More people than ever will try their hand at preparing their own tax return this year to save money. I’m all for the idea. You can even use the same professional tax software accountants pay over $1,000 per year for at my website: http://www.taxprepusa.net/. Click the box in the upper right hand corner. I have the lowest price of any firm in the nation.
Before you get too excited, I need to offer a few warnings. A software program can not prepare your return for you. It can do a lot, but you need at least a little tax knowledge. Be sure to read the instructions on areas of the return that apply to you.
Also note that the IRS is auditing self-prepared returns harder than ever. The IRS discovered a few years ago that self-prepared returns are riddled with errors and are low hanging fruit for bringing in more money to the U.S. Treasury. The IRS also knows that if they audit a self-prepared return, it is less likely the taxpayer will seek professional help. As a result, it is easier to talk a taxpayer into over-paying out of fear or lack of tax knowledge.
You can avoid the audit bug-a-boo by paying attention to accuracy. If your refund is less than you expect or want, this is not the opportunity to fudge numbers. If you owe money in an audit, they will add penalties and interest. Not fun. Trust me on this one. Use tax planning instead to lower your tax bill.
Simple errors can also trigger an audit. We had an audit this summer on a self-prepared return where the taxpayer claimed several million miles of commuting as a deduction. We did damage control in the audit, but the taxpayer still had a large balance due.
We are seeing a significant jump in audits of self-prepared returns. Prepare an accurate return and your chances of audit drop. And if you are audited, it is nothing more than a little wasted time.
If you use my website, I even answer questions if you give me a call. If it is too involved, I charge; if it is minor, it is on me.