- Personal Finance
Turbo Tax vs. Tax Preparer
Turbo Tax vs. Tax Preparer
It's that time of the year again, and tax season is upon us. Other seasons of the year can be identified by pumpkins, red hearts, tree lights, and green clovers. Tax season is now bought to my attention by the statue of liberties and Uncle Sam's dancing merrily on the sidewalks, drawing attention toward tax preparers offices.
For many the choice is simple. Wait patiently for W-2's to arrive. Take the paperwork down to the local tax preparers office. Sit around for an hour or two answering questions on how money was earned and spent in the past year. The tax preparer inputs the information into their computer, tells you how much you will receive or end up paying. The paperwork is then collected, signed, services are paid for and you’re done until next year.
For other individuals it's much more complicated than that, and for some it's as easy as spending an hour online. This article is not intended for those whose taxes are as complicated as their lives. I am aiming more towards people like myself who are known in the eyes of the IRS as form 1040EZ.
I have always had this pre-conceived notion that I should never pay for anything which I can easily do myself. For me personally, having my taxes "done" falls under that category. I tend to have this theory that no one is going to look after my money better than I do!
The first time I ever had the need to file taxes, I used my parents tax preparer. Being only sixteen at the time, the process was not only foreign to me but also extremely awkward and intimidating. I disliked it so much that by the time I was nineteen I was preparing, and filing my own taxes. Before the age of computers, one needed to go to the public library, pick up the needed books and forms, spend hours, possibly even days bent over paperwork, flipping through books in order to fill out all the needed numbers.
Since Turbo Tax first came out in 1993 I have been a faithfully, devoted, returning customer. At this point you’re probably asking yourself "if she loves Turbo tax so much, then why is she writing a turbo tax vs. a tax prepare article"? Please allow me to explain.
In 2006 I was married to an over the road truck driver. This simply means that he was out on the road driving for five weeks and then was allowed by his company to come home for three days.
When we met, he lived in Arizona, and I lived in Nevada. Even though we lived together in Nevada after we got married, he kept, and operated under his original Arizona driver’s license. When you’re a truck driver changing over a CDL license to another state can be a real nightmare, especially if you have hazmat or other endorsements which my husband did! Since his driver’s license was from Arizona and the only mailed documents he ever received where his W-2's at the end of the year, he used, and decided to stick with his parents Arizona address which he had used for the past twenty years. At this point I want to point out that this is perfectly legal to do when you drive all 50 states.
The following year in 2007 we moved out of the state of Nevada and into the state of Arizona. For the first time in 20 years I did not have access to a computer and my husband insisted that we use a popular big name tax service. I'm the type of person who prefers keeping my financial data private. I also confess that I'm a bit anal and also a control freak when it comes to my finances.
Turning over all of our sensitive financial data to a strange company and paying them to file a crucial document that could have a big effect on our finances was not something that I readily wanted to do! In the end I gave in because I hadn't kept up with the laws, and the move simply did not allow me hours of adding up numbers on paper.
I discovered that by using a tax preparer, I not only had to do most of the prep work myself, but I also had to endure almost two hours of doing nothing but watch him input the information which I had given him. At the end of the preparation, our filling charges came to almost $200 compared to the regular $45.00 which we normally spent on Turbo Tax on-line. We also ended up buying and paying extra for there "gold guarantee" just to make sure that we had all our bases covered. So what did I end up getting by forking out an extra $155 dollars? The only truthful answer I can give is that it was convenient at the time. I found that a human accountant couldn’t find us any more deductions than the Turbo Tax computer program. Since then I have gone back to strictly using Turbo Tax.
Just eight short months ago I received a letter from the state of Arizona letting me know that they had found some issues with my taxes. It seems that apparently, no Arizona taxes had been filed in..you guessed it!...2007! Even though we had informed this man that we had income in both states he over looked this simple, yet huge error. I contacted the office who originally did our taxes to find that, not only was this man no longer employed by their company but The Gold Guarantee which we purchased as extra protection was only good for three years and had now expired!
To add insult to injury, this new tax preparer, working for the same office and company, had the nerve to charge me to do taxes which should have been done four years ago. I paid it without complaint, because his return showed that we had a gain. When I filled the taxes with the state of Arizona however, not only did they not except them, but they had been done wrong, and I now owed them a substantial amount of money and interest. Since Nevada does not have a state tax and Arizona is a community state, they were able to use half my income towards the state of Arizona! If this man had been trained in his field, he would have known this and saved me a lot of hassle.
The clean-up process took me two days and I fixed the problem by doing it myself. I never took a single day of "Tax preparing classes" but even I was smart enough to go back, amend my federal, which fixed my state and I ended up owing them nothing!
One of the things that I love about Turbo Tax is that they offer a program called Audit Defense. For an extra $40, an accountant, or an account representative will take care of dealing with the IRS for you in the event of an audit. Turbo tax is also aware of the latest deductions, and asks you the right questions so you can take advantage of all of the tax breaks much like a tax preparer would. If simple or huge mistakes are made, the program will deny filing your taxes until the issues have been fixed. I also love the convenience of filing electronically on line, only having to wait ten days for my refund and having it direct deposited into my bank account without having to do a thing!
I want to stress that this is not the average experience with large tax preparing companies. I am aware of the fact that not all tax preparers are the same and many people feel more at ease by using one. I realize that come April 15th you will have done what feels best regardless of my advice in this article. A tax preparation for some is as personal and off limits as religion and politics.
I would like for you to keep one thing in mind however. These programs are free, on-line for you to use.They are secure, safe and fees do not need to be paid unless you decide to go through with the filing. Once you have reached the end, if you do not feel like going through with the actual filling, you are not obligated to do so. You end up losing nothing but an hour of your time, and perhaps you might even end up having gained a bit of knowledge and some confidence to do it next year all by yourself!