You turn to qualified medical, legal and (of course!) financial planning professionals. Make sure you seek the services of a tax professional as well.
Attempting to prepare your tax return by yourself is a bad idea. The Internal Revenue Code consists of more than 67,000 pages. There are nearly 600 tax forms. Even the instruction booklet for Form 1040 is 155 pages!
This extreme complexity means it is highly unlikely that the typical consumer will correctly prepare his or her own return. It not only takes hours to complete the forms -- once you determine which forms need completing -- but mistakes are costly. You could even find yourself the subject of an audit.
It is precisely because of this fear that many prepare-it-yourself taxpayers deliberately refrain from claiming the deductions, exemptions and credits they are entitled to. The result: They pay far more in taxes than they actually owe. And they spend hours doing it, all the while fretting if they're completing the right forms in the right way.
Tax preparation software is of questionable help. These programs ask you a variety of questions, but many users find the questions confusing. If you skip a question or answer incorrectly, the software will produce the wrong forms or complete them incorrectly.
And you're out the 50 bucks or so it cost to buy the program.
In an ideal world, paying taxes would be automatic, with virtually no paperwork or effort involved. (OK, in an ideal world, you wouldn't have to pay taxes at all. But let's be realistic, people.)
After all, it's bad enough that you have to pay taxes. The last thing you want to do is spend more money in order to pay the taxes you owe.
That explains why so many people prepare their own returns. But as we've shown, preparing your own return is a bad idea. A much better idea is to have someone else prepare your return for you.
But this doesn't mean you should turn to your nephew or neighbor. Nix also the idea of turning to one of those no-appointment-needed walk-in services, for they are too often staffed with under-trained, part-time seasonal employees.
There are two reasons not to have your son-in-law or daughter prepare your tax return -- even if he or she is an MBA. Unless that friend or relative is devoting 20 or more hours a week to the tax and accounting field, his knowledge is probably no better than yours. Worse, if the IRS ever comes calling, that preparer cannot represent you.
Continued... |