If one can read and follow tax software is it useful to still have a CPA review your tax return?

Question

Can the CPA find some little known tricks of the trade to help you legally pay less tax, assuming you already followed the software properly on your own? Example: TurboTax, TaxCut, TaxAct.

Answer 1

First off - I take offense to what one the other responders said. All CPA's are required to have continuing education each year (requirement are determined by the state(s) that a CPA is licensed in) and all CPA's who are tax practitioners take CPE in Taxation. Tax practitioners are extremely up-to-date on current tax issues in order to provide the best service to their clients. We also have very strict requirements on education and experience before we can get our CPA license.

That said, I think enrolled agents provide a very necessary service for some taxpayers, especially those who have prepared their own returns but need representation with the IRS.

In answer to your question, while it could be useful to have a tax practitioner (be it CPA, tax prep business or enrolled agent) review your return, it may not be practical. If you have a pretty simple return (some wages, interest income, itemized deductions) then it would not be efficient. More complex returns would not be a bad idea. The problem is you have to pay the practitioner to review the file and I know that they will not charge significantly less than what they might charge to prepare the return. To have your return competently reviewed they will need to review all your back-up documentation and the review could take time. You would need to discuss the fees involved before you do this. There are no tricks of the trade to be found. A practitioner might ask questions about your finances or activities during the year that might lead to additional deductions or credits that you may not realize you had available to you that the software might not automatically count, but that is probably a pretty slim chance.

Answer 2

I agree with most of the responders who indicate consultation with a tax professional would only be helpful if you have some unusual or complicated situations.

Thank you mariegailsweet for pointing out the error of the person who doesn't think CPAs are well versed in tax. In addition to what you said, it would be an ethics violation to practice tax services without the proper technical training. Licenses are too valuable to risk doing work we're not qualified for.

Answer 3

If your return is very simple, not really. CPAs are best for people with small to medium sized sole propritorships with lots of records to keep. Most CPAs concentrate on accounting and don't need to keep up with the latest tax laws. Enrolled agents take their continuing education in tax preperation and irs representation, so they are more up to date on the latest tax laws. A good professinal preparer at a major company can make sure the return is accurate and make sure you have answered the questions correctly (ask for one with at least 3 years experience if your tax situation is moderatly complicated). One area that really messes people up has nothing to do with numbers but is correctly claiming children they are supporting and qualifying for EIC. They changed the rules in 2005 and many people can no longer claim their boyfriend/girlfriends children (no legal relationship). A lot of people got hit with this last year and showed up at my tax prep office asking why they owe thousands of dollars to the IRS. Most prepares will check your return for free (H&R Block does) and only charge you if you want them to fix it.

Anybody (CPA, friend, tax preparer) who says they have a "trick" to get more money back is probably talking about filing inflated deductions than you legally can claim by saying that the IRS doesn't check if the numbers stay below a certain number (like $10,000 in mortgage interest when you really only paid $5000). This is fraud and can get you in major trouble (google on Jackson Hewitt and fraud for the latest example of tax preparer gone bad). Another fraud is to file single while your wife files head of household to get thousands of dollars in EIC. The IRS is checking for this and is developing computer software to find this on a nationwide basis (as in checking EVERY return, not just ones flagged for an audit).

Answer 4

That depends on how complex your return is. If you own a business that doesn't have very simple finances, it's probably useful. And if you have very complex personal tax situations, it can be.