The clock is ticking to complete your individual 2009 tax return by April 15. Many have flocked to the “off the shelf” tax preparation options, such as Turbotax, which can be efficient for taxpayers with relatively simple returns. However, those who prepare their own tax returns may miss the opportunity to save even more because they did not take all the deductions or credits they might have been entitled to if they had consulted an accountant.
There are a number of considerations to take into account in deciding whether or not to prepare your own tax return. Basically, if you do not have many complex tax issues or a myriad of deductions or credits, then the prepackage tax products may be helpful and cost-effective.
Carol Mount, a partner at the accounting firm of Halt, Buzas and Powell, maintains that the “main goal is to prepare an accurate tax return so you won’t hear from Uncle Sam! Another goal is to make sure that you don’t overlook any tax deductions in the short run, or tax strategies in the long run.”
When should taxpayers seek the services of a professional accountant?
Although Mount does not believe that everyone needs to hire an accountant to review their personal returns, she added that, “If your situation is pretty simple and you keep good track of your tax documents, you may be able to prepare a reasonably complete tax return using something like Turbotax. The problem is, it doesn’t take long to go from ‘simple’ to ‘more complicated’.”
In her experience, Mount has found that “most business owners understand this, especially if they have to file corporate or partnership tax returns, which includes a balance sheet, income statement and depreciation schedules. Even business owners who are single member LLCs usually need professional help, especially for the first year of business.”
Thomas J. Lantz, a partner with the accounting firm of HeimLantz, echoed Mount’s comments.
“Some of the reasons why you may want to consider obtaining the services of a qualified tax preparer include unusual situations,” Lantz said. “These can include the death of a spouse during the year, substantial investment transactions, business activity as a sole proprietor or if you have rental activities. These can all result in more complex issues in filing your tax return.”
Another excellent reason to seek the help of a professional tax preparer is that most people do not regularly review the tax code to keep up with the constant changes in the law. Many things can go wrong if taxpayers try to sort out the intricacies of the tax laws on their own.
Mount added that people do not always understand “what types of retirement plans you can contribute to, or how to depreciate a rental property, or what to do if a family member dies.” She explained that accountants, “in addition to preparing a complete and accurate tax return, will make sure you don’t overlook tax deductions like the sales tax deduction on car purchases in 2009, and… guide you with sound tax strategies no matter your stage in life.”
Once an accountant understands an individual family’s circumstances, they can then offer strategies and guidance for retirement plans, Roth IRA conversions, estate tax plans and tuition savings plans and help lessen the financial burden taxes can impose. In addition, should the IRS elect to audit an individual’s return that was completed by an accountant, the accounting firm stands behind whatever return they prepared and assists in helping the taxpayer through an audit.
As Benjamin Franklin quipped: “In the world, nothing can be said to be certain except death and taxes.” So, select the least stressful, most cost-effective means of complying with the taxes and resolve to be more efficient with you tax filings next year.