Now is around the time when things begin to really crank for us around here at our Louisville tax preparation office. It’s the week which the IRS is opening up actual e-filing, and many Louisville people have received all of their paperwork necessary for completing their returns.
But there’s also a temptation that I hope you resist. Sadly, my writing this could easily be seen as self-serving, but that doesn’t keep it from being true. Here’s what I’m referring to:
Trying to prepare your taxes correctly on your own.
You see, I don’t like to crow about other people’s mistakes.
In fact, in our line of work, much of what we get to do is to *fix* or alleviate those mistakes, at least when it comes to their tax implications. This year (of all years) carries so many changes that users who fall prey to screaming offers from the “cheap” options are more exposed to wallet-sucking mistakes, or even an audit.
Do you remember when (even) the now-departing Treasury Secretary, Tim Geithner, testified about tax irregularities in his own personal returns? Do you remember where he placed the blame?
And he’s not alone. But there’s a good way to fix that problem…
… and a BIG incentive to do so, by the way, at the end of my Note.
Kevin Roberts Explains Turbo-Charged Audits and Mistakes
You may have heard me say it before, but it’s true: Did you know that we accountants like to joke to one another about how good these online software programs (TaxSlayer, TurboTax, etc.) are for our business? Firstly, they are not as “easy to use” as claimed, and secondly … they cost you an arm and a leg.
You might think they’re cheap. And on the surface, you might be right (though, in the last few years, a $1 Billion class action lawsuit was filed in the federal court in Philadelphia alleging gross misstatement of fees and deceptive standards of the federal “FreeFile” program … so even on the surface, it wasn’t always cheap). But I’m not even talking about the money for the service itself.
Using those programs can end up leaving hundreds, or even thousands of your dollars in the coffers of Uncle Sam … even if you follow all of their instructions to a tee. I see it all the time–frustrated clients bringing in their prior year’s tax return, astonished at all the “hidden money” my staff and I are able to find for them!
Choosing the wrong method, or forms, in filing your taxes can place you directly in the crosshairs for an audit.
Even if you don’t owe a ton of back taxes, you still don’t want your record to show some IRS agent that there has been a discrepancy of some kind in the past, so that red flags begin to fly, and then more bureaucratic people start looking through all of your past tax filings and current income holdings … basically taking your social security number, and poking around in your private life.
(And if you think they won’t do this, read a little online about the increased “enforcement” measures the IRS is taking this year.)
They can do a lot of things you won’t want them to do. However, if you keep a clean slate (no IRS correspondence with you, related to filing your taxes incorrectly), the opportunities for them to mess with your personal stuff will be limited.
Here’s another reason why this is so important … now more than ever. New government regulations in 2012, delays in Congressional action, and issues with refund “loans” from the big chains continue to create a mess in the tax industry … and the “Big Brand Names” (you know who I’m talking about) do NOT want you to know about it. In fact, they’re doing all they can this year to hold on to their business, and trust me — it is not good for you.
Yes, it can be seductive to “go it alone” … to trust a piece of software to point out possible deductions. To trust your work to poorly-trained preparers in a big box office. To protect against your chances of audits through online chatroom support or hourly employees.
But it can be a big trap.
Just ask Tim Geithner.