This article was originally seen on The Register-Guard’s website.
Recently, while at a routine health check-up, my doctor asked what I enjoy the most about my job as owner of Accurate Bookkeeping & Tax Services . “Is it doing corporate taxation, estate taxation, or individual tax returns?” After thinking about the question for a few moments, I realized that the best part of my job is the human interactions and relationships I have established over a career spanning more than 30 years, and helping individuals to understand their unique tax situations. It’s very hard to establish a long-term, meaningful relationship with a box of do-it-yourself tax software.
Throughout the years, my clients have asked questions and even joked about using a “box” to prepare their own taxes. To be fair, tax software companies accurately prepare tax returns based on the assumption the person using their product completely understands the questions they are being asked. However, I have found that there are a lot of drawbacks to using “do-it-yourself” tax software. For example, such software cannot help you to implement a multi-year plan to help fund your kid’s education, to plan for your retirement, or to help reduce the tax burden on your estate when the time comes to pass your legacy on to your heirs.
Benjamin Franklin’s oft-quoted adage, “an ounce of prevention is worth a pound of cure,” applies equally as well to taxes as it does to medicine. Boxed software will ask you the same questions that a tax professional will ask about life-altering events: “Did your marital status change during the year?” or “Did you buy a house or have a baby?” The issue here is that those life events are good reasons to set up a tax consultation so you can anticipate tax consequences before those events take place. At such an appointment, hopefully, you are not only relying on a practitioner with years of knowledge and experience, but also consulting with one who has the intuitive sense to ask the right initial and follow-up questions; no boxed tax software has ever exhibited this personal, one-on-one capability.
Beyond good tax planning , when facing a financial crisis or financial windfall, do you really want to rely on impersonal software out of a box? Would you rely on do-it-yourself health care software to diagnose the cause of severe abdominal pain and a 105-degree fever? No, you would run to the nearest urgent care facility or emergency room. Use that same rationale regarding your taxes: Would you know what to do when facing a tax levy on your financial accounts or a wage garnishment? Not likely without a tax expert. Would the person who just won $5,000,000 in the lottery rely on boxed software to pay the least amount of tax that is legally required? Okay, maybe you won’t ever win that much money. But, if you consider, for example, that the average married couple who earns $200,000 per year will pay $2,000,000 or more in federal and state income tax over their 40-year working careers with little or no tax planning, you should ask yourself: Do I really trust myself to get it right with do-it-yourself software?
Those commercials, showing physicists and other renowned geniuses touting how easy it is to do your own taxes, make me laugh. Even the great Albert Einstein knew better; he once said, “The hardest thing in the world to understand is the income tax.” The average tax practitioner, one who has never embarked on a disciplined course of study to learn the intricacies of the legislative statutes and judicial precedent that make up our income tax laws, understands how incredibly complex it all is. As a practitioner who has embarked on such a course of study, reaching the level of a master’s degree, I firmly believe that no software ever written can replace the expertise of a seasoned professional when facing the complexity of navigating taxes.