Who to talk to in order to get all tax advantages?

Question

Hello,

I was able to buy two rental properties this year (and my only 2), but want to make sure that I take advantage of all the tax benefits possible. I'm assuming I don't go to H&R block to do this. Who should I get in touch with? How do I find the most qualified person?

Thanks for any and all advice!

Danny

Eamonn McElroy · Answer

As @Lance Lvovsky has already suggested, tax planning/consulting is where the money is saved.  Tax compliance (tax returns) is backwards looking and you can't change the facts.

That said, I more often than not  find something wrong when reviewing prior returns of prospects who were previously DIY.  You don't know what you don't know...

My general advice is that if your activity consists of: W-2, 1099-INT, 1099-DIV, 1099-B, 1099-R, and/or 1099-SSA, knock yourself out with TurboTax, TaxAct, etc as a CPA/EA won't be able to provide much value, if any at all.  Rentals, businesses, interests in passthrough entities...that's starting to get into professional territory unless you're willing to devote a large amount of time to continuously educating yourself, and are okay gambling with free, general advice on the internet.

Ben (Akiva) Bergman · Answer

Get in touch with @Daniel Hyman His firm specializes in real estate and they have been very helpful to me.

Aaron K. · Answer

For two properties you'd probably spend more on the professional than you'd save in tax breaks, I'd do all the research you can and do it yourself with Turbo Tax.  Keep all expenses even remotely associated with the properties organized so that you can sort out what you can deduct at the end of the year.  You might even get an old version of turbo tax and practice entering one of the properties so that you know what you should be keeping track of.

Eamonn McElroy · Answer

@Aaron K. If that's been your experience, I agree, why would you pay other CPAs for their work?

I wonder if the old adage applies: "you get what you pay for"?

@Basit Siddiqi "If the CPA is reviewing the return after it is filed; you are talking about a minimum of 2 hours of the CPA's time with initial consultation, uploading tax documents/returns, reviewing the return and final communication.

I can only see a CPA doing this if the engagement will potentially bring in a lot of money.If the engagement won't bring in a lot of money - I don't think the CPA values his time much which is likely a CPA you don't want." [Emphasis Added]

Exactly...

Basit Siddiqi · Answer

@Danny OndikI don't find doing the return in turbotax and then having a CPA review the return the best of both worlds.1 - This situation doesn't allow you to strategize with the CPA.2 - The CPA may be required to sign the tax return if he is reviewing it before it is filed. I don't see a CPA wanting to sign a return for free or little compensation.If the CPA is reviewing the return after it is filed; you are talking about a minimum of 2 hours of the CPA's time with initial consultation, uploading tax documents/returns, reviewing the return and final communication. I can only see a CPA doing this if the engagement will potentially bring in a lot of money.If the engagement won't bring in a lot of money - I don't think the CPA values his time much which is likely a CPA you don't want.

3 - You are also taking the time to do the return which if you are not familiar with doing; you can be wasting valuable time that you can do something else that generates more money/value.

Aaron K. · Answer

@Eamonn McElroy I've seen this service offered many times before and if an accountant is not confident that they can do better enough to justify their fee then why would I pay them to do so?

Eamonn McElroy · Answer

@Aaron K. It's unlikely that a CPA/EA will review your return for free or inexpensively if they know beforehand that you're not going to engage them if no errors are found or no value can be added.  You have to be realistic and put yourself in their shoes...they're running a business and trying to make a living too.

Aaron K. · Answer

@Danny Ondik @Eamonn McElroy If you want the best of both worlds you can do Turbo Tax year one and find an accountant who will review your return for free or very inexpensively, if you didn't miss anything great you don't need them if you did you can then way the costs and benefits of using an accountant.

Danny Ondik · Answer

Thank you, @Eamonn McElroy. I really appreciate your advice.

I really like the phrasing "tax planning/consulting is where the money is saved.  Tax compliance (tax returns) is backwards looking and you can't change the facts."

Thank you again.

Danny Ondik · Answer

Thank you, @Aaron K.. I Have used Turbo Tax the past 5 years with no properties, so I would like to continue this but wasn't sure how much I could save having a professional doing it for me. Your answer gives me the confidence to try Turbo Tax this year and see how it goes. Thanks!

Who to talk to in order to get all tax advantages?

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