Business Plan Tax Preparation
Tax Preparation Software Tips
Tax preparation software has become increasingly popular over the past few years. As a result paid preparers are becoming more expensive which in turn increases the number of people in search of tax preparation software! Anyone in need of a perfect Catch 22 scenario can feel free to quote my last sentence! Those hesitant to use the software often fear making mistakes. A mistake in either direction can be costly. A mistake in the governments favor can cost you monetarily. A mistake in your own favor can cause an audit and in turn cost you monetarily. I offer the following guidelines as a safe approach to your tax management.
Tax professionals are in the zone. They think, eat and breathe taxes for at least a few months a year and see a variety of scenarios. Therefore, it stands to reason that they may be more sensitive to economic and situational indicators that have an effect on your tax return preparation. Asking the right questions is key. As a general rule I would (and do) sit with a tax professional in any year that there is a significant change. These changes include a dramatic increase or decrease in income, a marriage, a birth or an adoption of a child (especially adoption, due to associated costs being deductible), a change in a business loss or gain status, the selling or buying of a home, etc.
Once your situation plateaus tax preparation software is a less expensive alternative. This method requires a little more work on your part, however. Rather than having your preparer ask you the questions, you will have to read the questions (not so difficult). I strongly suggest getting a second opinion (a little more work). Run your numbers through one of the online tax prep services that require payment only when filing. Often you can print these forms without paying or filing they are just marked with a DO NOT FILE to prevent you from simply mailing them in. This “second opinion” will give you peace of mind that your return has been prepared correctly. The following website compares multiple features and prices of 10 different tax software products: http://tax-software-review.toptenreviews.com/.
If you find that you have been using tax preparation software for a number of years, you might want to visit a paid preparer and ask them to take a quick look at a couple of previous year filings as well as prepare the current year’s filing. The preparation of the current year’s filing will get you in the door. Tax preparers tend to be anxious to find others mistakes, even if that “other” is an automated software company! If a mistake is found you can choose to have the preparer amend prior year returns or do so yourself as most software products have this option.
Even in the years that I have chosen to use a paid tax preparer, I run my simple numbers through an online software program just to get a ballpark figure. (By simple numbers I am referring to the info on any W2’s) This is helpful for planning and prepares me to have an intelligent conversation with the preparer if I have any concerns.
Tax preparation software is a less expensive alternative that I suggest using in combination with the professional services of a paid tax preparer. The guidelines above will help you reduce error and give you peace of mind while greatly reducing your cumulative tax preparation costs.
About the Author
I have an extensive background in Finance and Fiscal Procedure. I also have a web business where I offer Educational Computer Software and Games. I am very interested in the product itself as well as the subject matter that it involves.
Please use the link above to visit us at The Software Spot!
Thank you, Allison Merlino
Bookkeeping, Payroll & Tax Preparation
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