My wife and I made a lot of money this year, and both of us claim 0 on our taxes? Do we need to get a CPA?

Question

Whenever we do our taxes ourselves, using turbo tax, we don't seem to get back much money? I am wondering if getting a CPA would be a better idea?

Answer 1

It depends on your circumstances. If all you have are a W2 job each and some mortgage interest and real estate taxes, TurboTax probably will produce a refund close to what a CPA will. However, if you have children that have education expenses, unusual charitable donations, rental properties, substantial investment income, etc., a CPA can provide a service that will be greater than their cost. I tell prospective clients if I don't believe I can provide them a service worth my fee, I won't do it. For at least 75% of the people in the US, their returns are simple enough that they can do them, either manually or with a simple program like TurboTax. It's for the highly compensated, the small business owner and the self-employed that CPAs can really show their value!

Answer 2

The only way a CPA can increase your refund is to help you find deductions you are missing. If you both claim 0 on your W-4s and don't get much back, I suspect you are missing something. Even the standard deduction usually results in a refund if you claim 0 on all W-4s. I would recommend consulting a tax adviser of some sort for advice. Once you learn what to do, use should be able to prepare your returns without one until something else changes.

Answer 3

Probably not. Not getting much money back when you file your tax returns is not necessarily a bad thing. If anything, it's a good thing. A desire to receive a lot in refunds is a common misconception when it comes to taxes. All that means is that you've over-withheld taxes during the year, and you essentially gave the government an interest free loan with your money during the year.

With that said, generally speaking, there are not a lot of things you can do to lower your tax bill. Most people do not have nearly enough deductions (charitible contributions, medical expenses, etc.) to exceed the standard deduction ($10k for married couples filing jointly).

However, as you said you have made a lot of money this year, you may benefit from itemized deductions with mortgage interest, state/local taxes, and property taxes. My best recommendation would be to go on the IRS website and print off the 1040 instructions to see what kind of expenses you may have had in 2006 that are eligible for deduction that you may not have been aware of.

In the end, I wouldn't spend money on third-party help with your deductions. Any money they may end up helping you get would just end up in their pockets. If you're smart enough to do your taxes on Turbotax, you're probably smart enough to do research and reading that any other accountant can do.

Answer 4

A CPA is a good idea. For a basic fee, they can give you some suggestions for reducing your taxes. However, since 2006 is already over, their influence on your 2006 refund will be limited. Their help for planning your 2007 tax return will be greater.

Ask your friends and relatives for a good reference. Some of the accountants are not so good, but the profession is honest on average.

Answer 5

Without question, file jointly and you can probably itemize deductions as well. Look into your rental expense situation carefully, For example, if you manage your own rental property you can probably write off certain expenses incurred against that income. Perhaps even a part of the costs of the house you live in as an office, for example. It may be useful to get a good tax accountant the first time to ensure you are claiming everything you can. After that it will not be difficult to dispense with the accountant and do it yourself. I have done all of that stuff and it is not difficult at all after you have the basic knowhow.

Answer 6

Most people will tell you that go to a CPA but my advise is that no one is more interested in saving your tax dollars than yourself. So, if you do your homework and take advantage of all legal and possible deductions then you will certainly do a lot better than an accountant who is going to fill in more or less what you provide him which. A well establish accounting firm may cost you more than your refund check. I'm a strong believer in do it yourself philosophy.

Answer 7

hell yeah, get one asap, because they know everything about taxes and there going to be extermely busy this time of year.