WHY USE A TAX PREPARER WHEN I CAN DO IT MYSELF

Fkatz

Veteran Expediter
Charter Member
HI ALL, THIS IS SOMETHING TO THINK ABOUT!!!
Answering the Ever Plaguing Question
WHY USE A TAX PREPARER WHEN I CAN DO IT MYSELF!!!!

All Taxpayers have several options when preparing their returns
* Paper
* Personal Computer with store bought software
* "Friends" who have a personal computer with store bought software
* Online "Free Sites"
* A Professional Tax Preparer

We as Professional Tax Preparers have an explosion of Internet Competition. It has become even more important this year for us to differentiate ourselves from the canned software,of Turbo-Tax, Tax-Cut,Tax Act, and poorly trained or inexperienced preparers, and volume-only "check the box" human Machines (HR Block, Jackson-Hewitt, Liberty Tax, Web Tax, and other nationwide companies who are preparers rather then professionals.

A true Tax Professional adds value through knowledge and experience, and help our clients to obtain the maximun refund or minimun balance due by asking you questions and applying the specialized knowledge that a nonprofessional does not have.

We try to convince a tapayer to use a Tax Professional by answering the correct question that you might have, If you are in a Specialized Field of Employment, Trucking, Daycare, Teacher,or Clergy. Find a Tax Professional who specializes in that field. You do not want a person who calls themselves a tax preparer, and has absolutly no idea of how to prepare or take the proper deductions for your industry.

Facts, and examples:
EXPERIENCE: You want a Tax Professional who prepares between 200 to 400 returns or more per year vs one return per year as well as a number of years in business of preparing accurate tax returns.

EDUCATION: How many taxpayers attend and and pay(at their personal expense) for seminars/workshops to get 24 + CPE hours/year of tax training.

During the past season, our office, and I'm sure of many others had a chance to demonstrate the value of a professionally trained, knowledgeable, and experienced tax professional.

A new client visted my office because of a referral from another very satified taxpayer. The new client had sold a rental house with a large capital gain. After using a retail tax software to complete her income. she was sickened to learn in addition to the $31,000 she already paid in estimated taxes, she owed another $12,000.

After examining the return and asking several questions, we uncovered several software errors. The tax software had"
* Doubled her w-2 income;
* Not properly allocated the basis, selling expenses, or the sales price to the land and the building;
* Not asked understandable questions about the settlement statement on the sale of the real estate;
* Not properly placed the sale of the land and building on Form 4797:
* Missed several itemized deductions by not asking the right questions;
* Not probed enough to properly calculate basis and depreciation of a recent acquisition that was to be rental property; and
* Incorrectly calculated the alternative minimun tax (AMT)

By reworking the return, correcting the errors, and forcing Schedule A over the standard Deduction, we were able to remove the AMT Tax (A 7K savings) and reduce the regular income tax. Rather than the taxpayer writing a check to the IRS for $12,000, we were able to show the client a refund from the IRS of $2,000.00. A $ 14,000.00 difference as to paying versus getting A refund.

Another client, initially referred to by by his brother, had sold a limited partnership interest. He needed assistance reporting the sale (and its explanation) on the tax return. ( might add that this tax payer assembled and calulated there return by hand- there was not tax software in this case.) He and his wife had sold there personal residence and many belongings and move into a retirement community. He was unaware that the retirement community entrance fee, as well as the monthly fee, had a "medical expense"componet of $65,000 included.

Believing that he did not have enough in deductions to qualify, my client had not prepared a Schedule A to itemize even though he actually had enough deduction with just the medical expense. He could also claim Real Estate Taxes, charitable contributions, the balance of the medical expense,(prescriptions, doctors, etc) expense from a settlement statement, and dividends that were previously identified incorrectly(both qualified and non qualified) By using records from several years, I was able to reduce the capital gain on the sale of the taxpayers land. You can imagine that this client was smiling when, instead of paying the IRS just under $1,000. he was getting a refund of nearly $7,000. - A savings of almost $8,000.

Granted both of these cases ae unusual; but lets reviev some major issues that almost cost each cleint thousands of dollars:

* Both Taxpayers feld reasonably conpetent enough to prepare there own tax return, yet both demonstrated lack of tax knowledge beyond salaries, retirement income, dividends, and interest.
* The first taxpayer was confused as to how to imput data for the sale and to force a Schedule A deductions over defaulting to the standard deduction.
* In the second example the taxpayer was unaware that part of the residential community's fee structure was for lifetime medical support. Wheather this lack of knowledge was from misunderstanding or confusion about the information, it remains that the results were not available to the client.

Neither taxpayer had the backgroung and broad experience that a professional tax practioner brings to the table, Because we have had other clients that are residents and we were well aware of the medical components in hte entrance and monthly fees; so, the second cleint reaped the benefit of our experience and knowledge whe we brought a nice bonanza to him.

The Basic problem is that taxpayers simply do not and cannot hav ethe broad tax knowledge that a professional tax practioner brings to the table due to years of experience and hours spent in the classroom.

As tax professionals we bring a vast array of skills, knowledge, and experience to the tax preparation table. We are also a part of a network of skilled tax professionals that share experience-good and bad- with each other (maintaining confidentiality, of course) We should not be afraid to demonstrate out skills to out clients and ask that they share their positive experiences with there neighbors and friends. No box or website can match the service we provide to our clients, Let people know!

This article provided by the National Association
of Tax Professional and copywrighted with approval.

Franklin Katz, ATP
Frank's Tax & Busines Service
226 S. Cherokee St
Kings Mountain, NC 28086
(704) 739-4039
(704) 739-3934 Fax
 

geo

Veteran Expediter
Charter Member
Retired Expediter
US Navy
just like going to the dr, when you have a problem your dr to send you to right place so things will be check out and a plan of attack made to correct the problem
so you don't want to go to somebody who has know clue of what's going on
 

davekc

Senior Moderator
Staff member
Fleet Owner
Certainly a place where "EXPERIENCE" matters. Not a time to go to someone who is an expert at research.









Davekc
owner
22 years
PantherII
EO moderator
 
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