First I’ll say there nothing wrong with doing your own income tax returns using any of the tax return programs or the good old pen and paper method. I’ve seen many taxpayer prepared returns that were spot on. I’ve also seen the horror stories on these types of returns, but lets focus on the benefits of a professional preparer, specifically an Enrolled Agent or a CPA.
- Greater investment in tax education. To become an Enrolled Agent you need to study and pass a series of 3 exams that run 3-1/2 hours each. Then we are required to have at a minimum of 72 hours of documented continuing education over a period of 3 years. Most EA’s greatly exceed this minimum by reading professional tax magazines, on-line training, professional meetings and tax seminars.
- Access to reference databases and professional organizations. Professional preparers have access to proprietary knowledge databases, manuals and quick reference material that is more detailed than standard off the shelf tax reference books. We have access to other experienced tax professionals within our professional societies and other tax experts for consultation on difficult situations.
- Sophisticated tax software. For example Intuit that makes Turbotax also produces professional versions that allow much greater flexibility in producing the return. This is not question and answer based software, but dataset input and analysis software. Most of this software will run several thousand dollars a year for licensing.
- Experience with hundreds or thousands of tax returns and scenarios. Like any task or job experience results in a better final product. We know what questions to ask to find deductions and keep our clients out of trouble with the IRS. There are several gray areas in tax administration and we know how to navigate those areas.
- It saves you time. We’ve already done the research and are ready to go at tax time. In the time it would take you to read up on the tax changes I will already have your return completed. You benefit from our economy of scale.
- There are unknown unknowns out there. Not every tax issue is addressed or correctly addressed on the internet. You might not understand exactly what Turbotax is asking and misinterpret what is meant. I’ve seen this situation cost taxpayers thousands of dollars.
- We optimize your tax refund. Often there are several ways to account for college spending, but which way is the best way? When your children start making their own money is it better to include them on your return or have them file their own? Should you file married jointly or separately? Should you be a sole proprietor or a corporation? These are the tax issues we work through each day to come up with the best results for our clients.
If you feel competent to complete your own return and many people are, then go for it. If you have some doubts then at least have a professional review your return. We provide tax return review and tax consultation for several clients that go the DYI route. If you are interested in any of our services just give us a call.