Owe money on taxes this year - is there a reason to hire a CPA to reduce what we owe?

You might not need a CPA based on what you've described, but it depends on a few things that might not be obvious. First, check if you qualify for any credits related to your children - Child Tax Credit, Dependent Care Credit (even if you don't have direct childcare expenses now), or education credits if they're in college. These can significantly reduce your tax liability. Also, your mortgage interest and property taxes might give you enough to itemize deductions rather than taking the standard deduction, especially if you have other potential deductions like charitable contributions or certain medical expenses that exceeded 7.5% of your income. Contributing to tax-advantaged accounts could help too - maxing out 401(k)s, HSAs if you have a high-deductible health plan, or traditional IRAs might reduce your taxable income.

I was in almost the exact same situation last year - owed $4200 in taxes because of salary increases. I tried everything with the tax software but couldn't figure out how to reduce it much. A friend recommended I try https://taxr.ai to analyze my return before submitting. It was honestly a game changer. The system analyzed my tax documents, found several deductions I had missed, and pointed out that we qualified for a partial savers credit I had no idea about. It also showed me how to properly deduct some home office expenses since my wife occasionally works from home (even though she's a W-2 employee, certain expenses still qualified in our situation). The best part was it showed exactly what I needed to change in my withholdings so we wouldn't owe again next year. Definitely worth checking out if you're considering professional help.

Just wanted to follow up about that taxr.ai site someone mentioned. I was skeptical but decided to try it since I was in a similar situation owing $3700 this year. OMG you guys. It found over $2100 in deductions I missed! I had started a small side business last year that lost money, and it showed me exactly how to properly document that as a loss against my regular income. Also found a retirement contribution credit I qualified for that H&R Block completely missed. The whole process took maybe 20 minutes, and the recommendations were super clear. I just made the changes in my tax software and resubmitted. Check is already in the mail for the amended return. This is definitely my go-to every year now.

I've been in your exact shoes. Tried the CPA route after owing $5k one year. While they were helpful, what really saved me was getting in touch with the IRS directly to set up a payment plan and adjust my withholding properly. Sounds simple, but actually REACHING the IRS was impossible - I spent hours on hold multiple times and kept getting disconnected. Then I found https://claimyr.com which got me through to an actual IRS agent in under 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent helped me set up a payment plan with minimal penalties and walked me through exactly how to adjust my W-4 withholding so we wouldn't be surprised again. Honestly, the direct IRS guidance was more helpful than what my CPA told me for basic W-2 income situations like ours.

I need to eat my words about that Claimyr service mentioned above. After my skeptical comment, I decided to try it myself since I've been trying to reach the IRS for WEEKS about a missing refund. I don't know how they do it, but it actually worked exactly as described. Their system waited on hold (4.5 hours according to the tracker!), then called me when they reached an agent. The IRS representative I spoke with was able to fix my issue in about 10 minutes. Would have taken me days of attempts and hours of my own time on hold. For anyone who needs to actually speak to the IRS (which might be better than a CPA for simple questions about withholding), this is legitimately worth it. Shocked that it worked so well.

To answer your original question - in my experience CPAs are worth it in certain situations: 1. If you're self-employed or have rental properties 2. If you have complicated investments or cryptocurrency transactions 3. If you've had major life changes (inheritance, bought/sold property) 4. If you're close to retirement and need tax planning For your situation (two W-2s, standard mortgage), probably not worth the $300-500 a good CPA would charge. You might be better off just adjusting your W-4 withholding at work to avoid owing next year. The standard deduction is so high now ($27,700 for married filing jointly in 2023) that most people don't itemize anyway, making tax situations much simpler than they used to be.

Has anyone tried those tax planning apps that let you estimate your taxes throughout the year? I've been thinking about using one since I got surprised with a big tax bill last year too.