What type of licensed professional do you get when you combine expertise in financial planning, tax, auditing, and business strategy? Hint: It’s not this guy…
CPAs do it all
CPAs are no longer just tax preparers, book keepers, or number crunchers. Though they might end up specializing in a certain area, they are trained to be business and financial strategists who help chart the paths of businesses and individuals. People turn to their CPAs not only for tax services but also for financial planning, audits, investment advice, estate planning, and more.
When I worked full-time in public accounting, while I was mainly audit focused, I started becoming more interested in the tax side of things. That is where I learned that I really enjoyed going through the financial details of small businesses and individuals to help them minimize their tax liability.
Tax talk at the water cooler
This time of year, you start hearing tax chatter around the office with talk of W-2s, W-4s, withholding, etc. I’m fairly reserved about most things, but I’m fairly outspoken when it comes to federal tax withholding and refunds. I guess that’s why most of my close friends, work colleagues, or family members know that I am more than happy to talk about their private tax lives.
I now often get questions during tax time from people at work surrounding their personal income taxes. A handful of do-it-yourselfers have asked me to review their Turbo Tax or other self-prepared filings before final submission.
There has rarely been a time when I have not found something they missed in their return that ended up saving them at least an additional $100, or in my brother’s case, over $1,000. (You still owe me lunch for that Steven!)
How a CPA could help you
I’ve read a lot of articles out there that seem to take strongly opposing positions on the value of a CPA. If you look around you’ll find scores of articles with titles like Why you need a CPA, or conversely, Why CPAs are worthless. Or you might see comments like this one I read (and laughed out loud at): “By all means use TurboTax. While you’re at it, you can also do your own appendectomy.”
Well, I’m here to offer you another somewhat-but-not-quite-as-biased opinion on the value a CPA could add to your life. The truth is that there is a lot of middle ground.
CPAs cost money
First, let’s get right down to it. CPAs cost money. Some cost a lot of money. This is the reason most people don’t even consider hiring a CPA. And they have every reason to feel that way. Look at the average fees charged by CPAs for tax preparation.
- Form 1040: $159
- Form 1040 with schedule A (itemized deduction): $273
Plus the cost of additional forms:
- Schedule C (business): $170
- Schedule D (gains and losses): $115
- Schedule E (rental): $125
- Schedule F (farm): $160
Amanda and I will have both a schedule A and C this year, so according to these prices, I’d be paying almost $500 for someone to do my return. Yeah, that’s not happening.
Maybe it’s because I already have a full-time job, or maybe I’m just a sucker, but I don’t charge anywhere near these prices. I worked for a guy for a while who had his own tax practice, and people loved him because he was completely honest, he went out of his way to help his clients, and he charged ultra-low fees. Sure, he had to make up the difference with a few extra clients, but they weren’t hard for him to get. I think that approach resonated with me.
The point is that not all CPAs are trying to take you for all you’re worth. In fact, most probably aren’t. You just have to know what to look for.
Let them show you what they can do
If the value a CPA provides to you exceeds what they charge, it’s a no-brainer. So how do you know what type of value you’ll get before hiring one? Talk to them! It is easy to get a sense of how helpful someone is going to be. If they offer a lot of useful advice in a free consultation, that’s a good sign of someone who wants to help. If they are pretty tight lipped, you might want to steer clear.
A good CPA will look out for you
A good CPA will go beyond the task at hand to make sure you are aware of all of your opportunities for financial progress. For example, when I do someone’s taxes I have a pretty good snapshot of their financial position and can often see simple ways that they could save money not only in their tax preparation but also throughout the year. I always bring those items to their attention. Those helpful tidbits often justify the cost of a CPA several times over.
CPAs do the heavy lifting
Sure, you have to shuffle a few papers and get them into the hands (or the inbox) of your CPA, but he or she will take it from there. If you don’t want to know anything about your taxes except how much you’re getting back, your CPA will handle it. If there were some transactions you don’t know how to account for, your CPA will handle it. If you get audited, your CPA will handle it.
CPAs take away the uncertainty
If you want to be absolutely sure you are taking advantage of every deduction or beneficial tax strategy available to you, doing it yourself may not be the way to go. Many do-it-your-selfers are very conservative with their deductions because, well, they want to err on the safe side.
I’m fairly financially conservative myself, but being too conservative with our tax position often means we are likely leaving money on the table. With a tax code thousands of pages long (but not 70,000 pages long), there is just no way to know for sure if you are getting the most out of your do-it-yourself software. A CPA is someone you have a real life relationship with, and they know what questions to ask that you may have never thought of on your own.
Do it yourself
For people with simple returns who either enjoy or who can tolerate doing their own taxes, I wholeheartedly endorse tax software like TurboTax or H&R Block. I’ve used them myself in the past, and they generally do an excellent job. They have an increasing amount of options, and you can even pay extra if you want to have someone look them over.
For everyone else, you may want to consider asking around to find a helpful CPA who charges reasonable fees and saves you money.
Last year I had my first annual tax giveaway. I did all of the tax work for an awesome young family in Texas for free. I can’t believe the time for round 2 has already come!
What you get
If you are selected, I will do any simple to moderately complex federal and state (or states) income tax returns for free.
All you have to do is:
1. like Bare Budget Guy on facebook or just click the like button below
2. also, sign up for my newsletter
- If you are already a subscriber and want a chance, just share this article on social media and let me know.
- The giveaway will end on January 31st. I will select and announce a winner on February 1st.
Did I mention I’m a CPA? Just a minor detail that this whole article hinges on:)
What are your thoughts on using a CPA (and not just for taxes)? Any good experiences or horror stories?