Turbo Tax Premier or an Account?

Question

I'd like to know what the general consensus is on using tax software such as Turbo Tax Premier vs an accountant.

I searched for a question like this already and found someone asked it a few years ago; however, the responses I thought were pretty limited.

I take possesion of my first property in couple of days and will have my work cut out for me this summer getting it up to par. I've been spending this past month learning as much as I can about the admin side of the business so I can focus my attention on the physical side (sweat equity) for the next few months.

Since taxes are so important, I'd like to know if you guys think Turbo Tax is really adequate at getting the job done. Assuming it can get the job done, perhaps my question should be, can a layman who has done what he can to learn some tax basics understand the questions well enough that Turbo Tax asks to provide the correct data?

Please help! Turbo Tax vs a pro is a huge conflict for me right now. My parents own a few properties and swear by it, but honestly, they don't spend the time I do learning the paperwork side of things.

Shanti S. · Answer

Don't try to save money on your accounting - save it on your property offers, rehab materials, groceries, etc :-) A good accountant will see the big picture of your financial life and where you want to go with your business in a way that software cannot. He/she will be worth their weight in gold over the years and if your finances are currently very simple, you will not be paying them for very much of their time to actually DO your taxes when it comes down to filling out the paperwork. Get some word-of-mouth recommendations from local real estate investors on who's good, then drop by their office to see if you like each other in a quick interview/intro. Spend your time on the basics of managing your general business and finding deals and don't try to play catchup with accountants and attorneys so you can go around them with pieces of software....the pros may bill three figures an hour but they should find you much more than that in savings and business advice - so in the end, their hourly rate doesn't really matter much at all. Just their competence, creativity, and chemistry with you.

Bill Gulley · Answer

Good advice Workerdone! Check with Realtors/Investors to see who they use. Starting off, you need to see a tax person/accountant. They should assist you in setting up your books and a program....but don't buy the program from them! I suggest you go on ebay and find an accounting text book, 101 level. This is the beginning level of accounting, debits, credits, assets, liabilities and capital accounts. It will begin at a very simple level with the three accounts and "T" accounts to post expenses and income. Accounting is the language of business and if you're expecting to be a business person, don't ya think ya ought to have a basic understanding of the language? Then you can talk to your accountant latter on saving you time and money in paying them. You'll also get to a point where you can do most of your accounting and svae even more money. While they say that you don't need any accounting knowledge with programs like Quicken, you're way ahead if you do and it will allow more flexibility if you understand how the accounts merge together. It will also help you in your financial planning, loan requests, business plans and the list goes on......good luck, Bill

Jon Holdman · Answer

If you're an expert at accounting and taxes, you can use Turbo Tax Pro. Or, paper, for that matter. After all, that's essentially all your CPA is using. The trick is knowing what you can and can't do and where to put the numbers, not filling out the forms. Once you get past the basic 1040 info, these programs fall apart. The basis parts get a lot of effort into them, and work very nicely. Once you get in to anything complex, and investment real estate is very complex, they just say "what form do you want to fill out next? Here you go, fill it out." If you don't know what to put where, they're useless except for doing the math.

J Scott · Answer

Great advice above... I also agree that an accountant is much more useful than a tax program, and a good one will save you much more than he costs. Also, a good accountant will tell you how to structure your business in such a way that you'll have less tax liability in general, so regardless of how you prepare your taxes, you'll save money.

Tod R. · Answer

I definitely agree with everyone else. I use it as Jon mentioned. More for the ease of filling in data from year to year as well as having easy access to the different forms required. Unless you consider yourself a tax expert in real estate, don't do this on your own. You might end up regretting it.