Tax Preparation Software Saves You Time & Money
With the start of tax season here upon us, many people are looking at using tax preparation software. Though still a novelty as recently as five years ago, tax prep software has become big business offered by many well known names.
There are a number of reasons that ‘do it yourself’ tax software has taken off despite tax forms that seem to get more complicated, with that in itself, perhaps being one reason. As more and more people have begun using’at home’ tax software, news of use has traveled virally as more people now feel comfortable with it’s use as others confirm it’s validity. Accountants, as with many professionals, have slowly been raising their rates and the cost for an individual or family tax return has become a significant expense in many cases. This is especially true for small businesses.
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Another significant problem is that many qualified accountants get inundated by their larger corporate clients, and individuals as well as small business clients get shuffled to the rear. This is somewhat understandable from the accountants standpoint, but this doesn’t help aleve the stress and concern of the smaller client. In fact this just increases their frustration level.
They all offer the ability to e-file your taxes which is a big advantage and cost savings, since you now don’t have to worry about sending by certified mail, not to mention that you should receive your refund much quicker. Plus they all offer the ability to do your state returns also, usually for a small extra charge.
What’s even more amazing is that the price from most the leading vendors is almost nothing or even free for a basic federal filing. But the price for even the full blown version from most the bigger names is less than $120.00. That’s less than an hours time with most accounting firms. Some services also offer phone or online support if you have questions while using the software.
The result is that you’re now seeing the online tax services and software reach far beyond just filing your tax returns and tax preparation software as more of them now offer everything from retirement advice to family tax strategies. Even industry leader H&R Block is now strongly pushing its ‘at home’ service for even investors and rental property owners. Both them and industry leader TurboTax spend heavily on promoting their product during tax season.
You can expect to see the market for tax preparation software continue to grow as the features continue to grow, as well as the fact that you can now download it right off the interet in just a few minutes doesn’t hurt either. The net result is that the software can save you both time and money. Price is no longer prohibitive and as more and more people become familiar with the products and what they offer then I expect to see this market continue to grow.
The Truth about Tax Preparers and Tax Software
It is a question plaguing more and more taxpayers each year, “Should I hire a professional or do it myself?”
Tax preparer advocates say a professional can dig for deductions a software program will never find. While tax software advocates argue the programs are quite sophisticated and will save you a lot of money in tax preparation fees.
Whether you choose to do it yourself or hire a professional, it is important not to make any impulsive decisions.
Tax Preparer 101
Hiring the right tax preparer should be based on making sure his or her expertise matches your needs and financial situation. In other words, choosing the first tax preparer you see in the yellow pages or internet search is not the best way to go.
Except for California, Maryland and Oregon, there is no oversight for tax preparers who are not an attorney, certified public accountant (CPA) or enrolled agent (EA). In other words, the education and ethical standards these tax preparers go by are set at their own discretion.
In California, anyone who is charging a fee to prepare tax returns and is not an attorney, CPA or EA, is required by law to register with the California Tax Education Council (CTEC). All CTEC Registered Tax Preparers (CRTPs) must complete tax education courses each year and keep a current bond before they can prepare tax returns professionally.
In Oregon, all tax preparers must be licensed through the Oregon State Board of Tax Practitioners. Each tax preparer is required to pass a competency test.
Maryland also recently passed legislation in 2008 to require its tax preparers complete education requirements and pass an exam before they can prepare tax returns professionally.
As for those of you in other states, choose your tax preparer cautiously. You should hire a tax preparer that can provide proof of errors and omissions insurance and continuing education certificates; and unless the tax preparer is an attorney, CPA or EA, do not be afraid to question tax preparers who claim to be a “certified” or “licensed.” If there is no state oversight, how are they certified or licensed?
What’s in the Box?
Many people are ditching the paper and pencil route and seeking tax software programs for help. After all, it promotes three features most consumers want:Speed, ease and affordable prices. The average program can cost $100 or less.
Fans say it is fool proof and is as good as a tax preparer since both rely on the accuracy of information you provide. An up-to-date program will have the latest tax law information in its database. Plus, if you need tax advice or help, a live support team is usually available.
So why not use it? It depends on you, literally. A qualified user must be honest and thoroughly accurate in data entry. Not all innocent mistakes, such as wrong answers to misunderstood questions or transposed numbers can be caught.
These programs are also considered “self prepared,” which means you, and only you, sign the tax return. If the IRS catches a mistake, you, not live support, are responsible for it.
Bottom Line
Do your research. Get referrals. Stick to your comfort level.
Whether you hire a professional or purchase a software program, remember that you are the one ultimately held accountable for the information on your tax return. Choose wisely.
For more information visit www.ctec.org or call (877) 850-CTEC.
CTEC is a nonprofit organization that was established in 1997 by the California State Legislature to protect the public by registering tax preparers within the state.