After going through some of the tax preperation software threads, it appears that some don’t trust tax software, or that doing taxes is somehow “complicated” to understand. Pre-software, I can understand the complications. I’m curious as to the reasons. The software is pretty straight forward and asks you everything you need to know. And you can jump to any section of your tax form to view anything you want, even override things. All in all, it’s pretty easy to use, and you can come back to it and modify it up until you’re ready to file. So I’m curious, why would anyone still spend hundreds to get their return done by a “professional”?
I went from doing my own taxes to hiring a professional the year I had to file in three different states. These days, when I have weird-ass forms like “rent gained from farmland”, well, I want a pro to handle it so that I have their guarantee to help me out if I get audited. It only costs me somewhat over $100 for married, filing jointly.
I use the software now, but the year that I had to file in two states (as well as federal), it was a nightmare. Right now, I only file in one state. But I work at a law firm. Someday, perhaps, I could become a partner at that law firm. If I do, apparently, I have to file taxes in every jurisdiction where the partnership makes money, which is a bunch of states and several countries. So at that point I’d hire a professional. $300-500 to have someone do it for me is well worth it.
I suppose, as Ferret Herder’s post foreshadows, it depends on how complicated your tax situation is. If you are single with a modest income, no dependents, relatively few deductions and have lived in the same state all year (like me) it’s pretty damn easy to do my taxes myself. I did buy TurboTax this year for $19.99 (and I used a giftcard I got for Christmas so I really didn’t spend anything) and it saved me at least one $30 credit right off the bat I wouldn’t have known about otherwise.
If I was a millionaire real estate tycoon with a load of complex investments, deductions etc., I’d get a professional.
I prepare my own tax return. My finances are pretty straightforward. I can’t see the point in spending money to hire a professional or buy a software package.
I do my own taxes. I may have to go to a professional this year to take care of the returns for my parents (who both died during 2006). But I’ll try it myself first.
Apart from pure stubborness, I use the ability to do my taxes as a baseline for other projects. For instance, since I can do my taxes but never figured out Medicare Part D, that was a sign that the Medicare plan was ridiculously complicated.
We do use the software (having formerly paid someone to do it). I will say that there are times when the software doesn’t give me enough information and I have found it confusing to know what to put where.
For example, my husband does consulting work in our home office, which he also uses for his salaried job. I report the office as an expense for both “jobs” and the software doesn’t always explain what’s going to happen to what I enter. I have had to trust it to do it correctly. On many things, it will tell you why it’s asking something and how it will handle it, but that information is not as thorough as I’d like. Neither is the information on depreciation of assets used for a business. It gets a little better each year (they provide more and more explanation each year, presumably based on comments from users who find things confusing) but there are times when I could see the value of having a person to bounce these things off of, or provide the assurances.
GIGO.
If you are a normal W-2 Employee and you don’t itemize, you are an idiot if you don;t do your own taxes.
If you have a Sch C then you are an idiot if you do.
If you itemize, then you are likely costing yourself savings about what’d they’ll charge you.
There is no way that any non-tax expert is going to do Office in the Home right. Sorry.
My Bro is an EA, and he does mine (for free) and I have tried to do them without him. Once you have a Pro do your taxes and the next year is about the same, it’s not so bad. But otherwise, you are going to miss deductions. Oh sure, the Program will do the Math right.
I’m Canadian and I know tax laws are different up here than down there, but the broad issues should be similar.
I decided a few years ago that tax software (Quicktax in my case) was worthwhile because it provided some assurance that I was adding everything up correctly and not forgetting any important bits. In addition it meant that I could submit my taxes before I got all my receipts as long as I knew what was going to be on the missing receipts (notably my Jan-Feb RRSP receipts), and it meant that I would usually get my refund within a week of when I e-filed it.
My return this year is going to be a bit quirky because of a little contract work I did after I was laid off as well as dealing with my severance pay and I was almost tempted to find a human to do my taxes for me this time, but I poked through the relevant rules and decided that I could still make sense of them on my own.
I used to do our taxes every year. They’re not horribly complicated but we do have income from a number of sources, trade stocks, co-owners of businesses, etc. It would take around 8 to 10 hours and I’d be pretty worn out.
Switched to tax-prep software a couple of years back. Probably found most refunds I was due but it took me down a lot of wrong roads too.
