Tax software or a CPA?
Filing a CPA prepared return or using tax software depends on personal financial situation.
In the age of 24-hour news, immediate music downloads, and video-on-demand, completing and filing an individual tax return on your own is a bit like churning your own butter " it would get the job done, but there are other options. More than 65 million Americans will file individual tax returns on April 17, 2006, and more than half will file electronically using tax software. The rest will file through certified public accountants, tax preparers and tax attorneys.
How can consumers know they've chosen the right method " filed with all the deductions and incentives, while considering an overall tax and financial plan?
According to the Minnesota Society of Certified Public Accountants (MNCPA) commercial tax software can work for many individuals; unfortunately using such a program for a complex tax return is not the best way to maximize your savings.
"If you have a basic tax situation, tax software may be the route to go," said Todd Koch, a licensed CPA and MNCPA member. "But if you're looking for a long-term tax plan to improve your financial health or have recently gone through a significant financial change such as divorce, retirement or opening or closing a business, getting advice from a CPA could save you time, money and hassles."
Tips on Choosing a CPA v. Tax Software
Assess your overall financial goals. Is your tax situation straight-forward? Are you looking for a long-term tax plan? Have you recently experienced a major financial shift? Tax software looks at one piece of the puzzle; CPAs look at the entire financial picture.
Know your comfort-level. Tax software offers virtual advice if a consumer has a question, but not the judgment, experience and credentials like a CPA. If an issue arises there may be additional fees to obtain a solution. A CPA is licensed by the state, CPAs are required to take continuing education courses and adhere to a strict code of ethics. And, a CPA can represent you in front of the IRS if you are audited.
Test your tech savvy. Does your computer have the technical requirements necessary to run the tax software? Does the computer package have proper forms that apply to your situation, or is there an additional charge?
"Essentially, it comes down to the preparer, what they are comfortable with and what their financial goals are," said Koch. "The MNCPA and its members encourage consumers to look at their options to find the right fit for them."