The Truth about Tax Preparers and Tax Software It is a question plaguing more and more taxpayers each year, “Should I hire a professional or do it myself?” Tax preparer advocates say a professional can dig for deductions a software program will never find. While tax software advocates argue the programs are quite sophisticated and will save you a lot of money in tax preparation fees. Whether you choose to do it yourself or hire a professional, it is important not to make any impulsive decisions. Tax Preparer 101 Hiring the right tax preparer should be based on making sure his or her expertise matches your needs and financial situation. In other words, choosing the first tax preparer you see in the yellow pages or internet search is not the best way to go. Except for California, Maryland and Oregon, there is no oversight for tax preparers who are not an attorney, certified public accountant (CPA) or enrolled agent (EA). In other words, the education and ethical standards these tax preparers go by are set at their own discretion. In California, anyone who is charging a fee to prepare tax returns and is not an attorney, CPA or EA, is required by law to register with the California Tax Education Council (CTEC). All CTEC Registered Tax Preparers (CRTPs) must complete tax education courses each year and keep a current bond before they can prepare tax returns professionally. In Oregon, all tax preparers must be licensed through the Oregon State Board of Tax Practitioners. Each tax preparer is required to pass a competency test. Maryland also recently passed legislation in 2008 to require its tax preparers complete education requirements and pass an exam before they can prepare tax returns professionally. As for those of you in other states, choose your tax preparer cautiously. You should hire a tax preparer that can provide proof of errors and omissions insurance and continuing education certificates; and unless the tax preparer is an attorney, CPA or EA, do not be afraid to question tax preparers who claim to be a “certified” or “licensed.” If there is no state oversight, how are they certified or licensed? What’s in the Box? Many people are ditching the paper and pencil route and seeking tax software programs for help. After all, it promotes three features most consumers want: Speed, ease and affordable prices. The average program can cost $100 or less. Fans say it is fool proof and is as good as a tax preparer since both rely on the accuracy of information you provide. An up-to-date program will have the latest tax law information in its database. Plus, if you need tax advice or help, a live support team is usually available. So why not use it? It depends on you, literally. A qualified user must be honest and thoroughly accurate in data entry. Not all innocent mistakes, such as wrong answers to misunderstood questions or transposed numbers can be caught. These programs are also considered “self prepared,” which means you, and only you, sign the tax return. If the IRS catches a mistake, you, not live support, are responsible for it. Bottom Line Do your research. Get referrals. Stick to your comfort level. Whether you hire a professional or purchase a software program, remember that you are the one ultimately held accountable for the information on your tax return. Choose wisely. CTEC is a nonprofit organization that was established in 1997 by the California State Legislature to protect the public by registering tax preparers within the state. For more information visit www.ctec.org or call (877) 850-CTEC.
Pages to are hidden for
"professional tax software"Please download to view full document