Today TaxMama hears from Jerry who says, “I’m finishing up my tax return in Turbo Tax and they have two options – a review by a tax professional for $29.95 and audit defense for $49.95. Are those good values, or should I hire my own personal tax professional?”
Thanks for asking. These are good questions.
Looking over the Review function, that’s a good idea. I always advise anyone who prepares their own tax return to have a professional look it over before submitting it to IRS or the state.
As to the audit defense? It’s probably a good price for someone to help you organize your defense. You do understand that it will still be up to you to put together all your own records, do your own accounting (if you didn’t do it for the tax return), and gather all the back-up documents and put them into order yourself.
The only thing they will do is handle the calls to IRS or State agency, give you advice on how to get organized and go with you to the audit.
The heavy cost of professional audits comes from having your tax professional take all your records, and if you don’t have books, posting all your transactions into an accounting system. With completed books (yours or theirs), the tax pro organizes all your invoices and receipts to match up to the expenses on your tax return. And if anything’s missing, they help you find ways to replace or re-create the data.
You won’t be getting that service for $49.95. You will be getting guidance – and if you’re the kind of person who gets balky and skittish about doing the grunt work to get the audit ready, this kind of a service is a waste of your money.
However, if you’re really organized, or willing to pitch in and do the work, then it’s a terrific deal!
It’s not clear to me whether the one fee of $49.95 covers the full three years that the statute of limitations runs, or if it must be paid each year. You may want to ask them that, just to be sure. (I think it’s just one fee per tax return.)
You say “I’m thinking that a larger company provides access to professionals with greater knowledge and experience than what a smaller company of one or two accountants could provide. Or do you think it would it be better to simply hire a personal accountant?”
When they are getting paid $29.95 to review your return, trust me, you are not getting the same kind of attention that you would from an experienced tax professional with years of experience.
Just stop and think. Who’s going to accept $29.95 to spend an hour on a tax return? Someone fresh out of H&R Block training perhaps? Or if it’s someone experienced, who could be getting paid $150-$300 per hour…how much time will they devote to your review? 10 minutes?
You have to look at the economics of the situation.
The only other way to make this low price economically viable for the company? That’s to do the review and suggest to you that they provide additional information – and make you pay for the review upgrade service at $65.00 a shot. http://www.taxaudit.com/intuit/returnreview/index.asp
By the time you get done…you’ll have ended up paying well over $100 for all the services – and you have no long-term relationship with the reviewer. Anytime you need anything, it will be some other random person.
Personally, I like personal service. I like to have a relationship with someone who knows what I’m doing and can give me guidance. My advice? Spring for a good, local tax professional and get to know each other well.
And remember, you can find answers to all kinds of questions about tax preparation and all kinds of other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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