Using Online Tax Software or Accountant

EP 58 - Using Online Tax Software or Selecting an Accountant

[00:00:00] Have you ever found yourself sitting at your computer? Staring at a stack of tax forms, wondering whether you should tackle them on your own. Or look at using some online tax software. Or maybe even seeking the assistance of a professional accountant.

If, so, my friend, you're not alone. Many individuals face this decision, every single tax season.

In fact, here's a message we received from one of our listeners.

I've been listening to your show and you asked for a message, so here goes nothing. I've been doing my own taxes for the past several years on one of those online sites. It seems to work fine, but I am wondering if I am missing some deductions or credits. A friend at work told me he goes to an accountant and he gets his taxes done professionally.

He said it costs him about 400, but he swears it's worth it. What are your thoughts, and how can I tell if I would be better served using an accountant? I appreciate your advice, hope this message makes sense, and I will look forward to hearing your answer on the show. Thank you, Ralph.

Today, we're going to explore the pros and cons of both options.

So you can make an informed choice that suits your [00:01:00] personal financial needs.

Before we dive into the details. Let's take a moment to understand the basic differences between online tax software and hiring an accountant.

There are a lot of these online tax software, things to choose from TurboTax. H and R block And they provide a user-friendly platform that guide you through the tax preparation process.

On the other hand, you can hire an accountant like me. That involves working with a trained professional who offers personalized tax advice and assistance. So let's jump right into this discussion.

 first thing I'm going to talk about are the pros and cons of using [00:02:00] online tax software.

There are some advantages and there are some disadvantages, my friends, and this is a question we get routinely when people call to inquire. About our services

One of the first pros of using online tax software. Is cost effectiveness. Online tax software is generally more affordable compared to hiring an accountant.

 you can get one of these online tax softwares for 50, 60, $70. I've seen them as high as $99. Which make them very attractive. For individuals on a tight budget.

Additionally. This tax software, provide step-by-step instructions, helping you navigate complex tax forms and ensuring accuracy. Well, at least that's what they say.

They're going to do. But there are some downsides to consider.

And this is the truth they know, and people ask me all the time, Ralph, I come in and I pay you to do my taxes, but couldn't, I just do this on my own. Well, here's the deal. Online tax software may not be suitable for individuals, with complex financial situations. If you have multiple sources of income. [00:03:00] Investments, or own a business.

The software is not going to address all the intricacies of your personal tax situation. Here's another problem. Relying solely on software means you miss out on the personalized advice and expertise that an accountant like myself can offer. I say this to clients routinely. You can find somebody to do your tax return. Put the numbers on the paper. But it's the tax planning and it's the advice that I offer and other accountant offer that really makes the difference.

So let's talk about the benefits of hiring an accountant.

One of the most significant advantages is the expertise and knowledge they bring to the table. Now listen folks, as an example, I've been doing this for? Well, the truth is. I've been an accountant. Since I was about 22 years old. But I grew up in the industry. I had somebody in the other day and we were talking about it. I, I, truth is I probably started doing taxes when I was around eight years old, at least standing over a copier on the evenings and weekends making photocopies. I mean, my dad's an accountant. It's sort of runs in our family. So [00:04:00] accountants like myself, are trained. Professionals were required to stay up to date with ever changing tax laws and regulations.

I was talking to a client yesterday and he said, Ralph, how do you keep track of all this stuff? I said, well, this is my job. And the truth is that gives us the ability to identify deductions and credits you might've overlooked. Something that tax software can't possibly give you. Well, what does that mean to you? That means we can save you money in the long run.

Another advantage is the peace of mind that comes with knowing your taxes are being handled by a professional. I've had many clients tell me directly that they appreciate a peace of mind. They get from having me complete their returns. And not have to spend an entire weekend trying to figure them out. or trying to navigate some online software. The truth is folks tax laws can be complex. There's thousands and thousands of page of code. And making mistakes can result in significant penalties or even an audit. By working with an accountant. You can minimize the risk of errors and ensure your taxes are filed accurately and on time. [00:05:00]

So, how do you make a decision]

What are the real considerations Ralph that you need to make? I put together, what I feel like are several considerations. So when deciding between online tax software and hiring an accountant, there are a few factors that consider. I broken these down into three main considerations

consideration. Number one. You have to assess the complexity of your financial situation.

