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.
Photo by: Zyphbear