There are many excellent tax preparation software packages on the market today. The key thing to remember is that the software is only a tool, and to create a work of art you need both tools and a craftsman. An excellent tool can take you only so far, eventually you need the skills that can only be gained from training and experience to really create wonders.
Fortunately your tax return is not a work of art. Some people really can do their own taxes and do them well. Others simply do not have the temperament or the time to do the job right. Tax preparation software can greatly assist in doing your tax return, but you still need to bring your own skills to the table in order to really do it right.
The major software programs all do a fairly good job at a reasonable price. You can save on accounting fees and the like, as things aren’t too complicated and you will probably be fine. Most packages will ask you questions, point out deductions, crunch long calculations accurately and warn you about potential audit items. The problem with software today is the same as it has always been. Namely, garbage in, garbage out. If you enter in the wrong number, or don’t understand what number you are being asked for, you have no chance of getting your taxes done correctly. This can cost you more time and money than what you saved by doing your taxes yourself. If your situation is something other than plain vanilla then you could be inviting trouble.
A good accountant can be worth their weight in gold. It takes experience to know how to make the maximum claim for home office deductions without setting off a warning at the IRS. That type of ability requires human judgement combined with real life, hands-on experience that no software program today can mimic.
Naturally human accountants can make mistakes too, and the best ones are usually expensive. The tax laws change from year to year and can sometimes make a labyrinth look like a straight path in comparison. Sometimes the rules change in the middle of the year and the best tax preparers are always taking continuing education to stay on top of the changes.
The thing to do is to remember that the software is a tool that you can use. So too is an experienced professional tax preparer. Use them both and increase your chances of getting a good result. If you have a small business it might cost you $1-2,000 for a good accountant. The software package can probably be had for $100. Don’t forget to bill your own time when working your way through the software program. This might seem like a lot of money to figure out your tax situation. At least it is until you discover another $10,000 of deductions that you are eligible for. The value is even better when you consider the avoided back taxes, penalties and stress of an audit.
A good accountant doesn’t see the software package as a competitor, but as another tool that can help his or her clients. You should see it the same way. Use both the tools available to save time and money in the long run.