FISCHER, CARRILLO & ASSOCIATES

Turbo Tax v. Professional Preparer

 It is without question that Turbo Tax and other over the counter tax software companies strongly market their products. Based on what I have been hearing from so many individuals their marketing ploys work: "Why do I need a professional tax preparer, when I can just buy Turbo Tax and get it done cheaper by myself?”

Before embarking on preparing a personal tax return, tax payers may benefit from essential tax guidance. Many do not consider how various software glitches, situations and missing details can hurt them financially.

#1 What will you do if you are audited?
Yes, you may be audited. Even if you believe that you have the simplest return, even if the program has not shown you any red flags, the I.R.S. may audit you. Simply put, you don’t know all the current I.R.S. audit criteria and neither does the software. Do you realize that the I.R.S. is increasing their audit rate 35% over last year? Who do you call in that time of need? The software companies? No-their help is limited! Why put yourself in a bad position?

#2 Did you get all your deductions?
Probably not. Yes, the over counter software packages do walk you through a basic interview process, but this limited software will not dive into many tax loop holes and areas of vagueness. Unfortunately, the overly simplified help sections explain only the most common types of expenses and allowances. Many a time, the software abandons you, forcing you to “contact your local Professional” and pay more, when you try to get in depth tax information or guidance. These programs are designed for the most basic type returns with the most basic types of questions and prompts. Over the past 13 years of preparing taxes, I can not even begin to count the number of times that I have had a client tell me that they self prepared their previous years taxes, and when looking at their returns, I found either many errors along with missing deductions that they are entitled to receive.

#3 Ever Changing Tax Laws
Yes, the tax laws change each and every year. With these changes come little hidden secrets and details which software programs will miss. Without question, this puts you, the tax payer, in a very dangerous position. Tax preparation is not your line of business. Would you try to self represent in a criminal trial in court? Absolutely not! You would hire a professional that knows the laws, knows what to say and when to say it. You would look for someone that is knowledgeable and able to protect your best interests. Yet, every year, thousands upon thousands of tax payers self prepare their tax returns based on a false sense of security developed by a marketing department in a mega-corporation, making you feel confident and safe. Yet, the reality of the matter is that you are jeopardizing yourself in more ways than you realize, exposing yourself to an audit that you may very will lose! The result? You will have to pay painfully huge amounts of unpaid taxes, penalties and interest.

Simply put, self preparing your tax return is like playing Russian roulette. Are you feeling lucky?

#4 To Take or not to take deductions?
So you have followed the guides and questions, and you think you qualify for that in home office deduction or a non-reimbursed employee expense. Are you certain? Is there a grey area that may or may not qualify or disqualify you? How do you really know without actually seeking out professional advice or spending countless hours to make certain? You wouldn't know. Perhaps the software didn't ask you the right questions, or point you in the correct direction. You will overlook important deductible items and expenses. This is always a loss for you.

#5 Your Time and Value
How much is your time worth? I have used the over the counter software programs before, and, to be frank, they are not simple, quick or speedy. I have spent at least couple of hours going through the interview process for a simple return. If you are not a professional tax preparer, you will struggle to make sure that you cross all of your t's and dot all of your i's. So you want to save a few bucks by paying only $40 or so for a tax software. After spending 3 to 5 plus hours of your time and your $40, is it really worth it? Did you maximize all your expenses? Are you within the safe zone to reduce your audit rate? Did you understand the depreciation schedules? Should you have taken the MACRS Straight Line or accelerated? Would it have been better to take the Section 179 one lump sum deduction? These are all good questions for the professional. But, for the novice, these are not easy issues to resolve.

Conclusion
I personally believe that unless you are in the profession of tax preparation or have a simple 1040ez to file, leave it to the professionals. We will look out for your best interest! The typical cost of $150 - $250 is well worth the 1/2 hour for the personal 1-on-1 interview that we conduct, the magic we put into the numbers and the complete print out of everything you need. All you have to do is return a second time for 15 minutes for a quick review, you sign and mail. After an easy 45 minutes of your time, you enjoy a total peace of mind that you have received every possible deduction, that your refund is most likely larger, and that you are well below the radar of the wonderful I.R.S.