Author Topic: How to decide tax withhold or how to find a good tax preparer?  (Read 1989 times)


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How to decide tax withhold or how to find a good tax preparer?
« on: September 16, 2014, 12:10:05 AM »
Just realized I will be in a much higher tax bracket this year due to marriage penalty and thus I will owe IRS a lot of money.

I usually file tax return myself, but I find this year it's going to be tough. I got married early this year. We sold a lot of stocks with a lot of capital gains (because my husband hold too much his company's stock and I think index fund is a better idea). We exercised some options. We rollover after-tax 401k to roth 401k. We even plan to buy and sell a house. Maybe we also hit AMT. so I have following questions:
1. Where and how to find a good tax preparer? Is it worth?
2. How to decide how much tax should I withhold in order to avoid penalty?


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Re: How to decide tax withhold or how to find a good tax preparer?
« Reply #1 on: September 16, 2014, 12:47:03 AM »
Based on personal experience with all but the rollover, TurboTax will handle all those situations for much less cost than a paid preparer will charge.  Other high quality tax software will likely do so as well.

For withholding, see for thoughts on a similar situation.

Good luck!


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Re: How to decide tax withhold or how to find a good tax preparer?
« Reply #2 on: September 16, 2014, 07:38:16 AM »
You don't need a tax preparer for the outlined tax year activity.  Turbotax or HRBlock will do just fine.  Those are all standard transactions.  Just be thankful you don't have partnership or S-corp ownership.  Stay away from publicly traded partnerships at all cost.

Also, investing in mutual funds (ie index funds) won't save you anything on taxes.  If you want to diversify, do it through your Roth funds and there will never be a tax consequence. 

Buying and selling a house should be pretty straight forward as well.  No gain on houses if gain is less than $500,000.  The downside is that losses are not deductible when selling a house.  There are some minor adjustments on your Schedule A based off of the final HUD statement.  I believe there should be some internet guidance on that. 

If you want to avoid the 2210 failure to pay penalty, guestimate what you need to deposit quarterly and add $500-$1000 on top of that. 

A fun fact....if you withhold through your W-2 at the end of the year, the withholding is considered to be deposited evenly throughout the four quarters;  this effectively lets you dodge the 2210 penalty.  Many people who receive large bonuses in December will withhold nothing the entire year and then withhold their entire bonus and it is considered paid over the four quarters.  I despise the term "loophole" but I'm shocked the IRS hasn't taken steps to curb this behavior.  Of course, it benefits the wealthy. 

Also, if you live in a state with no income tax like me (Washington State), make sure that, if you itemize, you take the deduction for sales tax in lieu of the income tax everybody else gets to take (in the income tax states).  You don't have to track your sales tax paid; there is an IRS table which gives you an estimated number to claim.  Turbo tax DID NOT calculated it for me and would not allow it to be manually overridden (I would bet this costed TurboTax users millions of dollars in aggregate). 

This comes from a CPA and former accounting firm tax preparer (they would charge you $600 to prep the return outlined). 
« Last Edit: September 16, 2014, 07:45:51 AM by bjs210bjs »


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