When to get an accountant?

[SimpleCycle]

I have always done our taxes myself, but we majorly messed up withholding this year and are due a mid-5 figure refund.  This has me wondering if it might be time to hire an accountant, both to double check my tax work this year and to figure out our correct withholding rates on RSU compensation to prevent a repeat in future years.

Our taxes are roughly:
-MFJ
-two W-2s for DW's employment (I stay home with the kids)
-RSU compensation with sell to cover reported on one of the W-2s
-two brokerage accounts, one with a capital loss that will carry forward
-a 1099-R from a 401k rollover
-two backdoor Roths
-itemized deductions, large charitable contributions (but nothing crazy)

This is pretty simple in my book, but I get squirrely when dollar figures get larger than I am accustomed to.  Lending the government a bunch of my money comes with opportunity costs, but I don't want to swing too hard in the other direction and pay penalties either.

Tagging @SeattleCPA because he is a font of wisdom on this topic.

[SimpleCycle]

Also wanted to add that the way I messed up the withholding is we withheld all the RSUs at our marginal tax rate, when we're only a few thousand into the bracket so most of the RSU compensation was taxed at the lower rate of the bracket before.  Still not sure how it ended up being so far off, but it was six figures of RSU vesting.

[reeshau]

It seems like you understand your error this year.  And as errors go, It's not the worst thing in the world.  Use some of that refund to get extra juicy I Bonds paying 7%.  And easy enough to account for this year.

Is there something else you are afraid of?

[Sibley]

Are you comfortable filling out the forms for your situation?

Are you comfortable that you've structured your taxes to your advantage?

Are you comfortable that you're not missing significant tax benefits?

If the answer is yes to all 3, it doesn't sound like you need an accountant. You just math'ed wrong. It happens.

[SeattleCPA]

I have always done our taxes myself, but we majorly messed up withholding this year and are due a mid-5 figure refund.  This has me wondering if it might be time to hire an accountant, both to double check my tax work this year and to figure out our correct withholding rates on RSU compensation to prevent a repeat in future years.

Our taxes are roughly:
-MFJ
-two W-2s for DW's employment (I stay home with the kids)
-RSU compensation with sell to cover reported on one of the W-2s
-two brokerage accounts, one with a capital loss that will carry forward
-a 1099-R from a 401k rollover
-two backdoor Roths
-itemized deductions, large charitable contributions (but nothing crazy)

This is pretty simple in my book, but I get squirrely when dollar figures get larger than I am accustomed to.  Lending the government a bunch of my money comes with opportunity costs, but I don't want to swing too hard in the other direction and pay penalties either.

Tagging @SeattleCPA because he is a font of wisdom on this topic.

So thanks for calling me a font of wisdom. That's kind. :-)

These two thoughts:

First, I don't think you'll find it very easy to outsource this to a good CPA this year. The Covid-19 pandemic has finally hit the accountants hard. Short version of story: IRS is dumpster fire. Late-breaking tax law changes. Late regulatory changes. (We had to redo the first two dozen entity returns we did this year because of a change that IRS published on their website ). Severe labor shortages. So, bottom-line, you may need to do your return yourself. You may not have a choice...

Second, if you got RSUs from a big, well-established, long public company where the HR department a decade or longer ago moved up the learning curve, you should get good, accurate data for doing your RSUs. And in that case, if you're careful you should be fine. On the other hand--and we're out here in Seattle so see a lot of employee stock compensation stuff--if the employer is at all inexperienced? Like if the payroll and HR department doesn't have several years of experience to not only learn how the RSU and related stuff works? As well as several years to burn off the earlier mistakes they surely made? The HR and payroll department has very possibly (probably?) done their accounting wrong. And in that case, you may want to extend your tax return, locate someone knowledgeable in the early summer. Again, though, the good tax accountants are in very high demand.

[SimpleCycle]

Thanks for the thoughts @reeshau @Sibley @SeattleCPA.

I think there are two issues here.  The first is the accuracy of this year's tax return.  I have checked all the documents we got and they appear accurate, so I do have everything I need to do our taxes myself.  And I think the fact that it will be hard to find someone without filing an extension is a good point.  And filing an extension has additional opportunity costs since the government currently is holding on to a bunch of our money.  So I probably need to suck it up and do it myself, double checking everything along the way.

The second issue is "do I have enough knowledge to optimize our taxes going forward" and the answer there is less clear.  Fundamentally our tax return is a high single wage earner tax return - there just isn't a lot of optimizing to be done.  But I could totally be missing something important.  I think the most likely thing I am missing is an opportunity to manage our cash flow better with regard to taxes.  But I am not sure that is worth an extra $1k/year in value or whatever we'd pay for tax advice.

[Sibley]

If you want to have a consult with someone to help plan or check for further savings, you can absolutely do that. I would suggest waiting until things have calmed down a bit - so call after 4/16.

[SeattleCPA]

If you want to have a consult with someone to help plan or check for further savings, you can absolutely do that. I would suggest waiting until things have calmed down a bit - so call after 4/16.

I doubt the above is true. Certainly not in our market. Most firms I know aren't even taking on new clients.

If one does want to try this, after the tax accountants come from back from the vacations so maybe May or November is probably best timing.

Also, and sorry this is case, but anybody who's savvy won't be very interested if you're just a one time consultation or you're a one year client. It's a low margin service business. The easiest revenue opportunities to decline are folks who want to buy an hour or half an hour once. Or folks who want to have one return done and that's it.

Again, sorry...

[Sibley]

If you want to have a consult with someone to help plan or check for further savings, you can absolutely do that. I would suggest waiting until things have calmed down a bit - so call after 4/16.

I doubt the above is true. Certainly not in our market. Most firms I know aren't even taking on new clients.

If one does want to try this, after the tax accountants come from back from the vacations so maybe May or November is probably best timing.

Also, and sorry this is case, but anybody who's savvy won't be very interested if you're just a one time consultation or you're a one year client. It's a low margin service business. The easiest revenue opportunities to decline are folks who want to buy an hour or half an hour once. Or folks who want to have one return done and that's it.

Again, sorry...

Yes, you're right.... but it doesn't hurt to ask. And if you're going to ask, then you're best off waiting until after the due date.