2019 Taxes

[capitalcityguy]

I think you would be shocked by the number of people getting EITC...especially in Central Iowa where there are a LOT of people who don't get paid what I would consider a living wage. Why do CPAs do their returns? Because in a lot of smaller towns that's the option available.

I also think you grossly overestimate the ability of the average person to figure out their taxable income. Or to know they may get $2,000 per child. Or to know what qualifies for American Opportunity Credit. How much student loan interest is deductible and when does it phase out? What numbers from my 1098 need to go on Schedule A?

Again...I used to be a tax preparer....in central Iowa (Des Moines) , so no, I wouldn't be shocked. I saw if firsthand.

That said, my experience tends to confirm my suspicion that my clients getting the EIC, were not likely CF forum folks.....which is the audience here (obviously) . Not the general public. So using that as your starting point to refute my point that most people (the audience reading this thread) can do a fairly decent job adjusting their w/h prospectively still stands IMO.

 

[JY07]

It really isn't that difficult...unless maybe you are a contract worker or a small business owner....or maybe a day trader .

That is not the majority of people on this thread. This isn't rocket science.

So you disagreed with my assessment that it is not that easy to calculate if you have more than a handful of forms, but then follow that up by excluding a few examples where your return would have more than a handful of forms.

Makes sense: the extensive training I'm sure you went through for whatever franchised tax return company you worked for back in the day definitely paid off

 

[Tailg8er]

YTD Pay stub:

$50,000 Salary
$2,000 FSA
$2,000 HSA
$2,000 ROTH
$2,000 Trad 401k
$2,000 health insurance
$100 dental insurance
$100 vision insurance
$4,000 employer health insurance
$50 Life insurance
$50 AD&D
$100 Short term disability
$50 Long term disability
$50 cancer insurance
$4,000 expense reimbursements
$3,000 social security
$1,000 Medicare
$10,000 federal withholding
$2,000 state withholding

Those are all extremely common items on pay stubs. Super easy to figure out the taxable income.

It isn't very common for the majority of people to have ALL of those items, and a lot of them don't have THAT much affect on your taxable income.. $50 long term disability, really? I think you're trying to hard to prove a point that can't be proven.

For the vast majority of college educated people, it's not THAT hard to compute taxable income during the year (not saying it's necessarily worth it to do for many of them - a lot of Americans don't think it's worth it to stop smoking, or exercise, or eat less..).

 

[BCClone]

It isn't very common for the majority of people to have ALL of those items, and a lot of them don't have THAT much affect on your taxable income.. $50 long term disability, really? I think you're trying to hard to prove a point that can't be proven.

For the vast majority of college educated people, it's not THAT hard to compute taxable income during the year (not saying it's necessarily worth it to do for many of them - a lot of Americans don't think it's worth it to stop smoking, or exercise, or eat less..).

Yeah, that dude was over insured for sure. Also, for the oil changing, if you have someone change your oil that takes 15 minutes, labor is about $10 bucks on that. Someone to spend 15 minutes doing your taxes is $50 I’m guessing

 

[ClonesFTW]

A MFJ return with a pair of W2s, student loan interest, a minor child, a college age child, home mortgage, bank interest, and HSA distributions is 15 minutes of my time potentially. My parents do their own taxes and would blow an afternoon doing that...and not know if they did it right. I can change the oil in my truck and it'll take me 2 hours or I drive to QuickLane and it's 10 minutes.

Exact reason I have a CPA handle my relatively simple return every year, I’ll pay the price for convenience and peace of mind.

 

[capitalcityguy]

So you disagreed with my assessment that it is not that easy to calculate if you have more than a handful of forms, but then follow that up by excluding a few examples where your return would have more than a handful of forms.

Makes sense: the extensive training I'm sure you went through for whatever franchised tax return company you worked for back in the day definitely paid off

It is not that hard for the MAJORITY of taxpayers which would include a bulk of the individuals complaining about the time it takes to get their refund ck. Most TPs can avoid that, with just a little proactive effort. Period.

Certain tax preparers and CPAs are always going to be bias towards justifying their services, so they will default to the "it is complicated" corner to help drive business. It is understandable. It is probably human nature. Additionally, it is also low hanging fruit to make the client feel better about using your services, if they end up with refunds vs writing a check. They feel they got a better value for paying for a professional to do their taxes because....hey look! He/she got me a nice refund! There is an incentive towards having clients be overly conservative and thus over withhold so next year, you can work you magic again and get them a big refund.

I am not suggesting this is how everyone in the industry operates, but you are naive as hell if you think it isn't prevalent.

FWIW...no, I did not work for a franchised tax return company. It was locally owned and operated tax prep firm.
.

