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| *Loan,banking and credit>>>tax software |
Get someone to prepare my taxes, or use software? |
I've seen quite a few commercials from H&R Block, Turbo Tax, etc. that say, "Don't use them, use us!" What are the pros and cons to using a tax firm or using a set of software to prepare my taxes?? This is very long, but probably the best answer since I don't know your exact situation. Gives a pretty good breakdown on all of the options. If you do it yourself: If you earn most of your income from wages and you take the standard deductions (raised for 2005 returns to $10,000 for a married couple filing jointly or $5,000 for singles), or if you have few itemized deductions, completing the 1040EZ, 1040A short form, or even the 1040 long form should not be too difficult. And, there's no shortage of places to turn for help: Books. They include "Taxes 2006 for Dummies" and J.K. Lasser's "Your Income Tax 2006" (for 2005 taxes), which can be bought for less than $15 each, and often provide more guidance than the Internal Revenue Service's own instruction booklets. The Internet and phone help. The IRS Web site, www.irs.gov , provides some help and is a convenient source for publications and forms as well as links to state-government tax sites. Forms and information taxpayers need to file their returns is consolidated under the 1040 Central link on the home page. This year, the IRS has added a calculator, called the AMT Assistant, to help taxpayers determine their AMT liability on their own. Check www.irs.gov/app/amt . The IRS taxpayer assistance hotline at 800-TAX-1040 also offers help. However, some studies have found hotline help inconsistent. The IRS also operates Taxpayer Assistance Centers that can help you solve individual and small-business tax problems. You can check your local phone directory for one in your area. States also have tax help lines, as does AARP, some public libraries, and social-service agencies. The elderly can turn to a number of free services: AARP, Volunteer Income Tax Assistance (VITA), and Tax Counseling for the Elderly (TCE), which are available in most communities. To find them, call the IRS branch near you. Software programs. Best sellers include TurboTax Deluxe, $39.95, which this year incorporates a free download of one TurboTax State product, and H&R Block TaxCut Deluxe, $29.99, also including one state program. This year, neither company is offering rebates, though Intuit will honor rebates for TurboTax bought before October 13, 2005. Web-based tax-preparation services. These are proliferating, blurring the distinction between doing it yourself and hiring a pro. At H&R Block, for instance, you can have your taxes calculated online for $19.95 ($5.95 if you file a form 1040EZ) with a software program. Or you can have your taxes reviewed, edited, signed, and e-filed by a professional after you enter your data online for $79.95. Prices include preparation of federal form 1040 only; extra schedules and state and local tax forms add to your bill. There are more and more Web-based services. Some use TurboTax software; others use their own proprietary software. Most Web operations allow you to file your return electronically with the IRS. Doing so may cut the time it takes you to get your refund to less than two weeks. Before using any Web service, check its privacy and security policies to see how well the company plans to protect your information. Ideally, your information should not be shared with anyone without your specific permission. Consumer Reports will be testing both software and other tax preparation services in the future. DO-IT-YOURSELF DRAWBACKS You will have to invest more time and brainpower than ever before. A dozen years ago the IRS said it took the average taxpayer 9 and a half hours to complete the 1040. This year you can expect to spend 16 to 22 hours, including preparation of materials and assembly, depending on whether you do it by hand or use computer software. That total doesn't include preparing state and city tax returns. A bigger drawback to doing your own taxes is that you may make errors and/or overlook legitimate deductions. Depending on the tax references or software that you use, you also could miss out on valuable tax-planning advice, how to reduce your future tax bills by increasing before-tax contributions to your 401(k) or 529 College Savings Plans, for example. "Do-it-yourself software can't give you wisdom and judgement," says John Henry Low, a financial planner in Pine Plains, N.Y. If you figure your taxes without benefit of tax software or online calculators, you also risk making mathematical errors, so check your arithmetic carefully. Even if you use a computer, inputting errors occur, so check each field carefully to make sure your figures correspond to withholding and expense records. (Don't overlook this step even if you have your return professionally prepared.) Occasionally, glitches also show up even in reputable tax programs. These are the options if you have someone else do it: Regardless of whom you hire, we recommend you follow these precautions: Never choose a tax preparer based on a promise of a large refund. (With proper tax planning, your tax liability should match withholding and other taxes paid during the year. Getting a big refund means you gave an interest-free loan to the government.) Reach an agreement on a fee up front. The fee should never be based on the size of the refund. Ask for referrals from friends and business associates. Find out if the preparer's risk tolerance matches your own, ask how many returns he or she does that are similar to yours, and how many clients have been audited. Never sign a blank tax return or form. Ask the preparer what precautions he or she takes to protect your personal data. Ask whether the firm conducts criminal background checks on employees and how they dispose of old returns (they should be shredded, burned, or pulverized) and protect computer files. Check the return carefully for errors (including names and Social Security numbers) before signing it. Retain a copy for your records. WHICH TYPE OF PREPARER IS RIGHT FOR YOU? Here are the various types of tax preparers and their qualifications, from least to most expensive: Your moonlighting