Last year we hired a tax accountant. He came to our house, spent a little over an hour asking us questions and charged I think around $125. He’ll be visiting us again 2/28 at 12:00, at which time I’ll make an appointment with him for the next year. For us, it’s the only way to go.
I have my business taxes done by a professional, I do my own via Turbo Tax. I just feel more comfortable trusting my business stuff to a professional.
I wouldn’t make the blanket statement that it’s foolish to do your own taxes if you need Schedule C.
My part-time delivery job is paid as an independent contractor. In that Schedule C, or in recent years C-EZ, requires only a figure copied from a 1099, minus car expenses from a
notebook in my glovebox, I’d hardly think it wise to waste money on a preparer.
If I had multiple contracts with multiple firms on both the Nebraska and Iowa sides of the Missouri River, I’d still try it myself before surrendering.
I don’t get my math skills challenged enough.
Just in case bad genes don’t get me before old age does, I want to keep my mind tuned up; and income tax is an excellent mental workout.
I do not do my own taxes. There has been a change in the tax law sometime in the past 20 years that keeps me from getting a refund – ever. I tried doing my own taxes several years ago, paid for software and all that, and it told me I owed thousands of dollars in income tax. I took the whole mess to a tax specialist, paid another $250 to find out that I only owed hundreds of dollars. Ever since then, I’ve walked my forms directly to the tax specialist.
We used to use H&R Block, but then we were turned on to the free tax preparation deal through AARP. Ours is not terribly complicated, so we love being able to hand it to someone else to mess with.
I am a convert.
I am also a software professional who used to believe that everything that could be done by a human could be done by a machine. Then I met an enrolled agent that showed me where the tax laws conflicted and needed judgment to be exercised in the gray areas. As my life and finances have become more complicated over the years, I would rather pay someone who does this, who goes through professional development to stay current on the latest changes, and who has the experience to manage the gray areas for me.
I should say that I also do not do my own dentistry, my own surgery, or my own transmission overhauls.
I laugh at the commercials where the woman tells her husband to “ask the box”. This is so true. Some of the software (HR Block’s software, I believe) actually has the ability to call a professional if you get stuck. That is probably the best balance. I also hear that you can “Ask a Tax Professional” on Block’s website and engage some of the EA’s that are there now for a small fee.
I can do my own taxes. I use software if it’s free because it makes the entire chore easier. However, if TaxAct started charging me, I’d just go back to doing it myself.
I do my own taxes. I use Quicken for all my finances and when Intuit sent me a trial copy of TurboTax a couple of years ago, I gave it a try. I was initially very excited that it calculated that I owed much less tax than I thought I did. On investigation, this turned out to be because it imported from my UK accounts in Quicken without accounting for the fact that the accounts were in pounds sterling.
I got another trial version a few weeks ago. I tried it again - same problem. One pound (why doesn’t Alt-0163 give me a pound symbol?) = one dollar.
Am I doing something wrong? Have any dopers successfully used Quicken/TurboTax for foreign accounts?
So to answer the OP: I do not trust tax software because in my particular case, it has proven to be untrustworthy.
I do not see any reason to pay $100s to an accountant, though. The fillable pdf forms make the manual approach easier these days.
I can’t see why anyone would want software. Most people who buy it are better off with the standard deduction and the EZ form.
You very likely have a lot more expenses than just your car expenses, sez my Brother. And, with a Scd C, you are taxed twice (once for Income once for SE tax) which makes any deductions there worth almost double to the Self-Employed.
It has nothing to do with Math.
I used TurboTax for many years, but I was never very happy with it. By the time you get done paying for everything it costs almost as much as just hiring someone. The software costs $30 or so, which sounds great.
You get through the entire program and are ready to file when they mention that if you want to do state also it will be another $30 or so. At that point you’ve already entered everything in, so you would be crazy not to say yes. Then they charge you more to e-file the forms. I’m way too lazy to print them out and mail them so that ends up costing me another $60 or so. All told, I was spending over $100 on Turbotax when a pro only costs $150.
Last year my taxes were free since the guy I used sucked so much that I didn’t pay him. I’ve got a new acct picked out for this year on a different referal so hopefully he will be good. My taxes tend to be complicated.