NEW YORK (MainStreet) The old adage that you get what you pay for applies when hiring tax preparers as much as it does when buying tax preparation software.
"There is no absolute answer as to whether using basic tax software is better than hiring a qualified and experienced tax preparer, but typically certified public accountants (CPA) have the latest and highest quality of tax preparation software on the market," said Jordan Niefeld, a CPA with Gerstle Rosen & Goldenberg.
Yet and still the idea of doing it yourself holds a special appeal for many.
"It is advantageous to prepare your own return when you have the time, ability and desire to do so," said Rebecca Pavese, a CPA with the Palisades Hudson Financial Group in Atlanta.
Taxsoftware.com launched the first iPad app for federal tax returns three years ago.
"Tax software can walk you right through the preparation of your 1040," said Niefeld, who uses Ultra Tax. "For taxpayers who have limited deductions and credits, there is no reason why preparing one's own return should take more than 1 hour."
However consulting with a tax preparer has its benefits.
"It's time to use a professional tax preparer when you are not 100% sure what it is you're doing," said Craig Richards, managing director and director of tax services at Fiduciary Trust Company International.
The do-it-yourself crowd determined to figure out their own returns may find changes to the tax law and certain deductions overwhelming.
"Passive activity losses, the foreign tax credit, child and dependent credits and education credits can give taxpayers fits trying to figure out," said Richards.
Other sticking points include:
- The new net investment tax calculated on Form 8960. "It's confusing to seasoned preparers and will be a challenge for any taxpayer who attempts it on their own," Richards told MainStreet.
- Taxpayers who employ domestic employees. "You need to not only attach and file a Schedule H with the 1040 but also prepare W-2 forms and state unemployment filings for staff," Richards said.
- The earned income credit. "It was created to help taxpayers with the lowest income amounts but to claim it involves an extremely confusing process if when eligible," said Richards.
While the average tax software on the market today sells for $30 to $100, it is a preferred option for individuals with straightforward W-2s and not much financial activity throughout the fiscal year.