Reasons to Hire a Tax Professional over Tax Software

Last week I was quoted in The Fiscal Times article “Tax Hell: New Laws, New Reasons to Hire an Expert” by Steve Yoder. The article mentions Taxpayer Advocate, Nina Olson’s recent report to Congress that is critical of the burden the current tax system places on taxpayers, specifically on tax return preparation. Olson laments that the tax code is so complex, its burden essentially “requires” taxpayers to use their own money to either hire a tax professional or pay $50 or more for commercial software just to prepare their taxes.

This tax season, the “need” for more professional tax help was due to the fiscal cliff deal that ultimately made changes to the tax code in the following ways:

  • Created another income tax bracket
  • Created new rules limiting personal exemptions
  • Created a new 20-percent bracket on capital gains and qualified dividends.

In reality, the recent changes making tax code even more complicated affects taxpayers who already use a tax professional. But as a licensed CPA, every year I get the same question: should I buy tax software or hire a tax professional to prepare my tax returns. Since most just take the standard deduction, here are two simple points taxpayers want to consider before spending a dime:

  • Tax software is fine if you have straight W-2 wages and a very simple return. Even though the program asks good questions, if you don’t know the answers, it won’t provide the tax help you may need.
  • It pays to hire a license professional if you have more complex returns. For example, mortgage interest, stock or dividend income, an IRA or 401(k) deduction, property taxes, or small business: Sole proprietorship or DBA (Schedule C). Hiring a tax professional can prevent IRS tax issues from occurring in the first place. Important note: Make sure you know your tax pros qualifications. Due to fraudulent and frivolous tax preparers in recent years, the IRS cracked down and is now requiring all tax preparers who aren’t CPAs, tax attorneys, or enrolled agents to register in order to practice.

For those who have unresolved tax debt or are involved in an IRS audit, you are advised to hire a tax attorney or certified tax resolution specialist with expertise in tax negotiation and mediation to handle your case. Not only can they help you resolve past IRS problems, they can help achieve permanent tax relief and get you back into tax compliance well on into the future.

More Tax Help, IRS News and Tax Relief Tips:

  1. Ask the Certified Tax Specialist – Small Business Back Taxes
  2. IRS Bankruptcy-Five Tax Relief Options for Back Taxes
  3. Tax Resolution Expert-Five Reasons to Hire One
  4. Family of Hip Hop Label Sings IRS Blues
  5. New Offer in Compromise Policies Bring Tax Relief

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