Washing your car in the rain is more fun than the thought of an IRS audit, let alone actually being audited. Some individuals and businesses choose to use tax software such as TurboTax, Tax Act, and others, to protect them from one. These programs offer audit defense programs for protection. Yet, the chances of the IRS auditing you are less than one percent. If the IRS does audit you, a tax attorney can defend you far better than tax software.
Below we provide common features of tax software that help protect your from an audit, as well as their advantages and disadvantages. We continue with a discussion of the ways in which a tax attorney offers you and/or your business better protection from an IRS audit.
What Protections Do Tax Software Programs Promise Users?
Regardless of which tax software program you choose to file your individual or business taxes, you will be invited to pay an additional fee for some type of IRS tax audit defense. Exact features vary, but commonly include:
- A member of the team will respond to audit notices for you.
- A member of the team will defend your return to auditors and in mandatory hearings.
- You have access to some type of customer support team that specializes in audits and may or may not be tax professionals.
- The company will help you resolve any tax debt you have with the IRS.
- The company will help you deal with the consequences of identity theft if it impacts your taxes.
- Lastly, the company will absorb any fees or penalties if your audit is a result of an error by the preparer or the software.
Advantages of Using Tax Software to File Your Taxes
Tax software provides some advantages, especially for those who don’t make that much money and have simple returns. They include:
You will always pay less upfront to file your taxes with tax software than consulting an accountant, attorney, or professional tax preparer. Some websites offer software for free, but you can pay up to a few hundred dollars depending on whether you choose to file business taxes too. These savings are attractive for those who simply cannot afford to pay another professional upfront.
You can complete your taxes rather quickly when you have all the documents you need. Depending on the extent to which you itemize deductions and whether you file business taxes, you can complete your tax returns in as little as 90 minutes or so. It can take an accountant as long as a month to review all of your documents and file your tax forms.
Tax software guides users through the software by asking questions. The program’s internal algorithm figures out the answer and populates all the forms you need. Those who have only one or two sources of income and few deductions typically need not consult with a professional.
Disadvantages of Using Tax Software to File Your Taxes
In most cases, the disadvantages of using tax software are greater than the advantages, especially for high-income earners and business owners. They include:
- Software is not friendly when complex situations arise surrounding businesses and investments.
- Wealth management isn’t possible because tax software does not offer financial and tax planning advice.
- Tax software relies on user answers to recommend deductions, which means errors occur.
- Tax software makes it difficult to handle all the forms required for a tax return.
- Users who get audited are responsible for their errors or omissions.
The Benefits of Hiring a Tax Attorney for Audit Defense
Some people do not consider hiring a tax attorney until after they have received a letter from the IRS. Yet, if they chose to consult with a tax attorney to file their taxes, they greatly reduce their chances of getting audits. Some benefits of hiring a tax attorney include:
Not all software programs have been created equal. Even the best of the best are not perfect. Their internal algorithms rely on user input and cannot offer advice or suggestions for complex situations. Your tax attorney can also help you set up installments to pay your taxes.
Availability for Questions
Software programs sometimes provide access to company representatives for tax-related questions. Yet, these professionals are not always accountants or other certified tax professionals, and they are only available for questions for a limited time. Regardless of the time of year, you only need to send a short email or make a quick phone call to your tax attorney when you come upon a tax-related question.
Experience & Knowledge
Tax attorneys are trained professionals who know the ins and outs of tax law. Experienced tax attorneys have encountered a wide array of clients with different tax issues, incomes, and backgrounds. A tax attorney knows how to legally apply the tax code to your return to save you money and prevent you from getting audited. They also deal with more complex tax situations such as:
- Receiving an inheritance
- Starting a small business
- Retirement and estate planning
- Handling income from outside the U.S.
- Handling tax considerations with regard to financial windfalls from stocks and other investments
Tax Planning Advice
Tax planning is one of the best ways to protect yourself from an audit. Although a skilled tax attorney can help you negotiate with the IRS, oftentimes reducing the penalties you need to pay, having a tax attorney in your corner before you get audited is far better than waiting. Tax attorneys guide you so you make the right choices to minimize your tax burden and keep you out of prison for tax fraud or tax evasion.
Some people choose tax software to file taxes because it is the less expensive option for tax preparation. In the long-run, is tax software really less expensive? Mistakes are costly and audits can result in shelling out hundreds, thousands, or tens of thousands in back taxes. In the worst-case scenario, you could lose your home, your business, and other assets. A tax attorney helps you avoid costly mistakes, especially those that trigger audits.
Contact a Skilled Tax Attorney at Silver Tax Group Today
Taxpayers may have the skills and knowledge to handle their own taxes, but they risk an audit and inadequate defense of an audit when they use tax preparation software. Save time, money, and trouble. Contact Silver Tax Group today.