To listen to the podcast version of memo click here —> Podcast Version
Let me premise this memo with the following: If you only have W-2s, with no dependents, and no itemized deductions, then doing your own taxes might turn out okay.
But if the complexity of your tax situation goes beyond those basics, I urge you to hire a CPA to prepare your income taxes.
Software like TurboTax, does a tremendous disservice by spreading the propaganda that doing your own income taxes is very simple and doesn’t pose any hazard. This is the furthest thing from the truth.
If you do decide to have someone prepare your income taxes, never use someone that prepares your tax returns while you are sitting in front of them. It is almost impossible for an accurate return to be filed, and one that minimizes your income taxes, in 20 minutes.
At my firm we have a very thorough process of client interview, tax return data entry, a full partner review, and then we allow the client time to review a draft of their return before filing. You should never be rushed, and you should always have the time to ask questions.
Again, if you are getting your taxes prepared and filed in one meeting, I urge you to rethink that approach.
Back to preparing your own taxes with a software package such as Turbo Tax. These packages ask you simple questions, and have you enter your information. This can never substitute for getting advice from a human being with decades of experience.
Now here are my 5 reasons why you should hire a CPA to prepare your income taxes, and not prepare them yourself.
- Establishing a relationship with a seasoned CPA, who is a business, income tax and financial expert, has benefits throughout the year when other questions come up in your life that you need assistance with. This could mean retirement options at work, getting a mortgage, buying a home, buying a car, and hundreds of other things where in the past you’ve had to go it alone and make your best guess. The majority of my clients call me more outside of tax season than during tax season. How many times have you been faced with making a financial decision and wished you had someone you could call to give you direction and confidence? If you’re doing your taxes yourself, then you are missing out on one of the most substantial benefits of hiring a CPA to prepare them.
- You might say, Chris “It’s so easy.” No it’s not. Imagine I came to your office and I sat at your desk and told you I was going to do your job without the years of training that you have had. How do you think I would do? Then I told you I was going to use a software package to make it very easy for me to do your job and replace you. This would be a disaster and the odds of me performing your job at the level that you can are zero. The software companies like TurboTax, have people believing that it’s very simple and that their AI, or Artificial Intelligence, is a substitute for a human being. Of course it’s not. I always say the moment you would do your own root canal is the same time you should be doing your own income taxes. Again, imagine how dynamic your job is everyday and at a moment’s notice, and as new facts are presented, you have to change your direction and modify the steps that you take in order to perform your job correctly. Income taxes are no different, and the software packages that are used today can never substitute for a human being with decades of experience, just as there is no software that can substitute for you at your job.
- Your income tax preparation is the most significant financial transaction and financial reporting you do for you and your family each year. It is imperative that you have professional advice and direction. Your income taxes are being reported to the Federal and State governments. Just as you wouldn’t leave your health in the hands of a software package, you should never leave such an important part of your life in the hands of artificial intelligence within a software package on your computer. You would never use “Turbo” heart surgery instead of going to a human heart surgeon. So you should never use TurboTax to do your income taxes.
- Peace of mind. My clients will tell you there is no better feeling than knowing we have done all we can to minimize their income taxes, and that the forms are prepared correctly and per the tax code. Yes, you can prepare your taxes yourself, but how many times have you had questions or anxiety if they were done correctly and you have taken advantage of every possible deduction? If you do your taxes yourself you can never have the same piece of mind then if you used a CPA to prepare them for you. Many people live their lives looking back and worrying about the taxes that they filed themselves for many reasons. This is one of the most important reasons you should hire a CPA to prepare your income taxes. Again, having peace of mind with this most important financial transaction that you do every year, is priceless.
- If you do get a notice or letter from the IRS or your state division of taxation, my office is always there to assist you with that. This is one of the most important times when having a long-term relationship with a CPA benefits your family. If you prepare your taxes on your own, and you get a notice or letter related to your taxes, it can become a nightmare trying to contact the IRS to get it straightened out. Communicating with the IRS is truly an art that takes years and thousands of clients to perfect. It is very easy to make things worse if you try to communicate with the tax authorities yourself.
I do want to stress though, that if you only have W2s, then preparing your own tax returns may make sense.
Questions? Concerns? Call me on (732) 673-0510.
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Tax Laws are complex.
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Remember,
“If We Aren’t Working For You, Then You Aren’t Working At Your Best”
Chris Whalen, CPA
(732) 673-0510
81 Oak Hill Road
Red Bank, NJ 07701
www.chriswhalencpa.com
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