Should you try to file that complicated tax return with using commercial tax software or get the help of a qualified tax preparer? Unless you’re a qualified tax accountant, you should consider the pros and cons of DIY versus DPB. The former is fraught with pitfalls; the latter is more conducive to peace of mind.
A note on the aforementioned abbreviations: You probably recognize DIY as short for “do it yourself.” DPB stands for “done by professionals.” When it comes to preparing complicated tax returns, each method has its advantages. DIY will save tax preparer fees; DPB will add the focus of human attention on your unique circumstances.
Two methods for DIY: The “stubby-pencil” and the tax software alternative
Before automation, the “stubby-pencil” method in preparing a tax return required a pencil with a good eraser, a calculator and a knowledge of the fine print in the tax instruction booklet. Tax software stores and automates all that complicated verbiage, catches mistakes and omissions and saves paper and effort. It is the weapon of choice in the DIY category.
On the other hand, tax software is programmed by experts to be used by the rest of us. So the software designers must make some reasonable assumptions about the end user:
- The user clearly understands everything in the series of “interview” questions posted by the software.
- The user also understands the tax jargon and terminology used in the software.
- The user is reasonably adept at accessing and manipulating the software and has the patience to follow instructions and the sense not to override built-in warnings.
Pitfalls of tax software
Then there is the built-in caveat emptor — buyer beware — that is the small print of any software product:
- The tax software product has no guarantee that the return will be error free. The vendor only guarantees an accurate calculation based on what the user enters.
- If the taxpayer fails to answer or overlooks a deduction question while completing the return, the software won’t include a potential deduction in the return.
- No software is disaster proof. Answer “yes” after the question “Are you sure you want to delete your entire tax return?” and the software will follow your directions precisely.
So with the DIY approach the taxpayer is alone in the process and could easily overlook deductions and credits. Any problems that might result from errors and the taxpayer must face the IRS alone. Yes, tax software vendors “are standing by” as long as you’re willing to “wait for the next available customer service representative” — who probably isn’t a tax expert. (Well, what do you expect for your $40 to $60 investment?)
The peace of mind of the DBP approach
- The professional tax preparer knows the answers to questions you might not have thought of, or simply don’t know to ask.
- You’ll be confident that you have included every deduction and gotten the best result from your tax filing.
- Any IRS questions or audits will be handled by the professional you hired.
- The savings in time and the increased tax savings/refund are positive return on the fee you pay the professional.
Then there’s the valuable but intangible peace-of-mind factor knowing that everything was done by an actual person — and correctly. Also, when you hire a tax professional you get the benefit from advice on tax strategies that could save more money in the future by avoiding the mistakes of the past.
Contact Dmitry Dukhon at Dukhon Tax to help you get organized, file your returns and answer any questions you may have. We can be an invaluable resource for you to make the process as smooth as possible.
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