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William Perez

Prepare Taxes Yourself or Hire a Tax Pro?

By February 27, 2007

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Many bloggers are asking this question, and coming up with interesting ideas for why someone should (or should not) prepare their own tax returns. Shelley Elmblad, About.com's Guide to Financial Software, said she "will do [her] own taxes again this year," but other bloggers don't feel as sure. The writer at MyMoneyBlog, for example, has decided to hire a tax accountant, despite the popularity of free and low-cost tax prep software. But the idea I like best comes from 5CentNickel: he has decided to prepare his own tax return, and then take his return to a tax professional for a review.

Here's why I think 5CentNickel has the right idea. First, he's taking the time to work through his tax situation, review his tax documents, and try his hand at tax software. Secondly, he will have a long list of excellent questions by the time he calls his tax pro. He will be able to hire just the right tax accountant by finding someone who has the experience to handle his tax situation. Thirdly, he'll be able to compare just how much money his tax accountant is saving him -- either by uncovering deductions or by finding mistakes that would result in penalties.

However, this strategy will increase the time it takes to finish your tax return, and may increase your costs. So here's some tips to save both time and money this tax season:

  • Use free tax software. If you don't qualify for a free return, then start your tax prep using one of the top-rated tax prep software packages. You can print out a draft of your return, or a worksheet summarizing your tax situation, to hand to your preparer.
  • Ask good questions when shopping for a new tax accountant. Since you already have an idea of how your taxes look, don't feel shy asking about deductions you have overlooked or tax documents you don't understand.
  • Schedule an appointment for a time when your tax accountant isn't busy. Trust me on this one, your accountant will appreciate the break from the rush. Also, let your accountant know you would like a review of your tax return.
  • Bring a copy of your tax data file with you. Some accountants can import data from popular tax software. Be sure to ask ahead of time. This will save your accountant time, and save you money on your invoice.
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March 1, 2007 at 10:49 pm
(1) Randy Macaluso says:

I disagree with your opinion of 5cent nickel and doing his own return and having it reviewed. Time is too important. A good Tax Professional is well worth his fee. He should ask a lot of questions, there are all kinds of rules and reulations for people who file a schedule especially Schedule A.
An extra page is planned for Form 1040, its not getting simpler. People need to about the Energy Credits, new rules for cash and non cash donations, and how many times have I heard; What is this Telephone Refund ?. One os for this year only and the other is supposed to expire at the end of 2007 or will Congress extend it after the forms are printed with no line for it. Again. Ask your own questions and listen to the answer. Where are you in what tax bracket and a comparison to last year as he explains the current year is a good preparer. One hour and your done. You should leave stress free and confident. Time is short.
Randy Macaluso, Tax Accountant
Kona, Hawaii
Rachel’s Tax Service, since 1978 serving Oahu, now expanding to Maui,Kona,and next year to Hilo,Lihue.
Enjoy your Topics when I have time.

January 8, 2011 at 7:43 pm
(2) lew johnson says:

aloha hope you are doing well in with everything there. A great tax guy.

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