Discussion on:
View:
Show:
Come on Toni, doing your taxes, especially if you use tax prep software, isn't that hard.
If you're running your own business and trying to take as many legal deductions as you can, you're probably better off with some professional help. I've done it both ways over my 20 years as a consultant and I definitely prefer letting someone else do it, especially if the IRS comes around later asking for an audit.
... that I don't have issues doing it myself. I look forwards to the day where 1) it makes so much money that the opportunity costs offset the bill of a pro and 2) it is complicated enough to justify a pro. 
I've tried doing the ultimate deduction routine, it makes only a small dent at best for me. Last year, the difference between a home office deduction and none was less than $50, not enough to justify the audit risk IMHO.
J.Ja
I've tried doing the ultimate deduction routine, it makes only a small dent at best for me. Last year, the difference between a home office deduction and none was less than $50, not enough to justify the audit risk IMHO.
J.Ja
Perhaps then there'd be a real revolution.
Every representative in Congress should be required to prepare the taxes for a hundred random constituents.
...that on April 15th, all congresspeople should be required to gather in the capitol rotunda and prepare their own taxes on their own in front of the people. They wouldn't be allowed to leave before finished.
I wouldn't trust any one of them to prepare my taxes. They'd most likely opt for the "Let the IRS calculate your tax" box and be done with it.
I wouldn't trust any one of them to prepare my taxes. They'd most likely opt for the "Let the IRS calculate your tax" box and be done with it.
... if we also have a paid preparer do the return separately, and any difference in balance due comes out of the congresscritter's pocket?
You can expect smaller firms rates to go up due to increased costs, but the cost of IRS training at about a grand is not the reason (most firms are already doing CPE - Continuing Professional Education - to the tune of 2 to 3 grand per preparer anyway if they are keeping up on changes in the code, and keeping up on those changes is necessary if they are going to competently prepare them.) Now your fly-by-nighters will probably not be able to pass the competency tests anyway. But my guess is that they will work out a deal to get paid in cash and not sign the return. (paid perparers are required to e-file all returns too. even though there are advantages to the preparer in doing this, there is extra administrative time to check on all of the "handshaking" and acknowledgement process.) The real cost increase is the assumption of not just risk but the lost time in "compliance" visits by the IRS to the paid preparer's office. Some CPA's that have been visited have reported having to spend significant amount of time with the "examiners" who in many cases don't know what they want to look at or what to do with the documents they review anyway. (This program is still new and actually went into effect LAST year). Some have reported that there is no advance notice and they are expected to drop whatever they are doing and spend time with the examiners. Time spent not working means lost revenue and wasted overhead. There is also the risk of having to deal with penalties in case the copious amounts of information kept are not enough in the opinion of the examiner, despite keeping all of the legally required documents. (Happens a lot on IRS audits of taxpayers, and this division of the IRS will be no different.) So added lost time and added risk of financial loss = higher rates for returns. (BTW most CPA firms actually charge lower fees than some H&R Block offices - I've seen it when bringing in new clients from "chain" preparers).
This examination process of the preparer also means the IRS can gather information on taxpayers that might have been confidential or privileged, without the taxpayers knowledge. So even though the IRS's "motive" is compliance, they will now have a way to look at YOUR tax information and decisions as to how to report your income or expenses without your knowledge. For CPA firms compliance has never been a serious issue as they are probably far more competent than any agents at the IRS. And the ethics requirement of Circ 230 are far below those of the CPA profession anyway.
But firms like H&R and Liberty will probably have to increase their fee structures even more, since EVERY preparer that makes a determination as to the treatment or reporting of any item on the return (yes as simple as putting your W-2 wages in the wages block of 1040) has to be an approved preparer by the end of 2012 - return filed in 2013. H&R typically hires preparers in Nov gives them a couple of days (up to 10) training and releases them into the "wild". Licensing for first time licenses takes some time and must be done prior to Dec 31 each year. So more than anything you may begin to see a reduction in the number of preparers that can actually do returns starting next year unless H&R and some of the other "chains" are able to negotiate a way to fast track the paid preparer process.
Anytime the government decides to "regulate" any activity (and this is no different) you can expect the cost to go up. This is no doubt just the beginning.