friend or relative. Cost: Cheap. Pros and cons: Convenient, but no quality control. He or she could be well trained, highly credentialed, and up-to-date on tax law, but most likely isn't. Storefront tax preparers and national chains. Cost: Varies regionally, but usually less than full-time tax pros. Generally, there's a fee for each form, and you could pay $200 or more for itemized state and federal returns with additional schedules. H&R Block says the average its storefront clients paid in the 2005 tax season was $150. Pros and cons: Convenient but not always inexpensive. The chains offer in-house tax training, but the minimum credential required for part-time seasonal staff is usually a high-school diploma. Pros with more expertise may work side-by-side with new recruits. And as chains try to become one-stop financial shops, you're likely to be pitched everything from high-cost refund anticipation loans to second mortgages (H&R Block alone managed 812,288 active brokerage accounts and serviced 435,290 mortgages in 2005. Consumers Union, the publisher of Consumer Reports, has advised consumers to steer clear of high-cost refund-anticipation loans.) Tips: Get the most qualified person available. Ask about year-round tax help. Refuse refund-anticipation loans, which come with astronomical interest rates. If you need money fast, use the IRS's e-file program instead. If you're pitched other investment, insurance, or loan products (such as IRAs or second mortgages), compare them with similar products at banks and brokerages. Preparers should be licensed to sell insurance or securities if they offer them. A prospectus must accompany an investment offer. Enrolled agents. Cost: Usually more than a chain-store tax preparer, less than or comparable to a certified public accountant. Pros and cons: Enrolled agents are the only federally licensed tax specialists. They must pass a national qualifying exam and take 24 hours of continuing education on tax law each year in order to renew their license every three years. Many are former IRS agents or employees. They can handle complicated individual returns as well as those of small businesses and corporations. Some are also credentialed as financial planners. But there are only 40,000 enrolled agents, or about 1 for every 8 CPAs. Tips: You can find an enrolled agent by going to www.NAEA.org or the National Association of Tax Professionals, which includes enrolled agent members, at www.natptax.com or by calling NAEA at 800-424-4339. Certified public accountants. Cost: $100 to $300 per hour or more. Pros and cons: CPAs have been trained in business and accounting, passed a state-licensing exam, and met other statutory requirements. They're qualified to prepare financial statements as well as income taxes. But not all CPAs specialize in taxes. Some are credentialed financial planners; more and more CPAs also sell investments and insurance. Tips: Seek a CPA with tax expertise and familiarity with your occupation. If the CPA wants to sell you investments, annuities, or life-insurance products for tax-planning purposes, evaluate them against similar products sold elsewhere. To find a CPA in your area, go to the Web site of the American Institute of Certified Public Accountants, at www.aicpa.org/states/info/inde... , or the National Association of Tax Professionals, at www.natptax.com , or check the phone directory. Ask the CPA for references to check before you settle on the professional you want. Tax attorneys: Cost: $200 to $400 per hour or more. Pros and cons: Tax attorneys have passed a state bar exam and trained in the field of tax law. Most don't prepare individual income-tax returns, but they can plan your estate, draw up wills and trusts, and structure business deals to reduce tax liabilities. They also represent clients in disputes with the IRS and other agencies, and defend them in court. Tips: You probably won't need a tax attorney except for estate planning or business advice. Find an attorney through your state bar association, but ask for references before making a final choice. Source(s): Consumer reports website consumerreports.org Probably the best and least biased source of consumer information available for $26.00 a year Software is easy and cheaper than getting someone to do them for you. Screw that, if you are an average Joe with no side business and one property, TURBO TAX will save you just as much money as H&R and the Turbo tax program is way cheaper. It's a step by step piece of cake process. Get the basic federal tax version (unless u pay state taxes, then get the fed and state combo), and you DO NOT need the super duper maximize special addition bullcrap. Just the basic edition. If you don't itemize deductions or have any investments or self-employment money (1099s), the basic tax software will do you just fine. it depends completely on how complicated your taxes are. if you have investments and interest income or had major financial changes in '06 then go to a reputable tax preparer. find one who has a small company and has been doing it for a long time. some of the big name companies hire new preparers each year who really do not do the job of a seasoned preparer who knows how to nudge the numbers (of course not falsify) in your favor. if your income was very simple like just from a job then the turbo tax software works really well. my family owns and operates an accounting firm/ tax company and one year when my income was simple i bought turbo tax and did it myself. of course it kind of ticked them off but i had my mom recheck it the next year and it was perfect. Big companies like h r block don't have CPAs working in their offices. I would use an accountant rather than go to one of them. I would reccomend preparing them yourself if you have some general knowledge of tax law. If you answer the questions on the software it will prepare everything properly. That's what they do at h & r block. If you don't know much about taxes and don't want to pay an accountant a whole lot of money. Even if you don't trust going to a small store. The big stores are ok. The only thing is that some of the big companies try to get you to buy their products (like RAL or AR) which will reduce your refund. |
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