Taxes: Preparer versus Software

[js2012]

I have been going to a tax preparer for the past 6 years and pay $130 a year. I like him but I also notice he has these big signs up around his office about how he will not represent you if you are audited.

I am a teacher, have a school loan that will be paid off, invest in a Roth IRA, make clothing donations that are tax-deductible and take a deduction for my union dues and school supplies.

So, my question is: is it worth it to go to a tax professional or would software be fine? I guess what I'm not sure of is if the tax software will guide me through my career specific deductions. Or even if I, someone who knows nothing of taxes and withholdings, would be able to even understand it.

Any help is appreciated.
Thank you!

[ResNullius]

I don't know for sure, but I would bet that 99.99% of tax preparers use software to prepare your tax returns, virtually identical to what can be purchased in any computer store or office supply store. By the way, I pay a CPA $250 to do out state and federal returns, and I know he uses a professional version of TurboTax.

[SSSS]

Probably 90%+ of people would be better off with software.

To be sure you're not missing any deductions, you can prepare your return with multiple services (you don't pay until you file), verify they all match, and then only pay for the cheapest (hint: TaxAct). If you find a deduction in one that you missed in another, you can go back and fix it.

[Toons]

I have been going to a tax preparer for the past 6 years and pay $130 a year. I like him but I also notice he has these big signs up around his office about how he will not represent you if you are audited.

I am a teacher, have a school loan that will be paid off, invest in a Roth IRA, make clothing donations that are tax-deductible and take a deduction for my union dues and school supplies.

So, my question is: is it worth it to go to a tax professional or would software be fine? I guess what I'm not sure of is if the tax software will guide me through my career specific deductions. Or even if I, someone who knows nothing of taxes and withholdings, would be able to even understand it.

Any help is appreciated.
Thank you!

From what you are describing regarding your tax return there is no doubt in my mind you can do it yourself. Doesn't appear that your tax return is in the least bit complicated. Here is what I would do to "test the waters". Below are links to both Tax Act and Turbo Tax ,both highly regarded tax software.
Check them both out. I would "Start" a tax return with one or both of them online.What you can do is GO THROUGH THE INTERVIEW PROCESS and enter any data
YOU choose to enter,experiment and get comfortable with either tax program. You will find that the tax preparer you have been using is pretty much using some similar software when he does your taxes(you are providing the info and he is filling in the blanks).
Back to the tax software.
If you feel comfortable using the software and filing your taxes THEN YOU PAY otherwise there is NO Charge for using the software
to work with your data.
When I started doing my own taxes this is the route I chose,starting a tax return with a couple sites,deciding which software I was comfortable with then filing federal and state. I would just DELETE the account that I decided not to use.
I currently use TaxAct and have been for several years(the online version)
One again i reiterate YOU can do your own taxes don't be "afraid"

I am not affiliated with either TaxAct or TurboTax

TaxAct

http://www.taxact.com/

Turbo Tax

http://turbotax.intuit.com/

[Toons]

Delete duplicate post

[chaz]

TurboTax works fine for me. It walks you through all possible deductions. A teacher should have no trouble using it.

Good luck.

[jared]

Probably 90%+ of people would be better off with software.

90% of all statistics are made up on the spot.

[Fallible]

I have been going to a tax preparer for the past 6 years and pay $130 a year. I like him but I also notice he has these big signs up around his office about how he will not represent you if you are audited. ...

If you are audited and want a preparer to represent you before the IRS, you'd want an Enrolled Agent. That is probably what the signs mean. You'll pay a bit more for an EA. From what you've said, I'd agree with other posters that you probably could do your own, although I don't think $130 is too much to pay if the preparer is doing a good job for you.

Edit: corrects from 'court' to IRS.

[jared]

I have been going to a tax preparer for the past 6 years and pay $130 a year. I like him but I also notice he has these big signs up around his office about how he will not represent you if you are audited. ...

If you are audited and want a preparer to represent you in court, you'd want an Enrolled Agent. That is probably what the signs mean. You'll pay a bit more for an EA. From what you've said, I'd agree with other posters that you probably could do your own, although I don't think $130 is too much to pay if the preparer is doing a good job for you.

Enrolled agents without any other designations cannot represent a taxpayer in court.

[EternalOptimist]

I used several preparers and switched to doing it myself. I've used turbotax for several years and found it to be fairly straightforward. Look for deals through various firms like Fidelity, AAA

[Fallible]

I have been going to a tax preparer for the past 6 years and pay $130 a year. I like him but I also notice he has these big signs up around his office about how he will not represent you if you are audited. ...

If you are audited and want a preparer to represent you in court, you'd want an Enrolled Agent. That is probably what the signs mean. You'll pay a bit more for an EA. From what you've said, I'd agree with other posters that you probably could do your own, although I don't think $130 is too much to pay if the preparer is doing a good job for you.

Enrolled agents without any other designations cannot represent a taxpayer in court.

Yes, that's right and thanks for correcting me. EAs can represent taxpayers before the IRS, not U.S. Tax Court unless they're also members of the Bar of the Court. I've had an EA for many years and somehow began thinking of the IRS as tax court.

[mhc]

OP,

you can also use your old tax returns as a guide to make sure the software accounts for all of your deductions and such.

[Tabulator]

Assuming the hired professional uses software, is there any security or privacy reason to prefer using the hired professional? I am wondering if there is a greater chance one's information is kept anonymous when the software is used by a professional who is doing a hundred other accounts at once, instead of signing up for a TurboTax account by myself, where all the usual vulnerabilities are introduced: I would be managing my own password connected to my own social security number using my own insecure computer, and who knows how secure the TurboTax data center is, etc. I would tend to want to pay more to hire a professional if I can avoid the network security and privacy problems that are so common nowadays. Any thoughts on this, especially from people with experience?

[dratkinson]

Duplicate the CPA's work.

This is what I did when I switched from a CPA to using tax s/w.

1993 was the last year my CPA did my taxes (rental property, income/expenses, depreciation schedules,...).

Before doing my '94 taxes, I bought the '93 tax software and entered all the data to duplicate the CPA's work. The '93 s/w agreed exactly with the CPA. So I knew I could do my '94 tax return using the tax s/w.

As a benefit of doing this, duplicating the CPA's work for '93 using the s/w, I had established the depreciation schedules that were carried forward into the current tax year when I imported the '93 tax data into the '94 s/w.



You could try above idea for yourself. Use TaxACT to duplicate your CPA's work from last year. If you get the same results, then you are good to go for this year. TaxACT online Ultimate bundle, fed and state, will cost you ~$18. Online free and Deluxe bundle, fed only, will cost you ~$10.

Be aware that TaxACT will not allow you to print your forms until you pay, but it should allow you to look at individual forms on the screen. This should be all you need to verify your CPA's work from last year.



P.S. Remember to claim your $5K in paper I bonds.

[js2012]

Thank you everyone.

I will definitely look into it. It looks like I could save $100!

dratkinson, I don't understand the 5k paper I bond reference. Could you elaborate?

Thank you again!
js2012

[bmelikia]

Probably 90%+ of people would be better off with software.

90% of all statistics are made up on the spot.

Hmm. . .which one of you to believe. . .

[dratkinson]

Thank you everyone.

I will definitely look into it. It looks like I could save $100!

dratkinson, I don't understand the 5k paper I bond reference. Could you elaborate?

Thank you again!
js2012

Paper I-Bonds Purchases With Tax Return
viewtopic.php?f=2&t=109515

It's the only thing that makes doing taxes enjoyable.