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Tax Software Versus Tax Service: Which Is Better?

By Danny Davids(13,494) Danny Davids

Posted Wednesday, February 06, 2008
View All Blog Posts submitted by Danny Davids

I was going over my calendar a few days ago, looking at the special dates for 2008.  New Year's Day, Martin Luther King Day, birthdays for our older dog and younger daughter, Groudhog Day--all done.  The next dates of importance are, let's see--Valentine's Day, Presidents' Day, St. Patrick's Day, Easter (in March this year!), and April Fool's Day.  And then there's April 15.  Let us bow our heads for a moment of silence...okay, now on to the important stuff.

Many people these days are turning to computer programs to help do their taxes.  It's cheaper than paying a professional service, it's more convenient, and you gain the advantage of knowing exactly what's on your tax return paperwork, since you do the work yourself.  Besides, you still get that big tax return, right?  Not always.  Let me share my personal story and you'll see why I say that.

For years I did my taxes like most people--manually.  Didn't have enough investments and such to need to go to a professional.  Then we bought our first home.  That's when I realized I couldn't do this alone anymore.  On a friend's recommendation, I purchased a tax software program.  Installed it, ran it, answered the questions, printed out the forms, put them in the mail, got my refund check a month or so later.  How much easier could it get?

That worked great, until a few years ago.  That was the year that my confidence in the Great Personal Tax Software Program fell through the floor.  It might have had something to do with the fact that after years of getting refunds, I found myself suddenly owing taxes.  A LOT of taxes!  What the heck was this?  I'd gone through a period of unemployment that year, so my income was greatly reduced.  If anything, I should have gotten more back!  Rerunning the figures several times didn't change the numbers--at least, not in my favor.  By the third time through I owed more taxes than I did the first time.  This was not going well!

My daughter and son-in-law had also gone the software route, with similar results.  On a recommendation, they took their paperwork to a tax service, and came back cheering.  Not only did they not have to pay any taxes, they were actually getting a small refund.  And this was after paying the processing fees!  I didn't have to be told twice.  I scheduled an appointment, grabbed my paperwork, and hours later came home to my wife with the happy news that we, too, would be receiving a refund.  Since that year we've never looked back.

Why the difference?  I'm guessing that the tax guy knows a lot more about current tax laws and the deductions I can claim than my software-in-a-box program (even with the company's on-line updates).  I also believe it's because he, too, uses a computer program to calculate my tax situation--one that blows the Great Personal Tax Software Program out of the water.  Even if I could buy the program he uses, it would cost so much each year that it would negate any savings I'd gain.

I know, I know.  A computer guy saying that a personal computer software program isn't always the best option is probably anathema to the IT industry.  I'm guessing I'll be ostracized by my peers for preaching such heresy.  Too bad.  Bill Gates and Steve Jobs and their ilk may mean well, but sometimes the personal computer isn't the right tool for the job.  At least, it's not for the job I need to have done.  So again this year I'm leaving the Great Personal Tax Software Program for somebody who can get something out of it.  Me, I'd rather have that refund check.

This Blog Post has been read 356 times.
Posted to ProBlogs.com on Wednesday, February 06, 2008
View other posts by Danny Davids

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