Ask HN: Need some tax advice... | Hacker News Reader

Ask HN: Need some tax advice...

5 pointsnrj8 comments

I am a freelance software developer living in NYC. I'm 25, somewhat new to the whole contracting thing, and I feel like my accountant is taking advantage of me. I came up $27,000 short on my tax payments this year and I ended up having to file an extension. The reason I hired an accountant was to avoid being in a situation like this. I am now very in debt to the IRS and on top of that my accountant just keeps sending me expensive invoices.

I feel like I should take my business elsewhere, but I don't really know how to break it off a with a CPA. Does anyone have any advice? Or know a good accountant in the NYC area?

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First of all, fire your CPA. Sounds like that will help you pay off the debt faster. If you can't find a better/cheaper CPA in NYC, Turbotax online has a special version for contractors, which is what I use.

Next year, make estimated quarterly payments to the IRS, Just take 30-40% of what you make each quarter and send it to them, their website explains how to do it. Then at the end of the year you will either get a refund, or the amount you owe will be small enough that you can easily pay.

EDIT: I use Turbotax online, not Quickbooks online.

make estimated quarterly payments to the IRS, Just take 30-40% of what you make each quarter and send it to them

If you bank with Bank of America for small business, there is a tool to help you manage your taxes: http://www.bankofamerica.com/small_business/online_banking_a...?

It's basically bill pay for taxes.

It sounds like you're making a pretty decent amount of money if you owe $27k. Have you double-checked those numbers? Do they add up using back of the envelope math? Is that all income tax, or did you forget to pay your SS/medicare/unemployment insurance as well?

Either way, fire your accountant. If you're making < $100k/yr, I would probably go without and learn to file them yourself.

Also, the most surprising thing I've found: the IRS is really nice and helpful. They have an 800 number, and although the wait is long, they will spend as much time with you as you need. Everyone wins when your business succeeds, and so they are there to help.

Just do it the New York way and tell him he's fired.

Then again, did you just not pay in and then hire an accountant in hopes of making reality go away? There's not that much an accountant can do if the real problem is you're not paying your bills...

The problem is he severely underestimated my tax estimates.

Yeah, fire him.

I don't know all the details of your situation, but an expensive CPA should not screw up like that. Unless he can get you enough money back to justify the cost of retaining him, you're better off without a CPA.

The thing is I feel sort of helpless without a CPA. I recently (beginning of this year) bought Quickbooks and I have been keeping track of all the books myself. Logging all transactions, income, expenses, keeping receipts etc. So I feel like this is good step in becoming independent. I paid in a bunch of my debt (about 20k) and filed for a 6 month extension. I'd rather not pay this guy any more money to prepare my return. Do you know any online resources that might help me get this sorted out?

It's good that you were able to pay 20k along with your extension.

I can't think of any specific online resources that would help (note that I mistakenly said Quickbooks Online instead of Turbotax Online in my original post - I run Quickbooks, but do taxes in Turbotax or by hand).

Maybe you could find a better CPA, if you really feel you have to have one. Do you know your actual tax liability from your return? If not, you could go on the Turbotax website and figure it out without paying anything, unless you actually file through them. Do you know all your deductions, etc? Since you live in NYC your rent could be a big deduction, if ever work from home.

If I were you I would go through Turbotax Online and diff that against what your CPA is telling you, as a first step.

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