Hey yo, about 6 weeks ago we had a baby girl and I celebrated this Mother’s Day as mom to a daughter! Her name is Jonna and she’s unbelievably beautiful and clever (moms aren’t biased at all). That means I’m busy updating wills, insurance, documentation, changing out baby clothes, changing vehicles… basically updating everything in our entire lives. We love it though… and I know someday we’ll look back on these days with fond memories!
So of course, for everyone in the US, tax season came and Ross and I both started stressing about taxes. We always buy TurboTax software and do it ourselves, but the closer we got to selling the rental/fixer (this year!), the more we worried we’re not set up to snag all the savings we can from the government. What if we missed a deduction on which we could have saved hundreds of dollars? We just weren’t sure we were capturing everything within TurboTax. Ross may also have been sick of me sending him Forbes articles about deductions. Maybe. Possibly.
Our situation is unique, because we’ve changed our model from rental to resale since starting the LLC, which changes how you can recognize revenue. Because we won’t have a stream of income, we will recognize a one-time injection of capital at sale, we need to pay close attention to how we’re claiming it on our taxes and how we’re claiming associated expenses.
Long story short, we received a referral from a friend to a tax accountant and she is amazing! Not only did she find crazy HSA over-contributions from years ago that we would be financially penalized for (what the what?!) but she advised we change the structure of our LLC for even more savings come next tax season. She also helped us more accurately and appropriately deduct our current expenses. In other words, she told us things we would never have known, and will continue to advise us through the sale to get the most savings possible.
Yes, paying for a personal tax accountant is about 10x more expensive than TurboTax, but you’re paying for the consulting that Turbo Tax can’t possibly give you. This includes advice like which LLC will be the best vehicle for your business, when exactly it would be most beneficial to claim expenses and revenue and even looking over past years’ filings to find anything you may be penalized for in the future. Well worth it to have confidence in your filing of income taxes if you’ve made a large investment.
It’s kind of like insurance– and I love this analogy. When I was 19 and only looked at cost, I bought car insurance online from Progressive. When in a blizzard (#minnesnowta) my car was hit from behind and I didn’t know how to recover the cost of the damages, I called Progressive (naturally, right?). I think they even told me to call them first if I was ever in an accident. They proceeded to hang up on me and do virtually everything possible to avoid talking to me– to avoid ADVISING me.
It was a total shitshow; it was like being told to fuck off without someone actually saying fuck off. It made me hate the world and I really can’t over-emphasize how horrible they were. Therefore, when they should have just asked about the police report and told me to chase down the idiot who hit me, to force his insurance to pay, I was aggressively told by Progressive that I wouldn’t have any way to fix my vehicle, ever, and that I should just stop calling. The opposite of what I’d call advice, assistance, or even low-level helpfulness. So I drove a wrecked Celica for 5 years and ate my losses. I refused to lose any more money replacing my vehicle.
That was a sweet ride–my wrecked Toyota Celica, urgh. Today I have an actual insurance agent from State Farm (and a non-wrecked car woohoo!) and when me, my husband or my kids (someday) get in a car accident, the first call I make will be to our agent, and instead of telling us to fuck off we’ll get some actual ADVICE! In this world, you really have to pay extra for advocacy, service and helpfulness, and that’s a lesson learned the hard way. Otherwise, the general approach is to take the money and run, don’t look back, and sure as hell don’t answer the phone.