Archives for March 2016

“Where is my refund” is a question that will be asked more often by taxpayers. The IRS and states are delaying the issuance of refunds as part of their efforts to reduce the theft of refunds by scam artists. Thus, the increased security measures to combat increased identity theft threaten to delay processing of refund claims this year. One of the changes being made is the sharing of information between states and the IRS to combat ID theft. In a prior posting, we discussed that some states are requesting that taxpayers include their driver’s license information when e-filing.
The IRS has reminded taxpayers that the best way to check the status of a refund is through the “Where’s my Refund?” tool on the Service’s website or via the IRS2Go phone app. The IRS also predicted that it expects to issue 90 percent of refunds in less than [Read more…] about Where is My Income Tax Refund?

Dave Ramsey has been helping people with excessive credit card debt for years and we believe he has done a very good job getting their credit card debt under control and improving their FICO credit score.  However as with many business owners, perhaps he has expanded beyond his core and winds up embellishing other services.

Dave has a listing of endorsed local providers (ELPs) that he promotes in the investing, real estate, insurance and tax fields. Naturally we were interested in seeing his promotion of his tax advisors.

Dave claims that by preparing your own tax return, you are costing yourself an additional $1,166 and as such you should contact him for a name of one of his advisors. While we do not take exception with the statement that persons who prepare their own tax returns often overpay their taxes, we take exception to the $1,166 savings in how it was computed.

Dave, using IRS figures, says that on average it takes a person filing their own return 13 hours to do so. Using an average household income of $50,000, Dave says that the time cost, in terms of dollars, is $312. That computes to an hourly rate of $24.00. If the persons preparing their own tax returns took time away from constructive activities, then this cost may be applicable. However, if preparing the tax return took them away from watching a reality TV program, there would be no cost involved.

Dave than states that based on a survey, the average tax refund of tax software users is $1,824. The average tax refund of people using a tax advisor is $2,615. Thus, he surmises that persons who prepare their own returns are losing an additional $791. While the math is easy to follow, we don’t necessarily agree with the logic as there are so many other factors that need to be considered.

The $1,165 additional cost figure is based on the value of time + lost tax deductions + cost of software.

While we do not agree with the math in arriving at the $1,165 cost to prepare your own return, we do agree with the premise that persons who prepare their own return often overlook tax deductions and may even be increasing the odds of being audited by the IRS. As many individual income tax returns prepared by tax professionals can be in the range of $250 to $350, is it a prudent and reasonable decision to prepare your own tax return?

If you want to discuss financial planning or your business or personal tax planning and tax preparation concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.

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