WHO'S YOUR TAX MAN?
Whether to file via computer or hire someone to help
Creators News Service
One of the biggest dilemmas today with taxes is whether to hire someone to help you or purchase do-it-yourself computer tax software.
There are many computer programs offered and advertised as "user friendly" so that the average Joe can simply fill in the numbers and let the computer do the work for them.
It's a way to cut costs, but which way is better -- accountant or computer?
It all boils down to the individual preference. There are plus and minuses on both sides of the equation.
"I have reviewed many returns by people who have used a computer program," said accountant Richard M. Rothman of Denver, Colo. "Just about every one I've reviewed has had to be amended. Most of the time people end up owing more money, but there have been some cases where an individual got more money back."
Despite that, the Internal Revenue Service has seen an increase in e-filing each year since it started in 1986. In 2008, 87 million people filed computer returns, according to Raphael Tulino, a San Diego spokesperson for the IRS.
"We're big proponents of e-filing," Tulino said. "It's a changing of the times. It's easy on the individual and it's easy on your government. There's less paper to deal with and it's faster."
But what about tax laws? Policies change from year to year, and it can be hard to keep up.
"A computer is a tool that professional tax preparers use to prepare a return," Rothman said. "Only someone who is trained and up to date on the current laws can prepare an accurate tax return. Software is supposed to be updated each year according to the laws, but a computer doesn't have a mind, it is just programmed."
Even though filing taxes via computer is a matter of filling in the blanks, many times people still don't understand the questions that might be asked.
"They end up just putting a number there because they feel they have to," Rothman said. "The returns that get audited by the IRS are the ones that look fishy. When the IRS audits, they almost always get money from you -- it's very rare when they owe you money."
An individual who keeps up with the latest tax laws can still have issues with their filing.
"Even if you know and understand all the laws, chances are you are still missing some deductions or tax credits," Rothman said.
Using the computer has the definite advantage of being quicker than paper forms.
"If you follow along and answer the questions, the return is done within a couple of hours," Tulino said of e-file. "It's also quicker in getting your money. On paper it takes six to seven weeks. With direct filing and direct deposit, a person can have their return back in seven to 10 days."
When a firm prepares taxes, an accountant has to sign their name to the document as the preparer.
"A good accountant will stand by their work and if a person gets audited, we will be there with you," Rothman said. "I don't know of a tax [computer] program that will guarantee its work."
Even tax professionals can make mistakes simply because they're human. However, one of the biggest problems in preparing taxes is the information -- or lack thereof -- that the preparer receives.
"We can only deal with what we're given," Rothman said. "But it's the same with a computer. If you put garbage in, garbage is going to come out."