I only pay my accountant around $2000 to handle a bunch of housekeeping at the end of the year that I'm to lazy to do during, and to file my taxes. For years I did my own taxes using Turbo Tax Self Employed and Turbo Tax Business Editions, but in 2016 I decided to outsource all of that headache, the first year, my taxes were half of what they were the year before with similar income. Then after the TCJA in 2017, my taxes were only 1/5th what they had been before the accountant, with close to double the raw income.
The biggest changes from doing it myself: I got an accountant; I incorporated (s-corp) instead of doing self-employment income; I draw W2 income now (using Gusto); I set up a SEP-IRA and put 20% of my W2 earnings as an automatic debit from my business account (in Vanguard); TCJA chops off 20% of my distributions on my K1; and I'll state again, I hired an accountant.
I hear this advice a lot, but what does an accountant actually do differently? It always sounds magical. Are there super secret deductions and credits that aren't on Turbo Tax, and only accountants know about?
I feel like I'm doing 90% of the work already, having organized all my expenses and income. What are they doing other than typing it into their own Turbo-Tax-equivalent?
“TurboTax will take what I did last year and minimize my taxes. My accountant will tell me what to do differently this year to minimize my taxes next year.”
In other words a good accountant is a forward-looking advisor, not just a calculator.
