5 Reasons to Use a Tax Professional and NOT TurboTax
TurboTax is the most popular tax preparation software in the business. In 2021, TurboTax says more than 50 million people use the software to file simple returns.
However, lawmakers have accused Intuit and TurboTax of scamming 'billions' from taxpayers. Sen. Elizabeth Warren and others in Congress delivered this message in a letter to Intuit CEO Sasan K. Goodarzi. Congress identified that Intuit hired former Federal Trade Commission regulators as lobbyists "to shield its shady practices from government action."
"Intuit deliberately hid Free File from Google results, repeatedly changed names and landing pages to confuse and deceive consumers, and targeted military service members, people with disabilities, unemployed Americans, and people with student loans with upselling scams," the lawmakers wrote.
Is TurboTax actually free?
According to the TurboTax website "TurboTax Free Edition is absolutely free." The site claims you can "file your fed and state taxes for $0," though a popup clarifies that only "simple tax returns" using IRS Form 1040 qualify.
However, according to the US Federal Trade Commission, stating "free" deceives consumers.
In March 2020, the FTC issued a complaint against the company, alleging millions of people can't use the free program. Approximately 2/3 (66%) of all tax filers couldn't use the free TurboTax product because those who have a 1099 or farm income do not qualify.
We have seen a slight change in Intuit's "deceptive advertising" as the Super Bowl ad has changed from "TurboTax Free is free. Free, free, free, free" to "Come to TurboTax and don't do your taxes".
What are my tax preparation options?Americans basically have two options when it comes to filing their taxes:
- Do it yourself with tax software or through the IRS website.
The IRS does not charge to file taxes. If you're well versed in tax law (which most people are not), you can request tax forms, go online print them, complete the forms, and mail in your return.
- Hire a tax professional to do it for you.
In 2021, the average cost for a 1040 and state return was $323.90. Those numbers go up as the complexity of the return increases.
So, should you prepare taxes yourself or hire someone to help? Something as important as income tax should not come down to price. The primary consideration should be what you're most comfortable with.
4 reasons to hire a tax professional
- You don't have the time and patience to deal with tax preparation.
TurboTax does a wonderful job of asking questions to make the tax preparation process easy; however, it is not in TurboTax's best interest to find all of your deductions. Their business model focuses on getting people to buy the software and file. Many people leave hundreds, and even thousands, of dollars on the table every year.
- Have an advocate for complex tax situations.
Tax complexities can come from very simple places such as marital status, dependents, investments, owning a business, etc. Tax professionals can help sift through these situations to find things like deductions for a home office, business meals and travel, injured spouses, and audit red flags.
- You made mistakes on prior-year returns.
Tax preparers can look at previous returns and find even the simplest of errors. These errors can result in the IRS charging you back taxes, penalties, or selecting your return for an audit. And, unfortunately, when using the TurboTax, the bottom of the return says "Self Prepared" and you will be solely on the hook for any error. Most reputable tax preparers have an Audit Protection Program that serves as a sort of "insurance" to cover your tax returns.
- Save money (potentially).
We mentioned the average cost of hiring a tax professional, but hiring a tax pro can often save you money. Anyone can drop numbers into tax-filing software, but a qualified tax professional can analyze your situation, look for tax-planning opportunities, and help you plan for next year. A good tax professional can do more than beef up your bottom line. They can take charge of small tasks, such as prompting you to send in relevant documentation for a deduction or reminding you to adjust your withholdings. Having an expert looking out for you during tax season and beyond can give you priceless peace of mind.
If you’re ready to get your taxes done right, contact BOSS Taxes today for a free consultation.