If you’re thinking about the best way to file your taxes for the coming year, you may be tempted to opt for TurboTax or one of the other off-the-shelf tax preparation software offerings. After all, they seem to be easier and cheaper, and you can do it yourself.
On the other hand, if you have a small business, investments, complicated loans or even just want to be sure you’re doing it right, you may be thinking about hiring an accountant to manage the process.
Either way, the questions are obvious:
- Is an accountant necessary?
- Will you save money going with TurboTax vs an accountant?
- What is the best way to avoid an IRS audit
- How can you maximize your tax savings?
Maybe you’ve become accustomed to filing your own taxes. There are benefits to doing it yourself, including:
- Maintaining your financial privacy
- Doing your taxes on your own schedule
- Checking your own work
- Controlling what is officially submitted in your name
- Keeping an eye on your own finances
If you’ve launched your own business, you may be particularly interested in how well TurboTax, Tax Cut and other software can work for you as compared to going to an accountant.
After all, the tax implications of funds you bring in through your business can be more complex than income taxes when you only have income from an employer.
Still, many people feel very comfortable using a software program to manage their taxes. If you like to have a greater sense of control over your results, you can test it out by doing what we did: using TurboTax to calculate our taxes while hiring an accountant. This can provide you with some checks and balances while also giving you access to professional help. And you’ll understand more about what you get with TurboTax vs an accountant.
Interested in the best online tax solution? Try Picnic Tax:
Filing Your Taxes Online With TurboTax
TurboTax is one of several popular options for people to do their own taxes and file them online. There are various pricing tiers for TurboTax and its competitor software. There’s a free online option for people who have simple tax needs, such as only having a regular W-2. Other options are $59.99 plus state filing costs for deluxe, $79.99 plus state costs for premier and $119.99 plus state filing costs for self-employed people.
You can also pay for an audit defense service that can provide you with access to a third party to represent you with the IRS if you are selected by the tax agency for an audit. If you made a mistake on your taxes, you’ll still have to pay any overdue taxes and fees, but many people feel more secure by selecting this option.
TurboTax will ask you questions as you complete your tax return. The software does not leave you entirely on your own; its algorithm is designed to detect your eligibility for deductions.
It will suggest deductions for you based on your industry and other information that you provide. However, you should keep in mind that you are responsible for any representations you make through TurboTax or other tax software.
Advantages of TurboTax
Some of the advantages of using TurboTax or other software programs include the following:
- Lower costs, since you’re using software instead of professional advice
- Faster turnaround time, since you can sit down and do it yourself – although you may spend hours completing it
- Ease of use, because you answer the questions and the algorithm handles it
Disadvantages of TurboTax
There are also some disadvantages of using TurboTax to file your taxes, including the following:
- Difficulties handling complex situations, like small businesses, investments and other tax concerns
- Inability to offer planning suggestions, which can be important for people who want to manage their wealth
- Potentially inaccurate suggestions for deductions, since the software is relying on your input and processing automatically
- Confusion in dealing with tax returns and required documents
- You are responsible for your filing, should you be audited
Using An Accountant For Your Taxes
On the other hand, you might want more peace of mind by going to a Certified Public Accountant (CPA). You can do this in person or file online.
In many cases, you can get the greatest benefit from working with an accountant when you have more complex concerns or need to learn how to handle changes in your life.
If you’ve received an inheritance, started a small business, formed a company, lived overseas or dealt with other issues that might not be fully clear in a software algorithm, an accountant can go through your documents one by one. You are still responsible for the representations on your taxes, but accountants have professional responsibilities that they are sworn to withhold. They can also communicate with other planning professionals you work with, like an investment manager or an estate planning attorney.
Some circumstances to consider an accountant include the following:
- Owning and renting out properties to tenants
- Starting the estate planning process
- Retiring or launching a business partnership
- Founding a new small business
- Earning income outside the United States
- Dealing with the alternative minimum tax, or AMT
- Handling stock options or restricted shares
In most cases, you’ll need to book an appointment in person. It can be slower and more complex than using online software, but meeting with an accountant face-to-face can give you access to more tips to help you plan for the future. You can also learn about changes in tax law or how to file taxes for a new type of business that you did not have before.
If you have a history of conflict with the IRS, you may want the additional expertise of an accountant.
[Also Read: 8 Questions to Ask When Choosing an Accountant]
Advantages of Using an Accountant
Some of the advantages of hiring an accountant for your tax preparation include:
- Skills and knowledge gained through years of experience
- Insight into handling complicated tax situations or past IRS conflicts
- Advice on planning for your taxes in the future
Disadvantages of Using an Accountant
There are some disadvantages of choosing an accountant, however. They include the following:
- More costly than using software online
- Takes longer to produce a completed tax return, because you need to make an appointment
- Need to arrange in-person appointments to handle accounting
- Potential for human error
The Best of Both Worlds?
For people who want the convenience of TurboTax or other software programs but the expertise and knowledge of an accountant, there is another option. An online accountant can provide the best of both worlds. You don’t have to deal with the confusion of sorting out your own documents while using online software, and you don’t have to drive around to meet with an accountant in person.
An online accountant with a service like Picnic Tax can offer professional support in preparing your tax returns, while still providing the human touch that can be so valuable when dealing with more complex issues. You can also receive a clear price quote in advance, so you’ll be able to plan for the cost of professional accounting advice.
There are several great ways to prepare your taxes and produce excellent, accurate results. While each option has its pros and cons, you can choose the right option that suits your needs. If you’re looking for a new option with some outstanding benefits, Picnic Tax allows you to get the support of an expert, screened and trained accountant with all of the ease of an online service.
Interested in the best online tax solution? Try Picnic Tax: