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Tax Software vs Tax Preparer vs Yourself

dukebound85

dukebound85

macrumors Core
Original poster
Jul 17, 2005
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Which do you use?

Does software like TurboTax or TaxCut tend to be conservative in the refunds/amt owed? Is the higher price of using a tax specialist worth it? What has been your experience?

Thanks
 
Turbotax online. Long form, itemized deductions, e-filing, fifty bucks. Cheaper if you qualify for the short form. And you get call-in help if you want it (but I've never needed it).
 
We have a tax guy. Used to use Turbotax, which was quick and very easy.

Ultimately it depends on your tax situation. If it's complicated, a good tax guy can find stuff to deduct that you never would have thought of. That's where he/she will pay for himself, and then some.
 
I use TaxCut. I take the standard deduction so the math is fairly straightforward.

As a sanity check, I'll plug my numbers into a few of the free tax refund calculators online and make sure they all match up.
 
Tax Preparer. She's found numerous refunds for my parents over the past couple of years and now that I can't use a 1040EZ I'll be using her.
 
I use Turbo Tax. I've been using that for years and I'm happy with the results from TT
 
It's a function of complexity

I have been full circle. I started out doing my taxes when I had only earned income and it all fit on one tab of an Excel sheet. (in fact it was Lotus 123). If you have the time, and your situation is simple, build a spreadsheet that looks like a 1040 with the same line numbers, and you will learn a lot.

Then over the years I got married, got a house, got a rental house, got foreign taxes, AMT, ....I added tabs upon tabs to that spreadsheet. Finally it got so complex I called in a professional preparer. He indeed found things I had not, and for some years I used his company for the peace of mind. It was expensive but worth it.

Then I realized my situation had stabilized, no more new forms every year, every year the return structure was teh same, just different numbers; and decided to try Turbotax. Even with all of the above complexity, the version I needed was only about $90, where the professional fee was more than 10 times that. Guess what? Turbotax worked perfectly even with all that complexity. And guess what? It found stuff that my preparer had not - because it asked questions he had not asked.

So now I am back to doing it myself, but this time with Turbotax. And saving a bundle.


So bottom line: if your situation is relatively straightforward, you can do it yourself, it's not hard. As it gets more complex, I would recommend a preparer until you understand it completely. Once you do understand it, you can use software yourself, even if it is a complex situation. I would not have had the confidence to go direct to software, there is nothing like being able to ask a human a question.

Caveat: You are signing the return, whoever or whatever does the calculations. So take the time to make sure you are comfortable with the answer, however you get there.
 
Look, a tax preparer should have acute knowledge of tax laws. They should be able to help people with complicated returns file their taxes accurately and perhaps find deductions that the filer may not know about. However, I never thought to use a tax preparer when I was able to file a 1040EZ because my returns did not pose any issue. When I was still filing a 1040EZ and I owed one year I used someone who had this knowledge that I did not.

In the end, you have to make the decision that is right for you. Turbo Tax and the like will direct you through questions but even then you may not know whether you would qualify for something. It is entirely up to you.
 
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Tax preparers are like car mechanics. There are good ones who keep up with everything and then there are poor ones. The tax software has all the tax laws programmed in but will probably miss out on some things if your tax situation is way out of the ordinary. For the average person's taxes, the tax software is as good as most of the average preparers (and much cheaper). The only way to know for sure is to both let your tax preparer do the taxes and to do them yourself with the tax software. A comparison over a couple years should show you if your tax preparer is worth it for you.
 
I use H&R Block's free online returns for my federal. I don't use their state because it isn't free and their rate is a bit higher. Due to that, I might just look for somewhere that does federal free and a more reasonable state fee this year.

Just 22, so all I have is one source of income. Well, this year I'll have two W-2s, yippee -- school work study and now my full time post-grad job. Either way, ridiculously easy. Any fool that can read can do my taxes.
 
This year will be my first year to use a tax preparer. I've done them on my own using various software for the past 20 years. And I'm sick of it. Half a dozen W2's for each myself and my wife, half a dozen more 1099's for each, six states, three cities, house, stocks, IRAs, funds...it's not that it's that HARD, it's just so damn time consuming to put it all together! And then you find one wrong number, and suddenly it changes all ten returns. But you only find that after printing 150 pages of tax return!
 
I tried doing it myself. I actually had everything filled out and went through it very carefully. But I still doubted myself.

So I decided to give Turbo Tax a try. I ended up saving over $400 in deductions I missed.

I have a mildly complex tax situation since I own a business so profits count as income. If I had a larger business or a much larger income then I would switch to a tax preparer just because the tax situation would become too complex.

Turbo Tax also probably takes about a quarter of the time than forms to fill out. I'd buy through Amazon as the digital download is much cheaper than the physical version in stores. Mind that you have to buy a new version for each tax year. It also looks at the previous years return to streamline the process once you start using Turbo Tax each year.
 
TaxCut for many, many years.

I can't use a 1040EZ, but my stuff isn't that complicated: a day job, a little business here and there on the side, the occasional IRA conversion, then a mortgage, real estate taxes, kids, charity donations, blah blah blah. Nothing software can't handle, so far.

The deductions/refunds would be the same either way, it's worth it to me to spend $20 to not have to fill out forms directly or use a calculator. ;)
 
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