And everybody's situation is different. If you have a very straightforward tax situation. Online tax software may be sufficient.

Now, if you've got a job. Maybe you have a mortgage interest statement, maybe some charitable contributions. That's pretty straightforward tax returns. So maybe. That's a good fit for online software. But the truth is if you have investments, If you own a business. Or if you have complex financial matters, like let's say you sold a home, let's say you inherited property. Yeah, let's say you've got children in college, all those things. Make it so hiring an accountant might be a better choice.

So let's move on to [00:06:00] consideration. Number two. You have to consider your comfort level with technology. And your own tax knowledge. And are you going to sit down and learn? The tax code, you don't have some clients that come in. And I think this is fantastic. they really study the tax code. when they come in, they ask questions.

They have a good understanding of what's going on. But the truth is online. Tax software requires some level of computer literacy. Of course you needed at least to be able to point and click. And you got to have a basic understanding of tax laws. If you're not confident in these areas, having the accountant guide you through the process can give you that peace of mind. we talked about earlier and the truth is this. I have fixed so many returns, which were prepared by using online software. In fact. I'll tell you a story.

I recall doing an amended return for one client several years ago, where the online software had allowed them. And I'm not sure how it did this, but it allowed them to take both the standard deduction. That's if you don't have the ability to itemize and itemized deductions. Well, they got a letter from the IRS that said, wait a [00:07:00] second, this doesn't make any sense to us. And you owe us money.

So they came in to meet with me. I look at their tax return. And they had gotten a $2,000 refund. Well, they got this refund because their tax return was wrong. And unfortunately in the end I had to tell them not only were they not getting that $2,000. they had to pay it back. Plus another 6,000. that was a huge tough day for them. All because they relied on that online tax offer.

So like I said, I mean, there's a lot to be said for that, but there's a lot of things that, that it misses.

So let's move on to consideration. Number three. Think about the value of your time.

This is something I say to clients routinely. How much is your time worth? while online tax software may be cheaper. It may be time consuming. Listen, we're all busy.

If you're juggling multiple responsibilities. And would prefer to delegate the tax preparation process to a professional. Hiring an accountant may be worth the investment.

In the end. Often I tell my clients, you get what you pay [00:08:00] for.

 if you want to spend a weekend or a week or 20, 30 hours trying to figure out your tax return. And it's taken you away from your family or it's taken you away from your business. Then obviously paying somebody like myself, you know, professional count in the new year return is probably going to be a better choice. So you have to consider these factors carefully. And you need to make a choice that works for you.

 go, let's think of these considerations again.

So number one, Considered a complexity of your tax situation. number two, how comfortable are you with the technology and a basic understanding of tax law? And then think about the value of your time. So before we wrap up, I want to remind all of our listeners to visit our podcast page.

We'll have show notes there.

That's at askralphpodcast.com. You can leave us a review. You can share your thoughts, just like this caller. gave us an idea for a show. You can even give us ideas for future episodes.

While you're there. Make sure you join our email list. We're running a drawing right now every week with [00:09:00] a $25 Amazon gift card.

If you join our mailing list, so join yourself and tell others about the value you receive in the askralphpodcast. And maybe they'll win that gift card. If you find that you're in need of tax services, I do tax returns all over the world. You can schedule an appointment with me right on that website.

It's askralphpodcast.com/store. And just a final reminder. We're starting a question of the month where we encouraged you to leave us a voicemail message or an email. You can do that by clicking on the bottom right corner of our podcast page. See a little microphone there.

Just clicking record. And thimonths 's question is this. What do you find is the most difficult part of creating and more importantly, living on a budget.

We'd love to have your answers by March 1st. And we'll discuss the answers. and we will discuss the answers show in March. So don't forget to leave us your answers.

So, my friends, as we wrap up today's episode, I want to leave you with this to consider.

I always try to give you one of these, at the end. The decision to use online tax software [00:10:00] or an accountant depends on various factors. I think we've hammered these, the complexity of your tax situation. Your comfort level with technology, and tax. And the value of your time.

So make up your decision and decide what's best for you. And as always, I always say this at the end, stay financially savvy. God bless, you.

And until next time continue working to master your finances.

It's worth it in the end.