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« Back to articles from category "Finances"

The following article was published in our article directory on February 11, 2012.
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Tax Preparation Methods: Out with the Old, In with the New?

Article Category: Finances

Author Name: chickie maxwell

The debate on which tax preparation method is better, digital or manual, has continued for a number of years now, ever since software for preparing taxes have been introduced. With a lot of programs being very accurate and user-friendly, many observers have said that the days of accountants and other tax professionals doing the number crunching are coming to an end. But then, can computer programs really be a better substitute for humans when it comes to preparing taxes?

Come to think of it, expert tax accountants are already knowledgeable in matters that have a specific effect on their clients. For example, someone who is an expert in preparing taxes know the best way to claim the maximum amount for a home-office deduction without being noticed, especially from the Internal Revenue Service. An expert tax preparer can also weave his or her 'magic' on properly allocating expenses for utilities between business and personal accounts. Judgment when it comes to these matters that involves real-life situations in interpreting date is something that computer programs may not be able to do, but humans can.

The thing with accountants and other tax preparation professionals is that they are not that affordable, especially considering that they can also commit errors. After all, even the best CPAs or lawyers are still human, and may still miss some details. This can also be attributed to the fact that tax laws change every year, and in some cases, rules may even change in the middle of a year.

For example, for the year 2011, there was an extension with a rule allowing taxpayers to take out local and state taxes that are bigger than sales tax deductions. These changes can affect local jurisdictions, state jurisdictions, federal rules, or all three of them. Thus, unless a lawyer has a newsgathering crew that automatically updates of all these changes, there might be one detail or two that even the best CPA may omit. That is not to say that pros in preparing taxes are not expected to be familiar with all changes, but with the particulars varying every so often in the three different levels, it can be a challenge to follow all.

However, it may come as a surprise that there are actually a number of tax preparation professionals themselves who use tax software as well. Not only that; many professionals do recommend for users to be at ease in using both methods of preparing taxes. For example, an accountant can charge $1,000 to do a small business' taxes, and a tax program costs $110. $1,110 can be quite an expense for preparing taxes, but if close to $10,000 in deductibles are discovered by the combined efforts of the two methods, plus savings in avoided penalties and back taxes, then shelling out more money so that both methods can be used may be a great investment after all. Although modern technology is good, there is still a difference when something has a human component to it.

About the Author: MyReviewsNow offers information regarding tax preparation. To learn more about tax preparation, visit our website at MyReviewsNow.net.

Keywords: tax preparation

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