As to maj37's comment that as long as you are using software doing your own taxes isn't that hard. No if you have a W-2, maybe some interest, and a few interest and tax deductions, by all means do it yourself. But if you have any significant investements, your own proprietorship (schedule C) or an LLC, or corp, you might want to at make a visit with a professional.
This examination process of the preparer also means the IRS can gather information on taxpayers that might have been confidential or privileged, without the taxpayers knowledge. So even though the IRS's "motive" is compliance, they will now have a way to look at YOUR tax information and decisions as to how to report your income or expenses without your knowledge. For CPA firms compliance has never been a serious issue as they are probably far more competent than any agents at the IRS. And the ethics requirement of Circ 230 are far below those of the CPA profession anyway.
But firms like H&R and Liberty will probably have to increase their fee structures even more, since EVERY preparer that makes a determination as to the treatment or reporting of any item on the return (yes as simple as putting your W-2 wages in the wages block of 1040) has to be an approved preparer by the end of 2012 - return filed in 2013. H&R typically hires preparers in Nov gives them a couple of days (up to 10) training and releases them into the "wild". Licensing for first time licenses takes some time and must be done prior to Dec 31 each year. So more than anything you may begin to see a reduction in the number of preparers that can actually do returns starting next year unless H&R and some of the other "chains" are able to negotiate a way to fast track the paid preparer process.
Anytime the government decides to "regulate" any activity (and this is no different) you can expect the cost to go up. This is no doubt just the beginning.
As to maj37's comment that as long as you are using software doing your own taxes isn't that hard. No if you have a W-2, maybe some interest, and a few interest and tax deductions, by all means do it yourself. But if you have any significant investements, your own proprietorship (schedule C) or an LLC, or corp, you might want to at make a visit with a professional.
As an accountant with 35 years of tax experience, I appreciate your excellent explanation. I just want to add that there are individuals who spend the hours keeping up with changes in the tax laws who may do a good job doing their taxes themselves. Others find it too complex and need the services of a tax professional. However, the rest of the people who think they are saving money by doing it themselves may not realize that they would have done better with an accountant because they missed just one deduction or credit, reducing their refund possibly by thousands of dollars.
...I always laugh when people complain how hard their taxes are to do, because personal returns for US residents are pretty easy, compared to say, doing an 1120 for a corporation, being a non-resident US citizen with 3520 filing obligations, being dual-status, dual resident, etc.
One thing I will say is the biggest mistake I see people make with their tax returns is to use tax preparation software without having an understanding of how the tax system works. The first two or three times you do a tax return you should do it on paper, read the guide, etc. Yes you may make mistakes, yes you may not claim all the deductions and yes it may take you ages but at least you will understand it a lot better (a whole lot better than anyone at H&R Block for sure). So when software program X poses a question you will know how to answer it and what it means - because I have seen a whole lot of tax returns screwed up by software. In fact for my corporation next time I file I'm doing it all on paper. Or PDFs at any rate.
Laziness and carelessness will cost you more in the long run. Frankly if you genuinely have a properly hard return, e.g. dual status, receiving income from foreign trust, blah, blah, and you can't do it yourself, you should be hiring a proper accounting company to help you, think KPMG not H&R Block.
One thing I will say is the biggest mistake I see people make with their tax returns is to use tax preparation software without having an understanding of how the tax system works. The first two or three times you do a tax return you should do it on paper, read the guide, etc. Yes you may make mistakes, yes you may not claim all the deductions and yes it may take you ages but at least you will understand it a lot better (a whole lot better than anyone at H&R Block for sure). So when software program X poses a question you will know how to answer it and what it means - because I have seen a whole lot of tax returns screwed up by software. In fact for my corporation next time I file I'm doing it all on paper. Or PDFs at any rate.
Laziness and carelessness will cost you more in the long run. Frankly if you genuinely have a properly hard return, e.g. dual status, receiving income from foreign trust, blah, blah, and you can't do it yourself, you should be hiring a proper accounting company to help you, think KPMG not H&R Block.
Continuing Professional Education for CPAs(CPE) units. With NASBA accredited CPE online, theres no more reason for a non-CPE compliant Certified Public Accountant to be on the loose.
http://www.cpetrainingonline.com/cpe-for-cpa
http://www.cpetrainingonline.com/cpe-for-cpa
- Keyboard Shortcuts:
- Prev
- Next
- Toggle
