Author Topic: CPA to File Taxes?  (Read 5409 times)

gebraset

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CPA to File Taxes?
« on: January 19, 2014, 09:46:08 AM »
A little bit of a background: Current status is active duty military, and since I have a home of record and have lived in two different states for 2013 (along with my wife working in both of these two states and claiming our home of record state too(A specific military tax act applies here as well for state income purposes)), our tax situation is pretty difficult I believe. My wife also babysits and has made a substantial amount of money doing so part time, but the IRS now sees it as a business, adding to the complexity. Our vehicle is used for both personal and business expenses, and I'm fairly certain we can get a deduction for this. Additionally, we have multiple brokerage accounts (sign up bonuses for the most part), IRAs, checking accounts, saving accounts, and CDs for 2013.

I'm just really not up to preparing everything using TurboTax as normal, as its just to complicated this go around. Half my 1099-INT forms for example show my home of record whole the others show by current residence.

I was just wondering if anyone has ever had a CPA prepare and file their taxes. I'm aware of how fees are calculated for the most part, but am not sure how much it might cost in the end. Besides researching CPA/PFS individuals in the area here (http://www.aicpa.org/interestareas/personalfinancialplanning/resources/consumercontent/findacpapfsnearyou/pages/default.aspx) I'm not too sure how to go about finding a reliable one that won't nickle and dime me to death for not understanding what to look for.

Also, if anyone has had a similar situation, does the CPA/PFS need to be in the state that you file taxes in? For example, if I live in HI but have a residence of AL, does the CPA/PFS need to be based out of AL in order to file my taxes?

Thanks for the input in advance everyone, this is my first time ever pondering a possible tax preparation and filing by a CPA/PFS and it seems daunting.
« Last Edit: January 19, 2014, 09:48:19 AM by gebraset »

AccidentalMiser

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Re: CPA to File Taxes?
« Reply #1 on: January 19, 2014, 12:21:30 PM »
I agree you have a complicated situation.  I'd ask around in your unit for recommendations.

Good Luck and thank you for your service.

Joel

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Re: CPA to File Taxes?
« Reply #2 on: January 19, 2014, 12:36:14 PM »
I would definitely look for someone who specializes in military tax returns. CPAs can specialize in a lot of things, audit of public or private companies, corporate tax, or individual tax. Even if they specialize in individual taxes, they may or may not be strong in multiple state tax returns and finding someone who is strong in that would be beneficial. Likely someone who does a lot of military returns would be beneficial.

A CPA would be your best bet. The experience, overall knowledge, and licensing requirements are far superior to that of an enrolled agent. However, you might be able to find an enrolled agent with the right skill set at a more affordable price.
« Last Edit: January 19, 2014, 02:20:54 PM by Joel »

gebraset

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Re: CPA to File Taxes?
« Reply #3 on: January 19, 2014, 12:58:53 PM »
I appreciate the responses, thank you all for the information and reaffirming the believe that I had concerning having a CPA prepare and file my taxes this year. I never even though to make sure that the CPA is highly versed in military tax regulations and such, so thank you all for that as well.

Concerning an enrolled agent, is there a website that makes sure those individuals are actually certified and keep their certification up to date? The website I posted earlier allows me to retrieve their contact information as well as, if they list it, their specialties. I would like to make sure an enrolled advisor would be knowledgeable in certain realms, by some sort of certification, rather than that person saying that he or she is. In terms of referrals, almost all my family and friends (other military individuals) pursue their taxes by themselves or go to H&R Block. I haven't heard too many positive remarks about the latter, hence why I just want to make sure I'm dealing with someone professional that will assist me.

As of now, I'm going to call around to a few individuals near me as well as some individuals in my home state to see exactly what they specialize in as well as if they are familiar with military jargon when it comes to taxes and having multiple states involved. I'll look more into an enrolled advisor as well.


gebraset

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Re: CPA to File Taxes?
« Reply #4 on: January 19, 2014, 02:10:10 PM »
Contacted a few CPA/PFS individuals and am waiting on them to email me back, so hoping to hear good news.

Additionally, I answered my own question and found the National Association of Enrolled Agents. (http://www.naea.org/home/) I have left a message for one individual and one actually picked up, surprising for a Sunday afternoon.

Thank you all again for your information and knowledge, I appreciate it. I will do my best to let you all know how everything goes if I receive any additional details within the coming days.

