Hi, I heard once you are a home owning adult, you git yourself an accountant. Why?

[Zeze]

I'm sending 12% of my check to my 401k beyond company match.
Roth doesn't apply at my income level.
We save to 529
Also we buy stocks. Market will ways grow. Covid was a god-send. We are up a lot.
We have no car payments, drive 2008 accord and 2013 Hyundai SUV.
We have an investment property.
Turbo tax it

Please inform me.. how beneficial is a CPA for me?

 

[IronWing]

How do accountants handle constipation?









They work it out with a pencil.

 

[Greenman]

Ask the CPA why a ROTH wouldn't apply.

 

[brianmanahan]

Covid was a god-send.

 

[kt]

Ask the CPA why a ROTH wouldn't apply.

This.

Over half of the people I talked to who claim Roth doesn't apply for them, they were wrong.

 

[jpiniero]

This.

Over half of the people I talked to who claim Roth doesn't apply for them, they were wrong.

The income limits seem pretty self explanatory.

 

[dasherHampton]

If you can TurboTax it why not?

I've heard even K-1 forms are not that bad anymore with TT.

 

[kt]

The income limits seem pretty self explanatory.

Yes, but most of them assume the income limits apply to their gross income and not their adjusted gross income. A competent CPA will find ways that you may not be aware of to lower your AGI. Even if that doesn't help him with Roth, it will still help him lower the amount of tax he'll have to pay.

 

[bbhaag]

As a SBO doing over $1.5+ million dollars a year in sales we needed to stop using turbo tax and step it up to a CPA. We are an LLC taxed as an S-corp so all the disbursements, bonuses, salaries, quarterly taxes, and so much more are a huge hassle to deal with. Also because of the S-corp status all the business taxes get passed through to me and my partner.

So on the personal end not only do we have that to deal with we also have IRA's and other investments that need handled. Needless to say it's a complicated mess.

We stayed with Turbo Tax for years but once the business started growing and getting bigger my wife and I decided it was time to leave them behind and we both agreed that we would rather pay a professional to handle all of it.

Yes it's more expensive but it's just one less thing her and I have deal with/worry about and that alone it worth the cost.

 

[biostud]

Taxes in Denmark vs US.

 

[allisolm]

Home owning adult here. Don't have an accountant. Never have had and, as far as I know, the IRS has no warrants out for my arrest (unless I count those robocalls I get telling me to return the call or a warrant will be issued.)

 

[Steltek]

I'm sending 12% of my check to my 401k beyond company match.
Roth doesn't apply at my income level.
We save to 529
Also we buy stocks. Market will ways grow. Covid was a god-send. We are up a lot.
We have no car payments, drive 2008 accord and 2013 Hyundai SUV.
We have an investment property.
Turbo tax it

Please inform me.. how beneficial is a CPA for me?

Peter Thiel (founder of Paypal) has a Roth IRA with $5 billion in it.

There are ways to legally convert traditional IRAs to Roth IRAs if you can do a rollover. This is why you need an accountant at your income level. Especially since Congress is making noise about it, increasing the likelihood that the loophole Thiel (and a lot of wealthy Americans) used to do this is going to be closed or curtailed at some point in the future.

 

[ponyo]

Your taxes are basic. You don’t need an accountant to do your taxes. The only thing you need to worry and become familiar with are short term and long term capital gains tax rate along with personal tax rates. And NIIT and at what income level those are triggered. All this information is available for free online and is not hard to learn. Basically, hold out for LTCG whenever you can.

 

[jpiniero]

Peter Thiel (founder of Paypal) has a Roth IRA with $5 billion in it.

There are ways to legally convert traditional IRAs to Roth IRAs if you can do a rollover. This is why you need an accountant at your income level. Especially since Congress is making noise about it, increasing the likelihood that the loophole Thiel (and a lot of wealthy Americans) used to do this is going to be closed or curtailed at some point in the future.

I thought they closed the backdoor Roth loopholes but apparently not. I wouldn't be surprised if Roth ends up being taxable anyway.

Thiel I believe didn't use any loopholes per se, just that he was somehow able to buy Paypal stock at a fractions of a penny pre-IPO in his Roth.

 

[Torn Mind]

What you should do is look up property tax credits once you become a homeowner. Many lower-income earners might get one depending on the locality.

 

[Steltek]

I thought they closed the backdoor Roth loopholes but apparently not. I wouldn't be surprised if Roth ends up being taxable anyway.

Thiel I believe didn't use any loopholes per se, just that he was somehow able to buy Paypal stock at a fractions of a penny pre-IPO in his Roth.

True. However, Thiel will be used as the poster child for Congressional action as they are already demonizing his situation in the media outlets.

A lot of wealthier individuals who otherwise don't qualify to have a Roth have used Roth conversion as a vehicle to protect wealth from future taxes while benefiting greatly from asset growth. Honestly, I was considering it myself just before the pandemic collapse but sadly didn't follow through....

Roths are so very popular with the middle class that I don't see Congress changing the tax structure on them. I do see them severely curtailing the conversion loophole and also placing a hard asset limit on them, like maybe a couple million.

 

[ponyo]

True. However, Thiel will be used as the poster child for Congressional action as they are already demonizing his situation in the media outlets.

A lot of wealthier individuals who otherwise don't qualify to have a Roth have used Roth conversion as a vehicle to protect wealth from future taxes while benefiting greatly from asset growth. Honestly, I was considering it myself just before the pandemic collapse but sadly didn't follow through....

Roths are so very popular with the middle class that I don't see Congress changing the tax structure on them. I do see them severely curtailing the conversion loophole and also placing a hard asset limit on them, like maybe a couple million.

