I recently read an article that breaks down the differences in the two most popular tax preparations software; Intuit’s TURBOTAX and H&R Block’s AT HOME (previously knows as TAX CUT). I am going to post some of the interesting findings and add R&G Brenner’s comments underneath:
TAXES can make people do silly things, like investing in chinchilla and ostrich ranches or, over the last several years, buying a second home — which was a bad move just about anywhere in the United States.
For some folks, buying tax-preparation software may be nearly as wrong-headed…And if your taxes are complicated, you may be better off enlisting a professional’s help.
Obviously, R&G Brenner’s business depends on paid tax preparers, therefore it will not shock anyone that I agree with the above statement. For those with no experience with tax law it is almost NEVER a good idea to attempt to self-prepare your taxes. This is where those who think they are saving $100-$200 dollars could be costing themselves thousands of dollars. Adding dependents, itemized deductions, multiple W2’s/1099’s, unemployment income or rental income drastically increases the complexity of tax returns. And regardless of how good the automated step-by-step instructions are in do-it-yourself software is, they routinely miss deductions and credits which can dramitcally affect this size of one’s refund or the amount of taxes owed.
About three of every four filers receive a refund, and filing online can accelerate the process. You must use software, either personally or through a preparer, to file electronically, and e-filers can see their refunds in as few as 10 days, Mr. Williams said. Mail filers typically wait at least six weeks.
At R&G Brenner we do NOT charge any additional fees to file electronically. A lot of firms like H&R Block continue to charge extra fees to e-file. Read the fine print. Depending on which version of do-it-yourself software you use, there can be additional charges to e-file and that needs to be factored into the bottom line. And heaven forbid you need to file multiple states or you buy a software package that doesn’t include the forms you require. This all equates to more fees than the enticing low pricing they advertise or the lure of a “free” tax return. Not to mention the actual time-factor involved! But I will leave that for a little later…
Before you buy a tax-preparation program, understand that it won’t be a panacea. You still have to keep good records — they matter mightily if you’re audited — and, in complicated situations, you may need to research tax laws yourself. The software can’t tell you whether tuition for your Spanish class is deductible, only that job-related educational expenses might be. What’s more, it won’t ease the headache you may get by trying to find answers on the I.R.S. Web site. The agency provides reams of guidance, but the rules can be murky for people who muck about with them only occasionally — even pros…
The biggest shortcoming in each program isn’t what’s in it but what’s not: You’ll have to laboriously enter your personal data. If you’ve used tax software previously, you can transfer some of your information. But you’ll need to update entries to reflect last year’s earnings and expenses, and that takes time.
Well said. Just because you buy tax software doesn’t mean that your taxes are going to magically prepare them self. Someone (you) is going to have to dive into all your receipts and expenses to organize them and determine what is deductible and what is not. The rules change if your are an employee, independent contractor, self-employeed or a combination of the three. Furthermore, all tax software has to be approved for release BEFORE the beginning of the current tax season. The biggest problem we see with this is that many tax laws are not completely settled on before January 1st. Thus, no tax software is ever fully complete out of the box. For example, the IRS ruled that charitable donations for earthquake related relief for Haiti was ruled deductible for tax year 2009 if made before February 28th of this year. There is no way do-it-yourself software will know this unless you continually apply updates as they are released. Failing to install updates can have serious consequences in the miscalculation of your tax return. It could take years for the IRS and/or state to catch those mistakes. And for those that owe taxes and do not pay all that is due, it could result in high penalties and accrued interest…sometimes more than your tax liability itself.
As your taxes become more complicated, the programs’ guidance can become less helpful…My wife and I, for example, moved from Philadelphia to Massachusetts in 2008 and, as a result, paid state and local taxes in several places last year. Philadelphia alone imposes a variety of taxes on the self-employed, and I managed to get tangled up trying to record all of them. In both programs, I had to jump back and forth repeatedly between the interview and the underlying forms to ensure I got them right. In several instances, I had to override the interviews and record information directly to the returns.
This is playing with fire. Yes, sometimes the only way to deal with a unique tax situation is to manually override the warnings that are specifically designed to prevent errors. If you do not know the tax laws of these special situations, you are asking for trouble. The consumer do-it-yourself tax programs are bogged down with thousands of “error” notifications which can make even a simple override harrowing and nerve racking. At R&G Brenner we do not use these overly simplistic tax programs. We use an industrial tax program specifically designed and integrated to handle every state in the union that imposes an income tax. There is rarely a need to override a program verification error…but when there is, you can rest assured our professionals know when to do it.
[No do-it-youself tax program] is certain to deliver you from tax-time stress. It’s the hard questions, like puzzling through the alternative minimum tax, that eat up the most time and cause the most worry. When you grapple with those, you may still be gulping antacids and aspirin come April 15.
The biggest factor in preparing your own tax return aside from the stress of organizing your records, determining witch tax laws apply to you & overriding the program is the TIME you MUST devote in learning all this stuff; and in many cases your time is way more valuable than small fee you could have spent having a tax professional prepare your most important annual financial document. Unfortunately, the recent economic crisis has put a lot of people out of work and thus they have a lot more time to attempt to prepare their own taxes. However, just because you can, doesn’t mean you should. There are a lot of people out there that love to cook for themselves. But even that takes practice to become adept at it. I find it mind-boggling how many people are willing to take the risk preparing their own taxes without any prior experience. If you miscalculate your taxes in the IRS’ favor, they are not going to contact you saying “you qualified for this credit, so here’s an extra $1000”.
If you are one of the many that has attempted to prepare your own taxes, don’t worry. At R&G Brenner we offer a FREE consultation for your current years taxes as well as a FREE review of your prior three year’s returns. We will only quote you a fee if we can do better. Furthermore, we have a tax software trade-in whereby we will reduce our quoted fee by the retail amount you paid for your software. We also offer many more attractive promotions that will save you time and money (including a FREE tax return when your refer 3 new clients). So when it comes to your tax return leave it to the Professionals. No need to take unnecessary risks. Go Green – Go R&G Brenner.
Source: NY Times