Do you think I can do my taxes myself? Check out my situation.

[rentalnewbie]

I had a lot of life changes last year that will impact my 2016 taxes, so I was considering going to a CPA for the first time.

In the past I've always done them myself but I was feeling overwhelmed by the changes I've had. Previously I've used H&R Block online, TurboTax, TaxAct or something of that nature where I could find a way to get my Fed & State for free because I was below the income threshold (I did this https://apps.irs.gov/app/freeFile/jsp/index.jsp). So I'm not totally new to doing my own taxes but I have new things happening and don't want to miss something.

Specifically, starting in 2016:
- Bought first rental property
- Had rental income the first time
- Got married and will be filing jointly for the first time (we each have one W2 job)
- My husband worked full-time from our house for his W2 employer and we'd like to claim a home office deduction

We also own our primary residence and can deduct student loan interest but these aren't a big deal as I'm familiar with them.

I'm just not sure if turbotax will really show us everything and feel like there could be things we learn from a CPA. I got a quote from a local person who said she will take us through all of the forms and explain everything to us so we can start doing our own taxes again next year if we'd like but the quote was $400.

Worth it? Not worth it? What are your thoughts?

[branman42]

It really depends on how comfortable you are with the tax law and reading the forms. The married filing jointly should not matter that much, but with a rental property you have to file Schedule E, and you need to calculate mid-month depreciation. After doing it once, you should be fine in the future.

$400 is right about the quote for a normal CPA firm to do a 1040 with Schedule E's or business income.

I currently work at a CPA firm, and I am studying to become a CPA. I would be happy to help you with your taxes for $100, and potentially less if it's only those things. I can also help explain the tax law, and you will hopefully be able to file by yourself again next year, especially if you don't add more rental property. Of course, I will always be here to help if you do.

Let me know if you have any more questions!    I am looking to grow my Mustachian clients, because I am one.

[tomsang]

For rentals a good CPA will do a Cost Segregation on the property.  I am not sure if a computer program will do that.  You can Google what a Cost Segregation study is, but basically it is breaking the house value into tax lives. Preferably 5 and 7 year lives vs. 27.5 years.  If you purchase a rental.  What did it come with?  Did it come with a stove, dishwasher, drapes, carpet, water heater, etc.  Land is not depreciable so how can you justify the smallest amount of the purchase price to the land. 

Here is an article that I found on Cost Segregation it shows some of the categories that should be broken out of the purchase price.
http://www.journalofaccountancy.com/issues/2004/aug/costsegregationapplied.html

Good luck

[rentalnewbie]

Y'all have subverted my expectations! Since it was MMM forum I fully expected everyone to be like "You can do this!" "You want to pay $400?!?"

Tomgsang, thanks for the info on cost segregation that is not something I have considered, only straight line appreciation.

Branman42 thanks for the offer to do my taxes but I think I will either go with a computer program or a local CPA.

I see that "premier" turbotax offers a schedule E. If I recall correctly, you can enter in all of your information and they charge you at the end when you go to finalize your return so maybe I'll do a trial run this weekend in entering things and see how it goes, if I don't like it, I will go to the CPA I guess.

[oldmannickels]

Well you can do this, but I think it's reasonable to consult an expert to be sure you're doing it right the first time around.

I feel like the hardest part for the non-tax proficient is figuring out the cost basis of both the rental and personal home for the home office deduction. So read up on articles and IRS regulations in those areas. There is a safe harbor for the home office if you are having trouble there.

This article from Turbo Tax actually gives a pretty good overview.

https://turbotax.intuit.com/tax-tools/tax-tips/Rental-Property/Real-Estate-Tax-and-Rental-Property/INF12039.html

[Cpa Cat]

When I did support for TurboTax and saw what people were up to on it, I came to the conclusion that landlords shouldn't use TT to do their own tax returns. They made serious mistakes more than any other group.

People usually muddle through ok on other aspects of tax return. But it just seems like there are a lot of questions that landlords guess on. They usually get their basis wrong. They usually get depreciation wrong. They get the "at risk" question wrong. They get their deductions wrong. It's a whole hot mess.