hank - Share : This is always a hot topic, especially around this time of year. To accountant or not to accountant, that is the usual question. For some it isn’t a question, accountants cost money they don’t have, but for a LOT of people, they can get their taxes done for a lot less than they think…
I paid my accountant $220.00 this year to do my 2007 taxes (up about $50 from my 2006 taxes). Is that too much?* Let’s break it down:
How much time did it save me?
Well, seeing as though all I needed to do was save all tax related docs in a folder through the year. The time it takes to walk from my mailbox to my “tax folder” - all in all took me about 28 seconds total. The last time I did my taxes on my own (2003), I spent probably 15 hours cumulatively on TurboTax.com hashing it out.
Breaking down the TurboTax time a bit more puts about an hour just figuring out how it worked. Granted, it is very straightforward and they ask very basic questions, but they ask a LOT of them. Within THOSE questions, there are other options to “granularize” it even more. It CAN get busy.
Being a frugal guy I wanted to get every single option that was available to me, so I clicked on every link to make sure I didn’t qualify for them. If I didn’t know with 100% certainty, I’d dig around the internet to find some more info on specific tax questions.
If you’re extremely frugal, you can even “trick” the system by getting your own w2s, 1099s, etc and fill them out at the end of the process as they show you what the finished process will look like. You then just mail them in like normal, saving you the e-file cost also, which I certainly did at the time, tacking on another hour or 2 of filling out forms.
Are you up to date on every tax bill passed last year?
This is another big reason I moved to having it done by someone else. I like following the basics of tax, but he gets paid professionally to follow up with all the laws that may or may not apply to me. I don’t want to have to investigate each and every one myself.
I’ve got several other things I would rather be doing with my time. If I were to follow/keep up on each of these, I have to assume it’d take SEVERAL hours (we’ll just say 10 to keep it an even number).
Do I get my moneys worth out of it?
So 27ish hours is what I estimate it would take me from the first tax doc I got, to putting it in the mailbox. My cost of $220 for his time works out, in my work hours (he has it down and probably spends 2 or 3 hours on it) to giving him about $8.14 per hour for his time.
That’s not much more than you’re going to get stocking shelves at Safeway for a professional accountants time. I like that rate, and I like saving the 16 hours 59 minutes and 32 seconds of my life to do something else.
If you look at it in regards to what THEY charge you for the process, it seems asinine to pay someone $75/hour to do your taxes. I agree, but think of what it costs YOU to do it, in YOUR hours, on YOUR time, and saving YOUR dime. Breaking it down like that makes me believe it is WELL worth it.
*As a note to this, I’m always interested in saving money. I’d LIKE to be able to do it for less than $220. Do you have an accountant you’d recommend?
This is probably a good place to get the name out there. 
Leave a comment here or contact me and I may post a list of “the best recommended accountants in the world” if I get enough firepower behind it.
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12 Comments
March 18th, 2008 at 5:37 am
Great post Hank. Another reason that I have no problem paying my accountant is because he surely can get me more money back in my return than I could - regardless of how much research I do.
March 18th, 2008 at 11:00 am
We paid our accountant less than $200 this year. Remember, the fees you pay are deductible next year if you itemize so in a way you get a tax rebate on your accountant prep fees. We found our accountant through a friend so we may be getting charged less than normal. Still it’s more than worth it for us! There’s so many laws out there that I can’t keep track of. And I’ve used TurboTax before, which is great if you have just a W-2 to report, but it can still be confusing getting your head around everything.
FFB’s last blog post..A Nice Surprise in our Bank Account
March 18th, 2008 at 11:34 am
Hank, I hope you keep that extra $220 in tax in mind when it comes time to vote!
I use to do my taxes with pen and paper, but I’ve used TurboTax in recent years. You’re right FFB, it can get confusing as one’s financial situation changes. I think I’ll keep filing as long as I can make sense of my taxes.
Aaron Stroud’s last blog post..Time to buy a house?
March 18th, 2008 at 12:16 pm
Nice post Hank! Paying a CPA to do your taxes is a great idea for most people. It not only saves you time, but enormous amounts of frustration, that goes along with filling out the forms.
I have passed the CPA exam, I did work for a Big 4 Accounting Firm, and I am the Controller of a small company. I do not say these things to brag, but simply to note that I have a strong background in tax and accounting and it still takes me about an hour to do my taxes every year. I cannot imagine how long it takes individuals who do not keep up with the laws to complete their taxes, even with the help of turbotax.
That being said, for $220, maybe I should start doing other people’s taxes. I am qualified afterall
Dustin’s last blog post..Can Fiscal Motivation Cure My Diet Coke Addiction?
March 18th, 2008 at 2:35 pm
@Naveed - I may be able to grab the $ that my accountant found for me but it would cost me hours, of which I don’t like to part with.
@FFB - Good call; I think $200 is standard rate it sounds.
@Aaron - TurboTax is straightforward, but I agree, does get sticky as the variables of life get tossed in.
@Dustin - I bet you’d get some hits if you advertised on your blog to do taxes, would be an interesting experiment, eh?
Thanks for stopping by!
March 19th, 2008 at 11:57 am
Actually hank, Ive found the newest version of Turbotax actually does quite a good job of handling a lot of the “exception” cases. Just personal opinion of course
Jesse’s last blog post..Visa Stock - the Visa Stock release results
March 20th, 2008 at 4:53 pm
I paid my accountant $130 this year, down $20 from last year. I asked him why the savings and turns out he pro-rates his services for those under $25K a year. Last year, I increased my retirement contribution which nudged me under $25K so it was an added bonus.
But simply put Hank, it is just too much tax information overload for me that it is worth paying someone to pay attention to detail for me. I am still responsible for the bottom line but all the same.
Mark @ TheLocoMono’s last blog post..Rule of 72
March 21st, 2008 at 4:20 pm
@Jesse - Hey, to each their own. I have H&R Block post on my site monthly, but I’ve got to be honest, I don’t use them. That’s why there are so many different tax softwares out there, everyone has a favorite! Glad it works for you!
@Mark - I ABSOLUTELY agree. Too much detail to worry about not a huge amount of money…
April 5th, 2008 at 2:50 pm
Great points. One more to add - Accountants could be great if you get audited. So there is the peace of mind factor.
AndyS’s last blog post..The Magic of Compound Interest
April 6th, 2008 at 8:22 am
@Andy - good call on that as well; thanks for stopping by!
June 6th, 2008 at 4:14 am
If you are numerate, maybe you can attempt to do your taxes, without the help of an accountant. But like anything else, ie, fixing your car, computer, building, or other appliances.These could be a things you understand and can do, but at a certain level, you have to call in the experts, if you not a specialist. The same goes for taxes.
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