Why should I use a paid tax preparer?
You might ask: "With plenty of economical tax preparation software available today,
what is the value in paying someone else to prepare my taxes?"
There are several software suppliers who are making a lot of money
because many people figure they provide a whole lot cheaper way to do their taxes.
With all the copies of software sold, surely it must be perfectly
reasonable to prepare your own tax return. After all, you do most of the
work in getting numbers together anyway, right?
Probably not - unless you have a W-2 and not much else to consider.
Many people pay a tax expert each year to prepare their tax return, and
certainly they believe that they are receiving value for that. What value?
Lower Audit Risk: In general you expect your audit risk to be
much lower if your tax return is prepared by a competent tax professional
who approaches tax returns with a high degree of integrity. That person
will ensure that you do not claim deductions that are not allowed. He
or she should also be able to help you identify what income must be
claimed. Taking these two steps will go a long way toward avoiding
that dreaded audit by the IRS (or state tax authority).
Saving Money: What? After spending anywhere from $100 and up for
a prefesionally paid return, how does one save money compared to software
purchased at a discount warehouse? By exploring and taking advantage of
favorable tax positions on many situations. Some of these will be caught by
personal software, but not all of them. Every preparer has their favorite
story, but one of ours is the unmarried couple who had a child and prepared
their own taxes. But after finishing the work, they thoguht it might be
worth getting a professional opinion. They had done nothing wrong. But they
did not take the most advantageous tax position on a couple of things.
After a few changes and legally moving some things between their two returns,
their new refund exceeded their self-calculated one by over $4000.
That kind of a story does not happen often, but it does happen.
Minimizing Taxes:Coupled with the two ideas above is
the opportunity to discuss future plans
and ideas with your tax advisor in advance. Many people pay taxes that
could have been avoided had they met with a tax advisor before taking
some action.
Saving Time: Most people can do a respectable job at completing their
own tax return if they spend enough time studying the material. But how
many of us have all the spare time that we want? How many people set aside
a Saturday to "do their taxes" and at the end of the day have a completed
return, and a small queasiness in their stomach? Most of our clients
assemble 90% of their materials by stashing all the tax statements
that come in the first 5 weeks of the year in a large envelope.
Then a couple of appointments that require much less than 30 minutes,
and they are done!
So the bottom line is:
- Peace of Mind - the tax return is done correctly
- Tax Planning - minimize future tax liability
- Easy - very little time or effort
For most people that is worth a few extra dollars,
even if they do not save the difference in taxes.
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