Do I really need an accountant?

Question

I've been doing my own tax returns for over 20 years. Last year in addition to my regular real estate transactions as a real estate agent, I bought and flipped a SFR. Normally, I use turbotax business and have found this program to be adequate for my purposes. My REIA group has indicated that having an accountant would be beneficial. What would you recommend?

Christopher Cousin · Answer

@Brenda Hedges The true value of a CPA is that they serve as advisors. Plugging numbers into tax software is an easy task, but a credible advisor can save you literally thousands in taxes. For example, you mentioned that you bought and flipped a SFR. You should ask your CPA about the advantages of using an S-Corp entity in such a situation. A competent CPA can also advise you on how to structure transactions to maximize tax savings.

Please feel free to reach out to me if you have any additional questions.

You could also check out the Mark Kohler podcast for great educational information on tax/legal issues.

Please feel free to reach out to me if you have any additional questions.

You could also check out the Mark Kohler podcast for great educational information on tax/legal issues.

Bryan Wilson · Answer

I'm an accountant and I've done my own taxes my entire life and friends and family.  Where I believe the value is found is in knowing that a CPA or tax accountant in general will understand the IRS processes quickly in the case of an audit.  One benefit to having the CPA do your taxes is that if there is an audit and discrepancies show up they can pull together all that is required without needing to scramble to do so because they will understand what is necessary.  Another benefit is that they can represent you in a case with the IRS.  Also once taxes become more complex the likelihood of audit goes up as well and it is nice to have peace of mind knowing that a professional you can trust handled your taxes appropriately.

With that said though I tell people all the time they can do their own taxes if they are willing to read up on the tax code and apply the instructions appropriately.  It isn't rocket science, but it does take time to research.  I think whether or not you want to spend your time researching and applying is the real question.  In most cases the $200-500 is worth the time saved plus it may be a tax deduction too.

Brandon Hall · Answer

As @Joe Splitrock said, if you have the capability of producing your own tax return and managing your own tax position, then no you don't need a CPA or an accountant. However, please be honest with yourself. I can't tell you how many times I've had to clean up the work of someone who thought they could do it alone.

Regardless, I'm positioning my firm as an advisor to real estate investors and dealers. Frankly, I feel that within the next decade, tax return preparation will be commoditized and extremely easy (automated). But the ongoing advice is where the real value-add comes into play.

Too many people wait until Jan, Feb, and Mar to find a CPA. Unfortunately, many of your prior year facts are already written in stone. There's little we can do to drastically change your tax position retroactively that you can't do yourself (like tracking down expenses).

Ongoing advice is priceless.

Chinmay J. · Answer

@Brenda Hedges  - I am in same shoes as you are. I have couple of transactions from last yr, plus other sources of income along with rental income. This year I am using Turbo Tax for 2016 returns, but in 2017, once I have completed my first flip, I will be looking at EA or CPA to do my taxes.

There was some good discussion on this thread not too long ago  Do I need CPA !

Jamie Engledow · Answer

@Bryan Wilson

Thank goodness for POA'S

Jamie Engledow · Answer

Deleted erroneous duplicate post.

Brenda Hedges · Answer

@Christopher Cousin

Thank you that is helpful advice. So maybe I'll do my own taxes for this year but find a good accountant to help advise as we move forward with other projects.

Steven Hamilton II · Answer

My clients don't pay me to prepare a tax return. They pay my to advise them.

Many of us work with clients worldwide.

Brenda Hedges · Answer

@Chinmay J. Thank you for pointing me to that thread. It was helpful. It sounds like I could use an accountant for their ongoing advice. Now I just need to find a god one.

Joe Splitrock · Answer

It is not necessary depending on your ability level. I use an accountant and then go through and check all their work. It gives me comfort to have an expert who is up on tax code and then to have myself as a checking point for them. Ask any accountant and they will say they are beneficial (of course).

Do I really need an accountant?

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