| I practice public accounting in a Seattle suburb. | | | | return, you need to grab data from previous |
| Around this time of year, that means I get lots | | | | year's tax returns. Accountants and professional |
| of calls from people who need a tax return | | | | tax software like your accountant uses track |
| prepared or some tax question answered. | | | | these carry-forward items extremely carefully. |
| One of the most common questions is, "Can I get | | | | In comparison, many tax payers don't know |
| by with something like TurboTax (from Intuit) or | | | | which items need to be carried forward. |
| TaxCut (from H & R Block)?" | | | | TurboTax and TaxCut, by the way, do know. |
| The Case for Tax Software | | | | And as long as you keep using the same |
| My usual recommendation? Most people can and | | | | software on the same computer, you should be |
| should use a tax software program like | | | | okay. |
| TurboTax. The programs should be easy to use if | | | | However, if you get a new computer and forget |
| you've got computer experience. Especially after | | | | to transfer your tax files or if you bungle the file |
| the first year you use the software. | | | | transfer, you could lose thousands of dollars of |
| The programs are also really good at catching the | | | | tax savings. |
| usual errors. And they easily handle the most | | | | Special Circumstance #2: You've got more than |
| common tax questions or problems that the | | | | one tax return to prepare. For example, you've |
| individual tax payer is likely to encounter. | | | | got both a business tax return (like an S |
| What's more, the price is right. Tax return | | | | corporation, limited liability company or partnership |
| preparation fees vary by region and the skill of | | | | return) to prepare and you've also got your |
| the tax accountant. But just to give you an | | | | individual tax return to prepare. |
| example, I charge close to $400 for a typical | | | | In this case, you should consider the business |
| individual tax return. | | | | return when you prepare the individual return. And |
| In comparison, you can often find tax preparation | | | | vice versa-you should consider the individual return |
| software selling for between $25 and $50. That's | | | | when you prepare the business return. |
| a huge savings compared to an accountant. | | | | As good as the tax software programs are, the |
| The Exceptions to the Rule You Should Use Tax | | | | programs can't know as you're preparing one tax |
| Software | | | | return about the other returns you'll need to |
| In a handful of special cases, tax software (in my | | | | prepare as well. And that lack of insight means |
| opinion) isn't as good a choice. Specifically, I | | | | the tax software can't recommend tax |
| recommend people spend the extra money on a | | | | accounting choices on one return that let you |
| good enrolled agent or certified public accountant | | | | minimize the taxes you'll pay on another return. |
| in two situations: | | | | In comparison, a good accountant will consider |
| Special Circumstance #1: You've got | | | | your individual tax liability as he or she makes |
| carry-forwards for things like capital losses, | | | | accounting choices on your business return. The |
| alternative minimum taxes, or passive suspended | | | | accountant, for example, will consider your |
| losses. | | | | individual tax bill when depreciation methods are |
| In each of these cases, to prepare this year's tax | | | | selected on the business return. |