Nothing is certain but death and taxes, the saying goes, but can you be certain you are filing your tax returns correctly?
That’s the question from local tax preparers and accountants, who cast doubt on do-it-yourself approaches like online tax return services.
Pam Zahrt, chief operating officer of the local Jackson Hewitt Tax Service offices, puts it this way: Mess up and the onus is on you.
“It’s not really something you want to rush through. If there’s a mistake, you’re responsible for it,” Zahrt said. “And also — if for some reason you don’t claim a credit — I can probably count on one finger the times the IRS came back and said, ‘We owe you money.’”
Jackson Hewitt offers online services, as do many nationwide companies like Turbo Tax and H&R Block, but Zahrt said, “a knowledge of computers and the Internet” does not equate to an understanding of constantly changing tax code.
Michael Bannasch of Willis and Jurasek, 2545 Spring Arbor Road, said online services are great for people to cut costs and even have their filings checked for errors, but he’s not so sure Internet programs are the best at giving advice.
Bannasch, a certified public accountant, said that when he was first studying accounting and taxation in college he “thought taxes were all black and white” but he quickly learned, “That’s so far from the truth — there’s maybe 20 percent on either end that is black or white, but 60 percent in the middle is gray.”
Tax preparers have good reason to tout the value of their services: Online filing by individuals keeps growing. Nearly 35 million people prepared and filed their own tax returns last year, up 8 percent from 2009.
Money is one explanation why. Online services for filing 1040EZ forms and standard W-2 forms range in cost from nothing to about $100. A “basic individual return” costs around $350 to $400 at Willis and Jurasek. The hourly rate for many accountants is more than $100 per hour.
But at places like Jackson Hewitt, there is no cost for someone who is doing their own taxes or filing online to have their return reviewed by a professional.
“If it’s incorrect, we don’t really tell (a person) what they didn’t do correctly, but we will show them what we got and what the difference is and then they can pay if they want to use our service,” Zahrt said. “And very rarely when you tell somebody you can get them more money do they walk away.”
Places like Jackson Hewitt also provide services to help people amend previous year returns in the case errors were made.
Zahrt said it’s pretty normal to find “hundreds or thousands of dollars people are missing out on.”
Bannasch said working with small business returns reveals the value of communicating with a tax professional even more.
“We’ve got some businesses where we can pretty easily save them $20,000,” he said. “That’s a business that has revenues of a million or a million and a half a year and we’re coming in and saving them $20,000 in real dollars. We’ve just paid for our services many times over.”
He said part of the reason companies like Willis and Jurasek are able to help get clients larger returns is because they stay in contact with individuals year-round, offering advice on purchase transactions and financial decisions that have an effect on year-end taxes.
For example, Bannasch said 2011 is a great year for small businesses to buy equipment because
Congress is trying to stimulate the economy by offering write-offs on business expenses.
Zahrt said there are some people “who do great” filing their own taxes and using online services, but she believes paying for one-on-one interaction with a tax professional has more pros than cons.
“It gives you an actual sense of security,” she said. “We just want to just be sure people get the largest amount of refunds, because it’s really a big part of their incomes.”
Federal tax returns are due April 18 this year. The Internal Revenue Service offers information online at www.irs.gov, or individuals can call 800-829-1040.
As published in the Jackson Citizen Patriot on Jan. 31, 2011