Tax season is quickly sneaking up on us, which means it is just about time to figure out your strategy for Tax Day. How will you file this year? Hiring a professional is a luxury not everyone can afford, but do cheaper options like Tax Act and Turbotax really do the job as well as they claim? You may be surprised to find out that computer based tax programs may be filing your taxes incorrectly, which could potentially put you in legal trouble.
What are the issues?
Itâs not necessarily that the programs themselves are faulty, but more due to the fact that tax code is one of the most complex pieces of legislation ever put on paper. Tax laws are so deep that they now consist of over four million words, and many of the regulations change by the day. Since 2001, there have been close to 5,000 alterations to the tax code. In other words, if you arenât paying attention to every little thing the IRS does on a daily basis, your knowledge of taxes just might be out of date.
Using computer or internet based programs often leads to user error which can alter the bottom line of your return. Sometimes it may be in your favor, other times it could hurt you - regardless, submitting an inaccurate tax return is illegal and no one wants the Internal Revenue Service coming to their door with questions. Some states are even urging filers to not use certain programs for filing this season due to inaccuracies and potential delays.
Late or unreceived returns
In years past, a heavy influx of last minute filers actually has flooded servers on internet based tax preparation sites leading to many returns being marked as late or unreceived by the IRS.
Missing deductions and credits
Even the best computer filing programs can miss some items. You may have some extenuating circumstances which make you eligible for some significant credits which can put more money in your pocket that a web based program could simply miss. Similarly, you might miss something which requires you to pay more - and aside from the disappointment, itâs better to pay up than have the IRS find out you owe them money! Calculation errors are also common, due mainly to the issue of programs not being continuously updated with the rapidly changing tax code.
Time is moneyâ¦
Aside from the potential legal ramifications of filing incorrectly online, doing taxes yourself takes a lot of time. The IRS claims that the average American taxpayer who does their own taxes spends more than 20 hours of their own time crunching numbers and entering forms before finally e-filing. If you have any additional forms outside of the simplest, plan on adding on many more potentially headache filled hours in front of your monitor.
Safe is better than sorry
Needless to say, you can file taxes online and be safe, but unless you are a personal accountant, hiring a professional is a safer route to take. Professionals will save you time while ensuring that your return is 100% legally sound, which can more than offset the cost of hiring a tax prepare. Tax season can be one of the most stressful times of the year and you should never feel like you have to go through it alone. What about the cost? Any fees you incur while filing taxes can actually be listed as a deduction on your following years return, as long as they meet certain percentages of your adjusted gross income.