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I switched from TurboTax to an accountant three years ago and never looked back. Yes, it's more expensive ($375 vs the $120 I paid for TurboTax), but my accountant finds deductions I didn't know existed. She's saved me at least $1500 each year. Just make sure you find someone with good reviews who specializes in your situation (self-employed, rental properties, whatever applies to you).
Do you meet with your accountant in person? And how early do you need to book them? I heard good accountants get fully booked way before April.
I started with in-person meetings but now we do everything electronically. I send her my documents through her secure portal, and we have a video call to discuss anything unusual about my tax situation that year. You're absolutely right about booking early. I contact her in January to get on her schedule, and even then she's getting busy. By March, she's not taking new clients for the current tax season. Good accountants definitely book up fast, so if you're considering one, don't wait until April!
I was in your exact situation last year. TurboTax said I owed $1850. I panicked and went to H&R Block thinking they'd find some magic deduction. They charged me $220 and I still owed $1750. Barely any difference. If your tax situation is simple, software probably isn't missing much.
That's my fear too. Did H&R Block charge you even though they didn't really help?
One deduction many 1040NR filers miss is for qualified business expenses if you're engaged in a US trade or business. I'm from Brazil on an E-2 visa, and last year I was able to deduct business travel within the US, professional subscriptions, and even certain home office expenses since I occasionally work from home. You do need to be careful though - the rules for home office are strict. The space must be used exclusively for business. Also, keep DETAILED records of all expenses you plan to deduct. The IRS tends to scrutinize 1040NR returns more closely in my experience.
Can you claim home office deduction if you're on H1B though? My understanding was that only self-employed people could claim that, not employees working from home.
You're absolutely right, and I should have been more clear. If you're an employee on an H1B visa, you cannot claim the home office deduction. That's only available to self-employed individuals or independent contractors. For anyone on an employment visa like H1B who works for an employer, you generally can't deduct unreimbursed business expenses anymore after the 2017 tax law changes. There are some very limited exceptions for certain professions, but most employees (citizen or non-citizen) can't claim these deductions.
Does the tax treaty between your country and the US affect what deductions you can claim on 1040NR? I'm from India and heard there might be special provisions.
Yes, tax treaties absolutely affect what deductions and exemptions you can claim! I'm from India too, and our tax treaty with the US has specific provisions for students, researchers, and certain professionals. For example, if you're here as a student or business apprentice, a portion of your income might be exempt from US tax entirely.
Just wanted to add one important thing about home office deductions that hasn't been mentioned yet. If you're taking depreciation on home improvements for the business portion of your home, you need to be aware of the impact when you sell your house! The IRS will expect you to "recapture" that depreciation, meaning you'll pay taxes on it when you sell. It's called depreciation recapture and it's taxed at 25%.
Wait, so if we take the depreciation on this roof for my wife's business portion, we'll have to pay some kind of extra tax when we eventually sell our house? That sounds concerning. How exactly does that work?
Yes, that's exactly right. When you sell your house, you'll need to recapture the depreciation you've claimed on the business portion. For example, if you claimed $1,776 in depreciation over the years for that 12% of your roof, you'll pay a 25% tax on that amount when you sell, even if you qualify for the $250,000/$500,000 capital gains exclusion on your primary residence. It's still usually financially beneficial to take the depreciation deduction now (and you're technically required to take it even if you choose not to claim it), but you should be aware of this future tax implication. It's a surprise many home business owners don't anticipate.
Has anyone used TurboTax to handle home office depreciation for improvements? I'm in a similar situation with my graphic design business and I'm wondering if the software walks you through it correctly or if I should just hire a CPA this year.
I used TurboTax last year for my home office deduction with some renovations. It does ask the right questions and walks you through the depreciation calculations for home improvements, but you need the Home & Business version. The lower versions don't handle Schedule C and Form 4562 properly. Just make sure you know the square footage of your office and total home before you start.
Does anyone know if there's a simple calculator online where I can see exactly how much of my income falls into each tax bracket? I'm trying to figure out if I should contribute more to my 401k to stay in a lower bracket.
The IRS has a Tax Withholding Estimator on their website that's pretty good. TaxCaster by Intuit is also decent for quick calculations. Just google "tax bracket calculator" and you'll find several options.
Something nobody mentions about tax brackets - they're adjusted for inflation each year! The income thresholds for each bracket typically increase a bit annually. So if your salary just keeps pace with inflation, you shouldn't "bracket creep" into higher rates.
Jamal Harris
Former tax preparer here. One thing to consider is that if your parents have been going to the same person for years, that preparer might actually know important details about their financial history that could be relevant. When I had regular clients, I would often remember things like "oh, didn't you sell that property back in 2019? We should check the basis calculation" that they might forget. That said, $500 is definitely on the high end for a simple return. Maybe go with them to their appointment this year and see what the preparer actually does? You might get a better sense of whether they're getting value or being upsold on unnecessary services.
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Mei Chen
ā¢Is there anything specific to watch for to know if they're getting their money's worth? What kinds of questions should I ask the preparer?
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Jamal Harris
ā¢Watch for how much time they spend asking questions about your parents' situation - good preparers should be inquiring about life changes, medical expenses, charitable donations, and changes in income sources. They should explain why they're making certain choices on the return. Ask what specific deductions or credits they're applying that might be missed with self-filing. Also ask if there are any tax planning suggestions for next year - good preparers offer this. If they're just entering W-2s and a few 1099s without much discussion, your parents are probably overpaying.
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Liam Sullivan
I'm gonna be the devil's advocate here - just let your parents do what makes them comfortable. My mom insisted on paying $350 to Liberty Tax every year even though I showed her how simple her return was. I finally gave up and realized that for her, it wasn't about the money but about the comfort and routine. For that generation, taxes are scary, and the peace of mind is worth the cost. Maybe offer to split the difference - like suggest a cheaper tax service but don't push the completely free DIY option if they're resistant.
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Amara Okafor
ā¢This! I tried forcing my dad to file online and he made a mistake that cost way more than what he would have paid a professional. Sometimes it's not worth the battle.
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