TurboTax vs CPA
To TurboTax or not to TurboTax, that is the question.
My dad always said, there are only 2 things certain in life: death and taxes. (He has a way with words.) But it’s true. We’ve all got to do our taxes, it’s just a matter of how.
DIY (software) or hire someone.
This is not a sales pitch to hire me. My firm doesn’t do taxes. And hiring someone isn’t always the best answer. (I do walk hand-in-hand with my clients through the tax season acting as their liaison and translator by working directly with the very best tax CPA we can find for them in their state of residence.)
Considering DIY using TurboTax, H&R Block software, or ::gasp:: putting pencil to paper? Ask yourself these questions first:
Is TurboTax Right for you?
Do you love doing your taxes? If you don’t, you think this question is crazy. But believe me, there are real people (even non-accountants) who bask in the rays of their 1040s each year. Amen, sister.
Is your tax situation pretty simple? I would consider “simple” a single person or basic family unit with no unique child or adult dependencies. You didn’t adopt a child in 2021. You or your spouse don’t have any large stock options or RSU grants. Your business is a sole-proprietorship or single-owner LLC. You’re not operating a day care out of your home (yes, there’s some very complicated stuff in that last one).
Have you kept up to speed on all the many changing tax laws in 2020 and 2021? There’s no sugar coating it. There’s been a boatload. Many of them related to small businesses, and others involve things early payments of child tax credits.
If you answered “yes” to the above questions, software like TurboTax, or the like, might be just what you’re looking for. Go have fun, my friend! I’ll see you in the TurboTax aisle as Costco!
Should you hire someone to do your taxes?
Does the mere thought of doing your taxes make you feel miserable? It’s not for everyone. We’re all built differently. And that’s totally and 100% okay. If it causes you anxiety or stress in your marriage, the few hundred dollars you’re going to spend on having someone help you is more than worth it.
Is your tax situation a bit more complicated? Maybe you and your ex-spouse split custody with the kids? You have a home office or you store inventory in your home for your business, but aren’t sure if you should use the standard or simplified method for your deduction. You contributed to your kids’ 529 college savings plan and aren’t sure if or how that will save you taxes on your state return.
Is your business an S-corp? While electing to be an S-corp offers an awesome tax saving opportunity, they come with their own set of complications. For example, you need to make sure your health insurance is accounted for correctly to get your business owners deduction. And that you’re paying yourself the right way (as a W-2 employee!). Not to mention that little part about filing your 1120-S by the March 15th deadline.
If you answered “yes” to the questions above, hiring a CPA or tax preparer might be your best bet. If tax preparation is out of your league or makes your skin crawl, it’s more than worth the money.
PS - Our 6-year-old is obsessed with “vs” books (i.e. Lion vs Tiger, Stegosaurus vs T-Rex, etc). Shout out to all the parents who’ve lost their voice from reading those on end. I’m sure he’d ask me to stop reading if I presented a copy of TurboTax vs CPA ;o)
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