With all of the tax preparation options out there, why would you use a tax professional? After all, you can self prepare your tax return, you can use Turbo Tax for free if you invest with Vanguard, you can use the VITA program if your income is under certain limits, you can use Credit Karma or even some auto dealers if you want to buy a car. What is the added value of using a professional?

  • Time savings - Americans spend billions of hours filling out tax returns every year. Weigh the amount of time that you personally spend filling out your tax returns against what you would rather be doing. You generally hire someone to mow your yard, clean your house, paint your house, etc. Why do you hire someone to do these tasks? Because it saves you time and because you probably do not enjoy these tasks. If you love doing your taxes yourself, then by all means have fun...
  • Knowledge of the tax code and experience - This is one of the best reasons to use a tax professional. The Internal Revenue Code (IRC) has over 10,000 pages of provisions. Navigating through this code is the real added value of using a tax professional. Did you know that the IRS instructions and publications are not definitive (reliable) as far as the IRS is concerned? Only the IRC and court rulings are considered definitive. What that means is that the IRS can dispute what appears on your tax return even if you followed their instructions or consulted their publications.
  • After tax season follow up - If you receive a letter from the IRS, the tax professional that prepared the return is probably in the best position to get the issue resolved. Many times, the first time that I see a client is when they walk through the door with an IRS letter. We used to have a saying in the consulting world "if you do not have the time to do it right the first time, when do you have the time to do it over?". Sorting out a tax problem can be very time consuming. I am sure that you have better things to do.
  • Computer software limitations - Even the software that tax professionals use has limitations when it comes to understanding and applying the tax code. Just because you can handle a diagnostic error in a computer program does not mean that you are following the tax code. When preparing a tax return, you have to be vigilant when it comes to knowing which forms are required and what the rules are.

When you do use a tax professional, choose that person carefully. You are responsible for the information on your tax return no matter who prepared your return.