 

[capitalcityguy]

I think you would be shocked by the number of people getting EITC...especially in Central Iowa where there are a LOT of people who don't get paid what I would consider a living wage. Why do CPAs do their returns? Because in a lot of smaller towns that's the option available.

I also think you grossly overestimate the ability of the average person to figure out their taxable income. Or to know they may get $2,000 per child. Or to know what qualifies for American Opportunity Credit. How much student loan interest is deductible and when does it phase out? What numbers from my 1098 need to go on Schedule A?

A MFJ return with a pair of W2s, student loan interest, a minor child, a college age child, home mortgage, bank interest, and HSA distributions is 15 minutes of my time potentially. My parents do their own taxes and would blow an afternoon doing that...and not know if they did it right. I can change the oil in my truck and it'll take me 2 hours or I drive to QuickLane and it's 10 minutes.

Also, with the new W-4 form (which sucks but not nearly as much as the new 1040) there isn't really a way to manipulate your withholdings. Exemptions don't exist anymore so you can't just put Married and 4 to have less withheld.

I don't know that I'd say it's unnecessarily complex. Most people have very simple taxes. In general that keeps H&R and Intuit in business. True CPA firms make their money on business taxes and services. They do individual tax work because they have to....not because it's a great money maker.

There is a lot of "justifying my job" in this commentary.

Have you actually ever used consumer directed tax prep software? (I find a lot in the industry, never have). It doesn't sound like it based on your comments here. There is nothing to "figure out". The software asks questions and the answers provided by the taxpayers, drives the forms, schedules, etc. that are applicable. Does it work as well for very, very complex tax situations? Maybe not, but back to my efforts to challenge some on here to drive this conversation towards answering for the majority on this forum (non EIC eligible, W-2 workers) and not the exceptions.

 

[capitalcityguy]

It isn't very common for the majority of people to have ALL of those items, and a lot of them don't have THAT much affect on your taxable income.. $50 long term disability, really? I think you're trying to hard to prove a point that can't be proven.

For the vast majority of college educated people, it's not THAT hard to compute taxable income during the year (not saying it's necessarily worth it to do for many of them - a lot of Americans don't think it's worth it to stop smoking, or exercise, or eat less..).

Yep....I saw this too firsthand when I worked in the industry for a few years.
Everything is complicated with taxes. You need to pay us to handle,.
Tax software is too simplistic. You need to pay us to handle.
We will get you the maximum refund possible. You need to pay us to handle. (note: little incentive to educate clients towards proactively reducing their withholding so as not to require a large refund each year).

 

[Trice]

For those who haven't done their taxes yet and are still looking for a site to do them, I'll put another plug in for FreeTaxUSA.com. Spoiler: it's only free if you're filing federal only, but even a state return is only $15 and there are often codes to lower that price. For another week or two it's only $13.

This is a site for people who mostly know what they're doing and need minimal help. There's also minimal upselling of add-on services. It's a very "get in, file your taxes, get out" kind of service.

The Wirecutter recommends Credit Karma's free services but they were just bought by Intuit, so if that deal gets approved who knows if or when their free product will go away. I also used TaxAct.com for years but their prices skyrocketed and the upselling got relentless.

 

[Tailg8er]

For those who haven't done their taxes yet and are still looking for a site to do them, I'll put another plug in for FreeTaxUSA.com. Spoiler: it's only free if you're filing federal only, but even a state return is only $15 and there are often codes to lower that price. For another week or two it's only $13.

This is a site for people who mostly know what they're doing and need minimal help. There's also minimal upselling of add-on services. It's a very "get in, file your taxes, get out" kind of service.

The Wirecutter recommends Credit Karma's free services but they were just bought by Intuit, so if that deal gets approved who knows if or when their free product will go away. I also used TaxAct.com for years but their prices skyrocketed and the upselling got relentless.

I used Credit Karma last year and for Iowa they wouldn't allow you to file Married Filing Jointly for Fed but Married Filing Separate for state so I had to take State elsewhere. Not sure if they corrected that for this year or not.

 

[isufbcurt]

* if someone is able to qualify for Earn Income Tax Credit – why would they be paying for a CPA to do their taxes? I can’t imagine their taxes being complex given their modest income and thus, a lot of software companies provide prep for free. There are also volunteers who do taxes for individual of modest means too.

Just because someone is a CPA doesn't mean they are expensive, my base rate is $150 for what I call routine returns. I have a few very small business clients that qualify for EIC. I also have other individual clients that qualify for EIC.

I am looking at a 2017 tax return right now that a new client asked me to review because he prepared it on his own and then got an IRS letter saying they adjusted his return and owes $6000ish. This return is a simple return and is completely wrong.

