How can I tell if my tax accountants are adding value?
My tax accountants are charging us 0 (0 each for my wife & I) for our state and federal returns this year.
Our returns are fairly simple, so I'm wondering if I'm getting any real value out of the service. How can I tell?
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From a strictly financial perspective, you're almost certainly not getting value out of it. Tax software costs like .
The real question is "Do I want to do my taxes?". I can pay a plumber 0 to replace a toilet, or spend a few hours to do it myself.
Depending on your personal situation and the complexity of your tax return, your quoted price of 0 per person does seem a bit expensive.
This is of course a tradeoff between your own time and expertise vs. that of your tax preparer.
One way to do a level-set would be to use an online tax service to prepare your own. Most of these are free to use, until you want to file. Once you have filled out your taxes from your original documentation, check the generated return against your paid/prepared return.
Did your tax preparer find more for you, or did you do an equivalent job? Did you enjoy (or at least not hate) the experience of doing it yourself? Would you have used the time you saved to do something else?
Personally I have been using software for many years, and have a medium-complex (Canadian) return. My father, on the other hand, did his own until he retired. Then with the complexity of pension income vs. other income, and the various benefits to deduct, he has started to use an accountant. He deems it a small price to pay to avoid the aggravation that it was causing him.
Good Luck
Disclaimer - As my profile here indicates, I am a paid guest blogger at the TurboTax site. I've used TurboTax since my 1984 return, and never paid a preparer, so my experience is second-hand. Friends have showed me the "checklist/organizer" their tax guy supplies them. It has boxes to fill in to list things like mortgage interest, charitable donations, etc. These translate directly to the entry forms on the tax forms and therefore, the tax software. The tax guy then gives it to a clerk to enter into the same software you'd pay for and he may glance at the return. If you are in the 25% bracket, your guy would need to "find" 00 in items you'd have missed for you to break even.
My suggestion is that you look at your last few returns and ask yourself if every single entry was for items you had at your fingertips. There are a few things the individual would easily miss, when filing by hand, such as the Make Work Pay tax credit, but the software handles these things automatically.
Further, it makes sense to spend the , even though I assume you're done with your return. Spend the time, enter the data you supplied the tax guy. If you can then say that he added value, that's fine, if the returns are identical (or perhaps he even missed something) there's your answer.
To Duff's point, you should see how much incremental time it took to use the software now that your tax folder has all the paperwork. Last simple return I did with someone took 45 minutes. Income, interest, mortgage interest, prop tax, IRA withdrawal, donations. That was about it.
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