Do Tax Advisers Really Catch Things TurboTax Doesn't?

Using a tax professional to file your taxes has its advantages over using a tax program.

Using a tax professional to file your taxes has its advantages over using a tax program.

Despite TurboTax's popularity, many taxpayers still rely on a tax professional for preparation of their federal income tax returns. Sixty percent of participants in the CompleteTax Tax Prep Survey in January 2010 reported that they planned to turn to an accountant or professional tax preparer. Eleven percent said they would use online resources, 10 percent said they would use "a packaged program," and 17 percent indicated they would prepare their taxes the old-fashioned way without any special tools or assistance.

TurboTax

TurboTax uses information you enter to generate a tax return. Along the way, it raises red flags that indicate problems. It also provides free audit support year-round from a tax expert. If you have a simple tax situation, such as one job and no dependents, using TurboTax would be considerably less expensive than using a tax adviser. For a person with a more complex tax situation, however -- such as a business owner who must itemize deductions and use multiple forms -- the benefit of guidance that a tax professional offers might outweigh the advantage that the difference in costs represents.

Tax Adviser

Eighty-six percent of those participating in a survey by CompleteTax cited accuracy as their No. 1 consideration in tax preparation. A paid tax preparer must obtain IRS certification each year in order to file taxes on behalf of his clients. The IRS requires this to ensure that tax preparers have a handle on tax changes. There is no guarantee that a paid tax preparer will get you a bigger refund than will TurboTax, or that he will catch things that the software will not recognize. Assuming, however, that your paid tax preparer is not only properly certified through the IRS but also attentive to the details you provide about your situation, his perspective might prove advantageous.

TurboTax vs. Tax Preparer

A good tax preparer points out ways to reduce your tax liability -- advice that TurboTax cannot provide because it is a do-it-yourself program. In a head-to-head comparison of TurboTax with a CPA -- conducted by CBS MoneyWatch -- the CPA pointed out adjustments to the client's business tax deductions that TurboTax missed, and suggestions for additional tax deductions. TurboTax also missed some state filing forms. In the end, the CPA obtained for the client a bigger refund than did TurboTax. The CPA's fee also was higher than the purchase price for the program.

Audit Support from TurboTax

TurboTax provides free audit support from a tax expert over the phone year-round. According to the company's website, TurboTax experts "help you to understand what the letter or notice that you received means," "tell you what to expect and how to prepare" and "generally assist with outlining next steps." The service, however, will not represent you, provide legal advice or help develop a defense strategy. You have the option of purchasing full-service representation from TurboTax when you need to make an appearance before federal and state auditors.

Tax Adviser: In-Person Assistance

Securing the services of a tax adviser ensures in-person assistance is available throughout the year -- including tax season and the time leading up to and through an audit by the IRS. If a tax adviser makes a mistake while preparing your tax return, you can expect the adviser to correct the problem and communicate with the IRS on your behalf. Many tax advisers and tax preparation specialists are not CPAs. Still, a tax adviser with whom you have established a relationship might be sufficiently familiar with your personal circumstances to offer sound advice concerning your present and future tax liability.

About the Author

Randolf Saint-Leger began his professional writing career as a junior research analyst. His writings have appeared in various online publications as well as "First Call," a leading news source for professional fund managers. Saint-Leger holds a Master of Business Administration in finance and international business from Pace University.

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