It's not the Roth conversion that's the problem. Thiel only reported income of like $75,000 the year he opened his Roth so he qualified. But under the IRS tax law, it says you have to pay market price for securities. He did not pay market price. He paid like a penny for his PayPal shares for his Roth account. PayPal private shares were worth far more than a penny on the private market. So Thiel broke IRS law when he put his PayPal shares into his Roth. So he should be made to forfeit his entire Roth gains and also claw back most of his regular aftertax fortune since Thiel used his Roth gains as springboard to make his aftertax fortune as well.

 

[Viper GTS]

It's not the Roth conversion that's the problem. Thiel only reported income of like $75,000 the year he opened his Roth so he qualified. But under the IRS tax law, it says you have to pay market price for securities. He did not pay market price. He paid like a penny for his PayPal shares for his Roth account. PayPal private shares were worth far more than a penny on the private market. So Thiel broke IRS law when he put his PayPal shares into his Roth. So he should be made to forfeit his entire Roth gains and also claw back most of his regular aftertax fortune since Thiel used his Roth gains as springboard to make his aftertax fortune as well.

He did this repeatedly too. He started with <$2000 deposited (there was a limit he could put in). He had other opportunities to do the exact same stunt but starting with far larger amounts of money since he got to sell the original PayPal shares at market value with no taxes.

Absolutely ridiculous and needs to be dealt with retroactively as you suggest.

On topic I started using an accountant last year when I couldn't make TurboTax do what I knew should be correct for reciprocity between NY/NJ taxes. I fought it for a few hours and then just said 'fuck it' and we dropped off the whole pile to an accountant. I'll never do it myself again.

Even if I figured out how to make it work it's just so much easier and the ~$700 it costs me annually is 100% worth not fucking with it myself.

Viper GTS

 

[brianmanahan]

The income limits seem pretty self explanatory.

you can always do a "backdoor roth IRA" regardless of your income (and provided you don't have any traditional IRAs). that's a workaround to circumvent the income limit entirely.

and many companies have a 401k that lets you do a "mega backdoor roth IRA", which is also not limited by income. all my employers have allowed this, and it lets me put like 35$k into my roth IRA per year instead of 6$k.

 

[Red Squirrel]

I had an accountant even before I bought a house. I rather just pay someone $50 to deal with the hassle of filing taxes.

I would have no idea where to even start if I was doing it myself, and if I have to buy a computer program every year, then I may as well just use that money to pay an accountant. The tax rules change all the time, so I don't think you can just buy the program once and be good for life.

I have no idea what half of these tax related terms even mean. Roth, IRA, etc. I let an accountant worry about that.

 

[Torn Mind]

I had an accountant even before I bought a house. I rather just pay someone $50 to deal with the hassle of filing taxes.

I would have no idea where to even start if I was doing it myself, and if I have to buy a computer program every year, then I may as well just use that money to pay an accountant. The tax rules change all the time, so I don't think you can just buy the program once and be good for life.

I have no idea what half of these tax related terms even mean. Roth, IRA, etc. I let an accountant worry about that.

You're a Canadian. The Roth IRA is the TFSA in your lands.

 

[Spacehead]

you can always do a "backdoor roth IRA" regardless of your income (and provided you don't have any traditional IRAs). that's a workaround to circumvent the income limit entirely.

and many companies have a 401k that lets you do a "mega backdoor roth IRA", which is also not limited by income. all my employers have allowed this, and it lets me put like 35$k into my roth IRA per year instead of 6$k.

These have always confused me.
With a backdoor Roth, is the yearly limit still only what the IRS allows? 7K for me this year, for example.
I have had a traditional & a Roth IRA for several years now but the IRS sets limits on the yearly contributions. Is a "backdoor" only good for getting around the income limits for a Roth or would it somehow allow me to contribute more than 7K per year.

Mega wouldn't work for me as i have no 401K, correct?

I contribute to other accounts that i have but i have to report all that on my taxes each year, capitol gains/distributions even though all those are just re-invested.
I feel hamstrung that i can only put away 7K with tax savings per year.

 

[ponyo]

I put $2k in traditional IRA in 1996. That was the yearly limit. There was no Roth IRA back then. So just like Peter Thiel, I put in $2k in IRA and did not put another cent in traditional IRA. Thiel also put $2k but he did it in Roth IRA which I think first became available in 1997 or 1998 I think. But my traditional IRA is not worth billions like Thiel because I didn't get to cheat like him. I'm confident he would have less money in the IRA than me if he had to play with the same rules I did.

 

[brianmanahan]

With a backdoor Roth, is the yearly limit still only what the IRS allows? 7K for me this year, for example.
I have had a traditional & a Roth IRA for several years now but the IRS sets limits on the yearly contributions. Is a "backdoor" only good for getting around the income limits for a Roth or would it somehow allow me to contribute more than 7K per year.

correct, backdoor roth IRA is limited to the normal maximum of 6k (or 7k if you're 50+). and i don't believe you can do it if you have any traditional IRA accounts either, because of some really weird prorating rules. but i'm not totally certain.

Mega wouldn't work for me as i have no 401K, correct?

also correct, it takes a 401k with the ability to do after-tax contributions.

it is so dumb that they don't allow this kind of stuff across the board. you have to be lucky enough to have an employer who sets up a 401k that has the ability to do after tax contributions and in service rollovers of just the after tax portion.

 

[KB]

You probably don't need a CPA, unless you run your own business. Even rental income is easy to manage with the online tax preparers.