CrochetStache

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Re: CPA to File Taxes?
« Reply #5 on: January 19, 2014, 05:50:22 PM »
Many bases have a VITA (Volunteer Income Tax Assistance) office. They are experienced in the military jargon and spouses unique situations to bring in funds.

Many of the volunteers have training for the more basic tax situations, but the director's often have loads more experience and you could make an appt to work with them to get your taxes done.

Plus, it's free. Very mustachian.

mlipps

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Re: CPA to File Taxes?
« Reply #6 on: January 19, 2014, 07:52:41 PM »
Many bases have a VITA (Volunteer Income Tax Assistance) office. They are experienced in the military jargon and spouses unique situations to bring in funds.

Many of the volunteers have training for the more basic tax situations, but the director's often have loads more experience and you could make an appt to work with them to get your taxes done.

Plus, it's free. Very mustachian.

Depends on the site. I assume ones near a military base would have that certification, but "military" is a distinct certification & at my site no one bothers to get it. You could probably call ahead & find out.

Nords

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Re: CPA to File Taxes?
« Reply #7 on: January 19, 2014, 11:03:20 PM »
Contacted a few CPA/PFS individuals and am waiting on them to email me back, so hoping to hear good news.
Additionally, I answered my own question and found the National Association of Enrolled Agents. (http://www.naea.org/home/) I have left a message for one individual and one actually picked up, surprising for a Sunday afternoon.
Thank you all again for your information and knowledge, I appreciate it. I will do my best to let you all know how everything goes if I receive any additional details within the coming days.
You might be overcomplicating this.

Talk to your military base VITA office about a referral to a local tax-prep company.  You don't want H&R Block and you might not want the VITA office to do your returns.  (You definitely don't want the guy dressed up as the Statue of Liberty.)  However the VITA office will know of a local-owned business near your base which has a CPA supervising a half-dozen employees in preparing tax returns.  That's who you want.  You don't need an enrolled agent unless you've missed filing returns for a few years or have a huge unpaid tax bill or you've decided to come clean about all your previous fraudulent returns.  Even then you probably could start with a tax-prep professional who could refer you to the appropriate specialist.

The military aspects of your tax situation are tedious but not complex.  Most CPAs (and most tax-prep professionals) are just using specialized tax-prep software (a much higher level than TurboTax) for the states where you and your spouse have been earning money.  Nothing in your situation is unusual, and most tax-prep pros are familiar with military situations.  (Or they'll look up the tax-prep guides offered by military support organizations like MOAA and AUSN.org.)  You could do the same on your own, although it's probably going to eat up hours of your time that you'd rather spend with your family or on your career.

Depending on how organized your records are, you'll spend $400-$750.  Ideally you'll get a tax-prep office that will give you an accordion folder with tabs for you to insert each one of your forms or worksheets.  You want them punching numbers into a keyboard (or downloading statements from your brokerage) instead of organizing your records for you.

Frankly this is an exercise in time management, not esoteric tax knowledge or experience.  If your time is worth the money, then spend money.  If it's killing you to spend money (and it's a hassle) then take a shot at doing your own taxes.  If you're going to have these sorts of tax situations for the next few years, then it's worth your time to sit down with your copy of TurboTax and plug through the Q&A interview to try to do this on your own.  Nobody cares about your taxes as much as you do, and nobody can specialize in your taxes as well as you can.  CPAs and EAs (and all the other acronyms) have to be a mile wide, and they end up being an inch deep in most of it (with really good skills at looking things up in the tax code).  You can be an inch wide and a mile deep as long as you understand the questions that TurboTax is asking.  Another benefit of doing your own tax prep is that you'll be much more organized about keeping records (like auto mileage & maintenance) and you'll be able to do it a couple times a month instead of just delivering a dumpster of paper to your CPA at the end of December.

I speak with some experience.  I live on Oahu but I do tax returns for my daughter (a college student in Texas) and my father (a Colorado resident in a care facility).  I've been stationed in multiple states during the same year, I've done TSP rollovers and Roth IRA conversions, my spouse has taken all sorts of deductions for Reserve duty, I handle a rental property, I'm a self-employed blogger, I've done tax credits for home energy-efficiency improvements, and I even get a bunch of K-1s for investments in local startup companies with state tax credits.  TurboTax handles all of these situations with no problems.

