Three Things to Consider When Deciding How to File Your Tax Return

It's Superbowl weekend, and one of the heavy contenders during the game's commercial breaks will be tax preparation vendors - all fighting it out for the chance to help you prepare your taxes.    The choices are many, from online web based preparation software, to pc based, to small mom and pop shops, to large tax retail store offices.  
So how is someone, (who is now thinking about their W-2s on the counter), to decide between these choices?  There are several things to consider...
Cost:  The online / offline software choice is one of the cheapest.  I've seen some online offers as low as $9.99.  PC tax software falls into the $25-30 dollar range.  Tax retail shops generally will charge more since you're dealing with a live person.  However, H&R Block currently is filing the Federal 1040EZ tax returns FREE for taxpayers meeting the IRS qualifications to use that form.  For taxpayers with more complex returns prices tend to increase along with the complexity.  Mom and pop tax shops usually fall somewhere between the large retail offices and the software companies on the price scale.  
Expertise:  The tax prep software companies may do a decent job of applying the tax law.  The issue that I see is taxes are enacted into laws, and are very technical by nature.  Sure, companies try to make you comfortable by using terms such as GPS, or by showing pictures of people who may look likey they know about taxes.  Ultimately it is you, the user who has to interpret tax language well enough to use the software to flie your taxes.  Since it is a technical language the danger is you may think you know what something means, but it has a different meaning in tax law.  What does the "Double basis rule" mean to you?  I see clients every year who used tax prepartion software to do their taxes.  I can usually amend their returns to get them more money back.  In one case, I amended 3 years of returns prepared by the taxpayer using software for a several thousand dollar refund back to my client.
The expertise and training in mom and pop tax shops is as wide, and diverse as their numbers.  In the next year or so, the IRS will require all tax preparers to be certified with at least 12 hours of continuing education a year.  We are currently required to have 24 hours of tax CE at H&R Block.  Year after year, that's a lot of study, and a large amount of expertise.  
Guarantee:  This may be the most important consideration.  Last year, I performed several second-looks on returns that were prepared by a sole-proprietor tax shop.  I found mistakes, resulting in amendments giving my clients more money.  My client found out the hard way that the shop he had gone to did not have a guarantee on their work.  
I've heard that the software companies guarantee their calculations.  Well, I'm glad that they have confidence in the computer.  Especially since computers are addition and subtraction machines.  But what about if you transpose a number and enter it wrong.  Will they guarantee that?  I don't think so.  Being a human, I could make a mistake as well.  But I feel some comfort knowing that H&R Block stands behind my work, and will pay any penalities and interest resulting from an H&R Block error.  In addition, my client could purchase the "Peace of Mind" extended service plan, and H&R Block would reimburse the additional tax - up to $5,500 resulting from a H&R Block error.    
 No matter which method you decide to use to prepare your taxes, you, not the software company, or the paid preparer are legally responsible for  your return. 
In my next blog post, I'm going to be sharing the top questions I hear from tax payers.  
Happy Filing! John