Lorraine has used software to do her taxes in the past, but now she's bought a house and is wondering if the additional complexity should send her to an accountant. As a CPA myself, what do you think I said?
As tax year 2010 slowly fades into the history books, let’s answer one more tax question. Here’s one I got recently…
I have always done my own taxes, using TurboTax software. But now I have bought my first home, and things are a little more complicated. Should I continue to do my own taxes or get help? And how do I find a good, reputable tax person?
Here’s your answer, Lorraine…
First, congratulations on becoming a homeowner!
Buying a house may make your taxes seem more complicated, but when you’re using tax preparation software, it’s really no big deal. Your software will ask you if you bought a house during the tax year, and if so, when.
Then it will automatically and accurately figure out if you deserve the First Time Homebuyer’s Tax credit. It will also ask you for the interest you paid on your mortgage and your real estate taxes (which should have been sent to you by your mortgage servicing company) and deduct them accordingly.
So the answer to your question is that TurboTax should be fine. If all you want to do is file a simple tax return, there’s no point in paying an overpriced accountant. But let’s take this a step further, because I think TurboTax is also overpriced.
Their website says the cheapest version is $50. That’s outrageously expensive relative to other available products and is no doubt a reflection not of their quality but their advertising budget.
As with many other consumer items, the most heavily advertised tax preparation products rarely justify their higher cost. I stopped paying Intuit (the maker of TurboTax) years ago. This year I’m using TaxACT, which costs just $10. They even offer a free version, complete with free e-filing.
There was a time when tax preparation software was only available from a few sources, like H&R Block and Intuit. But now online preparation (as opposed to installing software on your computer) has become so ubiquitous that it’s highly competitive and, as a result, exceedingly low-cost. And why shouldn’t it be? If there’s one thing a computer is good at, it’s keeping track of minutia and adding up numbers.
Next year, check out a few review sites and pick something less expensive. Your taxes will still be done correctly and you’ll save a buck or two!
But if you still want to know how to find a quality pro, I’ve done that story – check it out below, along with a few other stories that I hope you won’t find taxing!
- 9 Tips to Find a Tax Pro: But Do You Really Need One?
- 3 Tips for Free Help
- Can’t Pay Your Taxes? File Anyway
- 10 Dumb Things to Do With Your Tax Refund
- 10 Tips to Avoid an Audit