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Why Should You Use a Certified Public Accountant?

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I actually think I am smart enough to perform my own appendectomy if I had adequate training ... and I bet you share that same opinion for yourself.  However, I don't perform my own surgical procedures, nor do I repair my own plumbing or cut my own trees ... I let someone trained and educated in that field perform those tasks for me ... in other words, I let a trained professional perform those tasks.  But, I do complete my own tax return ...

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A Certified Public Accountant in Texas attends at least 40 hours of continuing professional education in order to maintain the license.  That is in addition to the fact that the equivalent of a Masters degree (150 hours) is required simply to sit for the exam.

So Why Use a Tax Professional?

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Taxes are Complicated

 

Most of the tax code is interactive, meaning that taking a position on one aspect of your tax return has implications for another portion of your tax return.

 

Do you know how to recognize that?

 

Further, add the complexities of the new tax laws and you can have a real mess, especially if you have a small-medium size business or real estate.

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What is Your Time Worth?

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Although it may only cost $150 to prepare your tax return online, how long does it take to complete it?  Most do-it-yourselfers spend an inordinate amount of time before they pull the trigger on actually filing their return.

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And Is it Correct?

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An accuracy-related penalty can cost you 25% of the understated tax.  If you miss a 1099-R or 1099-DIV not only will your tax liability increase but you may owe a substantial amount in penalties.

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A recent survey by the National Society of Accountants states that the average federal tax return, including a state tax return, costs around $275, while a Schedule C for a small or medium sized business will tack on another $185.  So for just over $450 you can have an accurate tax return and Peace of Mind!!

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Also, as an added bonus, most CPA's will find deductions you may not know about and apply them correctly.  So not only is that another motive for Peace of Mind, it may also save you money.  Plus, if most of your tax research is done through your barber or neighbor, they will keep you out of trouble.

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And remember ...

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A TurboTax story ...

Each year I have what I call "one-time returns" meaning that these taxpayers have a few tax issues they do not understand how to report nor can they determine how to report it using online or off-the-shelf software.  I always have the taxpayer bring a copy of the prior year tax return with them so I can review it for accuracy and other tax carryforward items.

Most recently a couple brought their information in with the prior year tax return prepared using TurboTax.  I found no less that FOUR errors in their return ranging from:

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  • Various reporting of their children's income from Form 1099s that do not meet the Kiddie Tax threshold, simply from not observing the social security numbers on which the income was reported

  • Not reporting all the available medical expenses on Schedule A

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  • The most egregious error was miscalculating the exception amount for the early withdrawal from a qualified plan used for medical purposes, albeit a very technical tax issue and calculation

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These people did not even know they had tax issues, even less how to report them.  And they began their tax return for this last year using TurboTax and were making the same errors again this year!!

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Also, just because TurboTax now offers "TurboTax live" so the taxpayer can consult with a CPA or other tax professional, the cost is similar to what a local CPA would charge and there is no guarantee that it will be correct.

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For instance, before tax reform (TCJA 2017) many people in Texas attempted to deduct their motor vehicle registration fees because "TurboTax said I could."  Unfortunately, motor vehicle registration fees are NOT deductible in Texas because the fees are based on weight of the vehicle and not the value of the vehicle.

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I have a new corporate client and the local CPA firm that prepared the corporate tax return for last year listed his Corvette as 100% business use ... a huge red flag to IRS.  I mentioned this treatment to a Tax Attorney friend of mine over lunch and we got a dismayed chuckle out of it, wondering how many "bad preparers" are actually out there.

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