07 / 08 / 2011

Does every person need an accountant to do his/her taxes?

I’ve been asked many times whether everyone should have an accountant do his/her taxes. The answer is: it depends…

There are many people with just one/two W2 forms – for you, Turbotax Online is best – it’s free, quick and easy. They have a cap, though, as to how much you have to make to use the service for free.

If you tax situation is a bit more complex: you have a home, significant medical expenses, dependents, weird income types (Form 1099-C (cancellation of debt) or the like) – you are better off getting a professional to do it.

Now, by a professional I mean someone who has experience and training. He/she does not have to be a CPA, however, he/she has to be of a good moral character, have strong sense of integrity and responsibility. BEWARE of accountants who “give you good refunds”, instead, look for accountants, who will do your taxes right. Most preparers, who “work their magic” are not CPA’s – and have nothing to lose. So once your return gets audited by the IRS and the preparer did something illegal (created new dependents, etc – to “save you money”) – you will be penalized (best case scenario) and charged with fraud (worst case scenario). Penalties are very severe, plus there is interest charged on tax due AND on the penalty from day one.

So be careful, don’t just trust anyone, and take a minute to get an idea of why you’re getting the money back with your return.


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