[jetpilot]

Ok - now that the deadline is out of the way, I have a breather lol.

To answer your question, there are several different scenarios that could take place. Most people that hire a CPA have multiple sources of income. They could own a business, have investment income, they could own several apartment complexes. Usually the CPA will offer them financial advice and help them to keep everything in line so they will know exactly what to report on their taxes.

It varies for people who own their own business, although most people that do will hire a CPA to help them. How this person is taxed, honestly, depends a lot on the success of the business. I have seen people with huge business losses that get carried forward to the next years tax return and can result in a huge tax savings. A business owner that pulls in a lot of income from his business, will be taxed on it. A business owner can use business expenses on a tax return (most of them). Business expenses such as licenses and fees, repairs, etc. can be included. Some people have multiple properties and use a CPA to help them keep track of their information. The rental income they receive is taxed, and any expenses on the property (repairs, property tax, etc.) are included as well.

There are some people that are employees I have worked with that are employees and get W-2's (for those of you who do not know - that is a statement you get yearly...shows the amount you made from a particular job, amount you paid out in federal/state wages, etc.). I take it that you and your wife receive W-2's. Most of the people I have worked with in this situation will "itemize" their return. To explain this, everybody gets a standard deduction on their tax return. The deduction based on single, married, etc. You may also itemize your return based on the fact that your itemized deduction is larger than your standard deduction. Your itemized deduction may include charitable expenses you paid during the year, mortgage interest, as well as things like real estate/property taxes. Some people will get a high amount of itemized deductions, which will save them on their tax return.

As for tax rates - there are six brackets under the Bush tax cuts, the lowest being 10%. Should they expire, the lowest rate will be 15%, with people making $59,600 being taxed at a 28% rate. I think (and hope) something will be done to fix that. One of the lovely things people are going to deal with in Obamacare is the 3.8% surtax on medicare.

The CPA can be useful to people to organize their tax returns. While they are especially useful to people who run their own business and/or have multiple investments and properties. They are also helpful in determining how to handle tax returns, such as if a business owner should make advanced tax payments, etc.

Hope that covers it. Let me know if there are any questions or anything you would like me to expand on.

You sound very knowledgeable and conscientious, but you have left out the main reason people hire a CPA - to minimize their taxes.