid of the deduction.

They'll care when they do come up with enough money to buy a house and then discover they can't afford as nice a house because they have $150 to $300 less in available monthly after tax income to buy a house. Lenders are now making loans with as little as 5% down with good stable income and a decent credit score. There is mortgage insurance if under 20% down, but not near as bad as the insurance on an FHA loan.

Estimates are that the federal government would gain $68 billion in taxes, but elimination would slow economic growth by 1% annually. 1% of GDP would be about $150 billion. Nobody seems to be seriously talking about just eliminating the deduction, but rather making some changes. I am surprised that less than 1/3 of homeowners take the mortgage interest deduction. I suppose a lot don't have a mortgage and the rest don't pay enough interest to exceed the standard deduction.

Scott Stewart
03-26-2014, 10:22 PM
Count me amongst those that when I needed an accountant, they couldn't answer the question either and I was constantly getting farmed out to the newest greenest associate because I wasn't that valuable to them. The final straw was $500 for research billed because I had a green young man that hadn't done enough to know the answer to the question I had. His boss knew it instantly when I started to raise hell and started to make noises about filing a complaint to the board about incompetence. We were all young and green once, but I paid for my education, I'm not paying for yours.

If I had enough business that I needed stuff done on a regular basis to where I didn't get farmed out, they might be worth it. As it is now, I do my own stuff and hire them on an as needed basis.

Chris Padilla
03-28-2014, 8:04 PM
The mortgage interest deduction is another one of those third rails of politics like Medicare and Social Security. Nobody in Congress really wants to touch it because there is a good chance they would lose the next election if they vote to eliminate it. Short term eliminating the deduction would probably send the economy into a recession as home values fell and home sales dropped dramatically. On a decent suburban home it could easily increase the monthly cost to own a home by $150 to $300 a month. Long term it might be better for the economy to eliminate it. Canada doesn't have mortgage interest deduction and it could be argued that their housing market is in better shape than the USA.

I save almost $400 a month on my federal and state taxes because of the property tax deduction and the mortgage interest deduction.

My understanding is that the mortgage interest deductions actually artificially raises/inflates the price of a house. Eliminating it would drop house prices and thus make them more affordable for a few more people. More people would be in the market and be able to afford to buy a home. If they removed this, it should be a tiered elimination spread out over a few years so that people can slowly get accustomed to the change. It seems fair to me to eliminate the mortgage interest deduction even though it will raise my taxes.

As far as taxes and accountants go, I've been a lover of Turbo Tax for many many many years.

Brian Elfert
03-28-2014, 8:24 PM
My understanding is that the mortgage interest deductions actually artificially raises/inflates the price of a house. Eliminating it would drop house prices and thus make them more affordable for a few more people. More people would be in the market and be able to afford to buy a home. If they removed this, it should be a tiered elimination spread out over a few years so that people can slowly get accustomed to the change. It seems fair to me to eliminate the mortgage interest deduction even though it will raise my taxes.

It would still kill the housing market in the short term. If housing prices fall then a lot of people will have negative equity and not be able to sell their homes. At the same time the increase in taxes would cause those living on the edge to go into foreclosure when they can't afford the house after taxes go up. If the mortgage interest deduction went away today I would have to choose between eliminating my retirement savings or mailing the keys to the bank. I couldn't afford an extra $400 a month in federal and state taxes. (Yes, I made some bad choices when the housing market was booming. I spent a ton of money in 2007 to prepare my house for sale, but couldn't sell it before the housing market tanked. I won't make the same mistakes again.)

At what point are houses fairly priced? It costs more to build a house right now than most existing houses are worth. My 12 year old house is valued at $340,000 right now and it is estimated to cost over $300,000 to replace it. The land is worth well more than $40,000. My house cost about $230,000 to build including the original construction in 2001 and the work I did in 2007. It is 2,650 square feet with some high end finishes inside and out. I just had a more modest house with 1,200 square feet on the 1st floor priced out and the cost came to $230,000 (no land) and the interior and exterior finishes are very low end. $230,000 doesn't even include a garage which my current house has.