This is a married guy with 3 kids, 1 W2 job, 1 1099 and a small 1099R. Should be a simple return. Him and his wife filed separately. He filed federal with 2 kids and HoH and did not include his 1099's. He also filed Iowa as Married filing separately with 2 kids and did not include the 1099's. His wife filed Federal and Iowa as Single with 1 kid.

This should have been a simple routine tax return that they messed up really bad because he "had a friend help him with it".

 

[jdcyclone19]

Just because someone is a CPA doesn't mean they are expensive, my base rate is $150 for what I call routine returns. I have a few very small business clients that qualify for EIC. I also have other individual clients that qualify for EIC.

I am looking at a 2017 tax return right now that a new client asked me to review because he prepared it on his own and then got an IRS letter saying they adjusted his return and owes $6000ish. This return is a simple return and is completely wrong.

This is a married guy with 3 kids, 1 W2 job, 1 1099 and a small 1099R. Should be a simple return. Him and his wife filed separately. He filed federal with 2 kids and HoH and did not include his 1099's. He also filed Iowa as Married filing separately with 2 kids and did not include the 1099's. His wife filed Federal and Iowa as Single with 1 kid.

This should have been a simple routine tax return that they messed up really bad because he "had a friend help him with it".

We've used the same CPA firm for the last 5 years, usually pretty good. Two years ago they changed owner and now I'm getting irritated because I've sent a few emails (they have an online server that I upload all my documents too and communicate on) and haven't gotten responses on a few occasion for over a week, plus they raised rates 25% if you want an in-person meeting. I feel they have shifted more too the business taxes and we have taken the back seat.

For instance, this year I have a 1098T and received tuition reimbursement but the "new" guy doing my taxes said I don't need to reduce the 1098T box 1 by the amount of reimbursement I received if its not on my W2. Previous guy in the firm, always subtracted reimbursement received from 1098T so we're not "double dipping". Its annoying as AF and now questioning their accuracy.

Needless to say we might have to venture over to Newton next year.

 

[isufbcurt]

We've used the same CPA firm for the last 5 years, usually pretty good. Two years ago they changed owner and now I'm getting irritated because I've sent a few emails (they have an online server that I upload all my documents too and communicate on) and haven't gotten responses on a few occasion for over a week, plus they raised rates 25% if you want an in-person meeting. I feel they have shifted more too the business taxes and we have taken the back seat.

For instance, this year I have a 1098T and received tuition reimbursement but the "new" guy doing my taxes said I don't need to reduce the 1098T box 1 by the amount of reimbursement I received if its not on my W2. Previous guy in the firm, always subtracted reimbursement received from 1098T so we're not "double dipping". Its annoying as AF and now questioning their accuracy.

Needless to say we might have to venture over to Newton next year.

The bold is crazy to me.

 

[jdcyclone19]

The bold is crazy to me.

Yeah, after reading through this thread. I think we're getting the shaft. The bold tells me they're trying to move away from individual tax preparation. We will not be using them again moving forward.

 

[Go2Guy]

Any CPAs can help with question?

Can I roll a Pension into an HSA acct and avoid tax payment?

I currently roll the Pension into my IRA as a contribution and report a 1099-R. Can I instead use it as a contribution into the HSA? Thanks

 

[CascadeClone]

The issue isn't "are CPAs a ripoff and I should do my own taxes?".

The issue is that the federal tax code is the most complicated document ever assembled by man, and they keep adding stuff to it every year.

And without getting too political, it's designed/become that way so both parties can grant favors to people/companies/industries that donate money to them. It's terrible.

 

[capitalcityguy]

The issue isn't "are CPAs a ripoff and I should do my own taxes?".

The issue is that the federal tax code is the most complicated document ever assembled by man, and they keep adding stuff to it every year.

And without getting too political, it's designed/become that way so both parties can grant favors to people/companies/industries that donate money to them. It's terrible.

But that isn't an issue any of us are going to solve before April 15th, so the issue really is -- what method makes the most sense for a person to get their taxes prepared given we have the complicated tax code we have today?

I think it is pretty clear, there is no one right answer for all because everyone's situations, comfort levels, etc are different.

 

[Trice]

Anyone gotten an Iowa tax refund in the last couple of weeks? I filed in late February so I know I'm at least a couple weeks away. But with all the turmoil of the last couple weeks I was wondering if the state would be (further) delayed in processing refunds.

 

[Trice]

As a reference point for anyone waiting on a refund...

I filed on February 29. My Iowa refund came in on April 2.

 

[ISUAgronomist]

As a reference point for anyone waiting on a refund...

I filed on February 29. My Iowa refund came in on April 2.

Went back and checked. I filed on Jan 27 and got my return on March 3.