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Tax Return Preparation Myths

Purchasing Tax Software and Preparing My Own Return Saves Me Money?

In the majority of cases this is not true. To determine the entire cost of preparing your tax return you need to consider all the costs.

bulletComputer with a modem (one-time purchase)
bulletPrinter (one-time purchase)
bulletCabling (one-time purchase)
bulletPower supply (one-time purchase)
bulletIncome tax software
bulletTime needed to select income tax software (1 hour)
bulletTime needed to install and setup software on your computer (1.5 hour if you do not encounter any computer problems)
bulletTime to troubleshoot tax software not working correctly (2 hours)
bulletTime needed to learn the software and any new features (1 to 2 hours)
bulletEnter information from your records (1, 5, 10, 20, plus hours depending on the complexity of your records)
bulletTime to research tax questions (1, 5, 10, 20, plus hours depending on the complexity of your records)
bulletTime to research problems with your tax software carrying/not carrying numbers to the correct location (1, 5, 10, plus hours depending on the complexity of your records)
bulletCost for getting tax help from a CPA (if you can't find answers to your tax questions) 
bulletTime needed to find state or federal tax forms not included in the tax software, you may have to file in two or three states (1 to 3 hours)
bulletPreparing your tax return to file electronically (.5 hour)
bulletCost of filing your tax return electronically (if not sending in printed copy)
bulletPrint your tax returns (.25 hours)
bulletPrint extra copies of your tax return (.25 hours)
bulletCost of paper and ink
bulletPrepare the envelopes for your returns
bulletWorrying whether or not you put the information in the correct location in the tax software (.5 hour)
bulletNo guarantee that your tax return was prepared properly, you are liable for any interest and penalties on tax return mistakes.

TOTAL ONE-TIME COST ESTIMATES: $1,000 - $2,000

TOTAL ANNUAL (REPEAT) COST ESTIMATES: $60.00 - $250.00

TOTAL ANNUAL COST OF YOUR TIME: (8,10,20,30 . . . HRS)    PRICELESS

But, I Enjoy Preparing My Own Tax Returns?

If this is true we would encourage you to submit a resume to us. Most individuals do not care to prepare their own taxes, they seem to find more enjoyable ways to spend their time.

 

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Last modified: December 17, 2010