by Ashley
It’s that lovely time of year when we all get to do our taxes. *cue collective groan*
We ended up having a small tax debt this year for our federal taxes, but ended up with a refund on the state side, which helped to even things out in the end. Going through all our files (physical and electronic) is such a pain and we have a lot of different investments and tax credits through the state of Arizona, and it can be tough to keep track of everything! So it makes me wonder…is a CPA worth it?
My prior experience with a CPA
When I was married to my now ex-husband, there was one year that we really messed up our taxes and ended up owning a LOT of money (like….nearly $20,000). The following year, I hired a CPA and we used him for a couple of years until I went through my divorce. The CPA had been fine, but I didn’t feel like I was getting much out of the fee I was paying him. The biggest benefit is that he had a tax organizer that told me all the forms I needed to find/organize so I didn’t leave anything out. But I didn’t feel like he gave us any real advice in terms of minimizing tax obligations and his service cost $450/year.
While it was lovely not to have to do any of the work ourselves, I couldn’t really justify the cost. Once I went through my divorce, a lot of my tax situation simplified. My ex had been a small business owner, so there was a lot of extra “stuff” in relation to that. I didn’t have to worry about that on my own, and did my own taxes for a few years.
Current experience with certified tax preparer
My now-husband and I have been handling our taxes ourselves since we wed in 2020. This year, however, we were both overworked and out-of-time to do it on our own. We ended up hiring a certified tax preparer to get all our documents together and submit everything for us. He was cheaper than the CPA ($275 total), but I still wonder….is it worth it?
CPA vs Tax Preparer
If you’re in the market to hire someone to help with taxes, it’s good to know what you’re getting for your money. A CPA is generally more expensive, but they have more expansive training and testing on all types of accounting and financial information, including (and beyond) tax preparation. The certified tax preparer we used this year still passed a test and is certified to be able to prepare taxes. But he doesn’t know all the ins-and-outs of everything a CPA would know. In our initial meeting, I asked what the current income limit is in order to have a Roth IRA. He didn’t know. It was easy for me to look up on my own, but it just feels like something a CPA would surely know straight from memory.
What are your thoughts?
We did, in fact, use a tax preparer this year. But I don’t know what we’ll do in the future. I feel like we’re at a point in our financial lives that a CPA’s advice could be beneficial for financial planning purposes. But I don’t want to spend an arm-and-a-leg and feel like I’m not getting much out of it, either.
Maybe last time my CPA was just a “dud” and I need to interview around or get better recommendations and referrals. To be clear, he did what he was supposed to (he prepared and filed our taxes, after all). But it just didn’t feel like anything over and above what our tax preparer is doing. Can spending more money on a CPA result in a net savings in terms of smart investments and legal ways to minimize tax burden? When do you know if it’s a smart choice for you?
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Early 40s, married mother of twins, and working in academia. Currently working toward financial independence with the goal of (hopefully!) retiring early at 50.