PM or e-mail me if you're stationed in Hawaii-- I can recommend a CPA who will either prep your tax returns or give you a referral to a good firm.  If you're in the Washington DC/Annapolis area then I can ask my brother-in-law (also a CPA) for a referral too.

clutchy

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Re: CPA to File Taxes?
« Reply #8 on: January 20, 2014, 10:05:45 PM »
Many bases have a VITA (Volunteer Income Tax Assistance) office. They are experienced in the military jargon and spouses unique situations to bring in funds.

Many of the volunteers have training for the more basic tax situations, but the director's often have loads more experience and you could make an appt to work with them to get your taxes done.

Plus, it's free. Very mustachian.

He is far beyond the scope of VITA...

Cheddar Stacker

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Re: CPA to File Taxes?
« Reply #9 on: January 20, 2014, 11:02:09 PM »
Nords is right on the money. I'm a CPA and our fees are based on the time we spend on each client. I would have estimated maybe $500-800, but I'm in St. Louis and it's different at every firm, and I'm sure it's different where you are. That should give you a fairly good benchmark though. I was surprised to learn that our fees are really not much more than the H&R Block types, and a CPA will give you more consistency. Also, I have clients all over the country so it really doesn't matter where you are. We send/receive a lot of data via a secure web portal on our website, so as long as you have a scanner/printer you can work with anyone, anywhere.

Re-read everything Nords said though, because it's all spot on. No CPA is going to ever know you, your goals, or your potential deductions as well as you do. We also don't ask every single question possible like TurboTax since it's not efficient with our hourly fees. We have to learn to ask the right questions, but we can't do that unless you're properly prepared. You need to really understand everything that's going on, and take an active interest in it. It's no different than managing your own investment portfolio. You need to understand how your decisions impact your overall situation. If you give it to a CPA or someone else to prepare for you, I would still make sure you have a fairly active role in making sure you get all the deductions you have coming to you. You need to be your best advocate.

For most people Turbo tax will get the job done no problem, and I recommend it for everyone with a fairly simple situation. I believe you've crossed over to the point where it's no longer worth your time to prepare, but it's up to you to decide.

mlipps

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Re: CPA to File Taxes?
« Reply #10 on: January 21, 2014, 05:53:03 AM »
Many bases have a VITA (Volunteer Income Tax Assistance) office. They are experienced in the military jargon and spouses unique situations to bring in funds.

Many of the volunteers have training for the more basic tax situations, but the director's often have loads more experience and you could make an appt to work with them to get your taxes done.

Plus, it's free. Very mustachian.

He is far beyond the scope of VITA...

Not at my site he wouldn't be. It's only the home of record that is unfamiliar to me, which I assume is covered in the military certification.

tat96

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Re: CPA to File Taxes?
« Reply #11 on: January 21, 2014, 02:36:42 PM »
Interesting.  I am stationed in Hawaii with my wife and also file in AL.  I am a CPA candidate and passed 1/3 of the EA exam so far so here is my two cents.

I would agree you should see a CPA (specializes in taxes) and/or and EA.  You could do some research and put your taxes together but I would probably just go with an accountant this year.  Business income deductions are low hanging fruit for tax audits and too many people try to abuse them. 

This year I am filing in HI, AL, GA, and doing FED (of course).  My tax person (Masters in Taxation) is in California so no need to worry about finding a locally based one.  Lastly, if you are worried about it maybe going with one in your HOR may be a good idea.  They will be more familiar with the tax laws in that particular state. 

As a side note: I have to say that you have gotten some great advice on this site!! Most sites I read regarding taxation are filled with bad and mostly incorrect information.  At least several of the other posts indicated that you should find a CPA that specializes in taxation (I do very little tax at work and know many CPA's that have never even done a tax return).  Also, very few people even know what an EA is let alone recommend them.

Lastly, I would ask anybody doing your taxes how many year they have been doing taxes and who will be doing your return.  I have seen instances where the secretary does the taxes and you get a bill for $500.  This is not necessarily unethical if the CPA/EA reviews and signs but realize that this happens and you may be paying somebody with less knowledge than you have to fill out Turbotax in between answering the phone!!  Also, you should get a phone call (or office meet) reviewing all your information after your return is complete (30 minutes) as part of the process.  If you do not get this find another accountant.


Saverocity

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Re: CPA to File Taxes?
« Reply #12 on: January 21, 2014, 02:47:30 PM »
Just something to throw into the mix - you don't need a CPA/PFS - that is a specific Financial Planning designation within the CPA field.  A regular CPA or EA will be what you are looking for if you go that route.  May help in searches.