The TURBO TAX Question: Can You Save Me Money?
Every year, somebody calls me on the phone and says:
"I have already prepared my annual tax return using TurboTax. I already know I have a $500 refund coming from the federal and state returns combined. If I have you prepare my tax return, am I going to get the same result, but ultimately lose money, because I have to pay your fee?"
I am not offended. I always answer the same way:
No offense, but who prepared your return?
Someone with no professional education, experience or credential.
That inexpensive computer program cannot replace skill and knowledge.
This is my profession, and my art form.
This is all I do, day in and day out, for 30 years.
All of my continuing professional education is targeted in this specialized and rapidly changing area.
Very few CPAs specialize exclusively in the field of taxation.
My clients are not stupid, money-wasting fools.
They are smart people, who know not to do their own dental work, not to repair their own video camera, and not to prepare their own tax returns. (My clients include tax lawyers, CPAs, MBA accountants, certified financial planners, smart teachers, doctors, lawyers, and sharp business entrepreneurs.)
They get what they pay for:
Tax returns prepared, at a reasonable cost, in a tax efficient manner, taking advantage of all the opportunities the law allows, to minimize their tax.
Every single time this scenario has unfolded, I have prepared a proper and advantageous tax return, delivering to my client larger refunds by at least $1,000, and usually more.
My clients benefit from my education, knowledge and experience.
They are consistently satisfied, and return the next year, by over 95%.
Safety? I have never had a client lose money because of a tax audit.
You're the boss. Your decision will not change my lifestyle, nor hurt my feelings.
Please review my website and make the decision that is right for you and your family.
My knowledge and skills are available to you, for a small cost, and potentially a Large Benefit.
Real-life example #1:
A taxpayer prepared her return by herself, using the inexpensive TurboTax computer program, with a result of owing combined federal, state and city taxes of $800. Then she called me, and scheduled a 1 hour tax consultation. After properly preparing the same years' return, with my knowledge, experience and skill, the result was a total refund of $1,800. For the single teacher, my (tax deductible) fee was $325. Her benefit was $2,600.
In 10 years, the net benefit is almost $23,000.
Would that have any value for you?
Real-life example #2:
A new client came to me. This couple prepared their prior year's tax return themselves, using inexpensive TurboTax software, resulting in a $660 combined federal and state refund. I then prepared their tax return, utilizing my years of education, experience and knowledge. The result was a combined federal and state refund of $6,200. This is an increase of $5,540, or 800%.
In 10 years, after paying (tax deductible) tax preparation fees of $4,000, the net benefit is $51,400.
Does that have any meaning to you?
I spoke to an IRS agent recently. I told her that I thought TurboTax software was a great deal for the government, because people have no idea of the many legal deductions available to them. They prepare a return quickly, with no education or skill, and send it in to the government. They pay much more tax than they are legally required to pay. I was surprised when she said, "Well, you know what I see? I see people who claimed many deductions they were not entitled to, and I have to go out and bust em'!" Which alternative would you choose?
I have also seen tax returns prepared using TurboTax software, which had the numbers in the wrong place, and inappropriate forms which I have never seen in 30 years of tax practice. It has been time-consuming and expensive to amend these returns. Frequently, taxpayers do not understand what they are doing with this software, cannot control it properly, or do not have the experience to recognize the output is wrong. Taxpayers do not understand the various acceptable options available to report the same transaction, and which is more advantageous for them. Of course, with a tax system as complex as this, there are various alternative strategies available to minimize taxes. With the ever-changing complexity of business taxes today, self-preparation using an inexpensive program could be a serious - and expensive - mistake.
What Happens if a Return is Audited by the IRS or state?
If it is necessary, I can successfully defend these tax returns with no problem, because they were prepared correctly, in accordance with current tax law. If there are questions or problems, clients don't need to "Ask the Box" or represent themselves against an experienced IRS agent, a foolish, dangerous and expensive mistake. They can call an experienced Certified Public Accountant, not to go with them to an audit, but to go instead of them. Only an attorney or a CPA can represent a taxpayer, not unqualified "tax preparers."
However, please be forewarned: I do not defend tax returns that I did not prepare. I simply do not have the time.
Now, you decide: Is TurboTax really such a good idea? Does it really save people money?