I can only comment on one thing:

he said that he chooses to have the max in taxes taken from his monthly paychecks

His "refund" of $2,000 was actually money that belonged to him that he loaned the IRS for free. If he only had the amount needed taken out, he could have invested that $2,000 ($167 per month). He could have put that into his 401K, bought a Roth IRA, etc. Even at a basic 2 or 3% CD return, he would have made money. Or if he used that money to pay down credit card debt, he would have made/saved up to 21%, depending on his interest rate.

Kelly, just start asking every business owner you know for referrals. Call during non-busy tax times and talk with them. DH is a CPA and he has several clients who do their own taxes. They essentially pay him for an hour to review stuff. You may be missing some deducations, or you may not. It totally depends upon your situation. With email and faxes, you really don't have to have someone close to you as long as they understand your local or state tax situation.

Gloria

I've never heard of giving an accountant a bonus based upon the size of the refund.

I'm self-employed working out of my home office, too. I have a "genius accountant" and he's worth his weight in gold. I highly recommend finding somebody--and asking business associates is a good place to start.

Firstly, I'd just like to re-iterate what's already been said here. A refund means that you've paid too much taxes - a genius accountant wouldn't let that happen. The bigger the refund you get from the IRS the worse you're accountaning practices are.

Giving a bonus to to an accountant based upon the size of a refund shows a fundamental misunderstanding of what a refund is and what an accountant does. I would be leary of taking any financial advise from your GM dealer friend or his accountant.

A tax preparer will go through your box or receipts once a year looking for deductions, an accountant should do much much more than that. There are many ways to receive renumeration from your business; pension plan, salary, dividends (if you own a schedule C corporation), etc. An accountant should be able to show you how to extract the maximum ammount of money from your business while paying the minimum in taxes.

I've had a small business for about three years now. I haven't had a single refund and I doubt that I ever will. However, my accountant has saved me tens of thousands of dollars in taxes as well as giving my invaluable advice on the financial aspects of running a business. Speak to an accountant, or better yet a CPA about your business and your wont regret it.

I missed the bonus part in the OP. That's unethical, no question. The accountant should have nothing at stake with the outcome of the return. Stay away from that accountant and ask for other referrals.

Gloria

I believe that it is illegal for a paid tax preparer to receive a payment based on the size of a taxpayer's tax liability, balance due or refund.

A good tax preparer can help you with tax planning. You don't need to pay CPA fees to get the same service. Word of mouth is the best way to find someone to help you with taxes.

Also, a Schedule C buisiness is a sole proprietor, doesn't pay dividends or have stockholders and a C Corp is a company with stockholders that may pay dividends.

I don't know if the refund based bonus is "illegal" in your state, but it is certainly unethical if the person in question is a CPA.

As others have pointed out here, don't get fooled by the big refund your friends are getting at the end of the year. The object is not to get a big refund, but to properly plan so that you get no refund and owe no additional tax. The thing to concentrate on here is the tax deductions that are available to you and your unique situation. As a former CPA (I am still licensed, but have moved into industry), I would suggest you find a local CPA to provide you with the guidance you need. As for your friend's accountant with the "bonus" plan, I would steer clear of him. Your friend may soon find his "hobby" has become the hobby of the local IRS agent. Another thing to remember - no matter what type of tax advice you receive or who prepares your return, you will sign the return and you are ultimately responsible for its accuracy. Just ask Willie Nelson.....

Thanks for all the responses. My goal isn't to receive a refund, I was just illustrating some extreme examples of people obviously doing a better job than me at maximizing their deductions.

I'm going to seek out a financial advisor. I probably need to have my investments and overall financial outlook checked as well.

Do financial advisors/planners also do taxes?

I would get a CPA. My CPA does everything, planning, taxes, invetments, etc. He's licensed with some sort of a broker's license for investments.

I am self-employed and don't have time to run from advisor to accountant, etc. He keeps everything straight for me--would even write checks if I wanted him to...LOL, although I still do that myself. I may give that up soon too, though. Time is short when you're the only one in the office!

Yes, its illegal for an accountant to receive a bonus based on your refund. The IRS would be PO if they knew.