Tackle the Paperwork Yourself or Pay an Expert?

By Bauerlein, David | The Florida Times Union, February 8, 2009 | Go to article overview

Tackle the Paperwork Yourself or Pay an Expert?


Bauerlein, David, The Florida Times Union


Byline: DAVID BAUERLEIN

The W-2 statements have either arrived in the mail or will show up any day. It's time to choose a tax preparer.

Some filers will use a certified public accountant for both tax expertise and the personal touch, a relationship that one CPA likens to being a "psychologist for their financial affairs."

Others will pick the convenience of storefront tax preparers that pop up with offices all around town.

And a growing share of filers will take on the task themselves by plugging in numbers on their own computers, using over-the-counter software programs or Internet sites. Some online sites affiliated with the Internal Revenue Service are free and automatically fill in the forms by asking taxpayers a series of questions.

Whatever option taxpayers select, they should start by deciding what they want from a tax preparer, said Rob Hinckley, a certified public accountant at LBA, a firm in Jacksonville. He said hiring a CPA would cost more than going to a storefront preparer, for instance, because a CPA takes a personalized approach.

"We probably spend more time at the front end trying to get our arms around the total situation," he said. "Just in casual conversation, things come up that might trigger an idea."

He said that kind of relationship continues year-round and gives clients a multi-year tax strategy. But he said if clients reach the point where their situations aren't changing from year to year, he'll suggest they consider a less expensive service.

"If I ever feel like I'm not bringing added value to the table, I'll tell them 'you're spending more on us than you need to and you would be a good candidate for going to a storefront preparer,'" he said.

For those who really want to save money, there's Free File.

Free File is a partnership of the Internal Revenue Service and the Free File Alliance, a group of companies with computer programs for tax preparation. Free File has been around since 2002. Last year, it handled 4.8 million returns, a 26 percent increase from 2007, according to the Free File Alliance.

Taxpayers go to the IRS's Web site and click on Free File to get a choice of 20 companies in the program. Free File is for filers who make up to $56,000, which officials say accounts for 70 percent of taxpayers. Some companies set lower income limits so taxpayers should examine each one for the right fit. The companies use online questionnaires to get information about the taxpayer and then automatically fill in the tax form, which then is sent electronically to the IRS.

The companies offer additional services at a price, but there's no obligation to purchase those. "Free is free," said Tim Hugo, executive director of the Free File Alliance. "That's one of the things that we're straight up about."

For the first time this year, Free File also offers an online option for taxpayers who make more than $56,000. They can go to the site and click on various forms that they can fill out on their computers, and then electronically submit the return to the IRS. However, there is no set of questions to guide taxpayers through the process. Hugo said the program is for people who are knowledgeable about preparing their own tax returns and prefer the convenience of doing it on computer instead of filling out paper forms.

Bob Baldwin, senior vice president of community development at the Jacksonville Regional Chamber of Commerce's Small Business Development Center, has simple advice for business owners tempted to save money by doing their own taxes - don't do it.

He said the survival of a business rides on how it handles tax issues. He said owners should establish a year-round relationship with a CPA or bookkeeper to get a "second set of eyes" on everything. …

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