Use tax software or hire a human? -- DIY vs. DPB

Should you try to file that complicated tax return with using commercial tax software or get the help of a qualified tax preparer? Unless you're a qualified tax accountant, you should consider the pros and cons of DIY versus DPB. The former is fraught with pitfalls; the latter is more conducive to peace of mind.

A note on the aforementioned abbreviations: You probably recognize DIY as short for "do it yourself." DPB stands for "done by professionals." When it comes to preparing complicated tax returns, each method has its advantages. DIY will save tax preparer fees; DPB will add the focus of human attention on your unique circumstances.

efile taxes vs tax accountant

Two methods for DIY: The “stubby-pencil” and the tax software alternative

Before automation, the "stubby-pencil" method in preparing a tax return required a pencil with a good eraser, a calculator and a knowledge of the fine print in the tax instruction booklet. Tax software stores and automates all that complicated verbiage, catches mistakes and omissions and saves paper and effort. It is the weapon of choice in the DIY category.

On the other hand, tax software is programmed by experts to be used by the rest of us. So the software designers must make some reasonable assumptions about the end user:

  • The user clearly understands everything in the series of “interview” questions posted by the software.
  • The user also understands the tax jargon and terminology used in the software.
  • The user is reasonably adept at accessing and manipulating the software and has the patience to follow instructions and the sense not to override built-in warnings.

Pitfalls of tax software

Then there is the built-in caveat emptor -- buyer beware -- that is the small print of any software product:

  • The tax software product has no guarantee that the return will be error free. The vendor only guarantees an accurate calculation based on what the user enters.
  • If the taxpayer fails to answer or overlooks a deduction question while completing the return, the software won’t include a potential deduction in the return.
  • No software is disaster proof. Answer "yes" after the question "Are you sure you want to delete your entire tax return?" and the software will follow your directions precisely.

So with the DIY approach the taxpayer is alone in the process and could easily overlook deductions and credits. Any problems that might result from errors and the taxpayer must face the IRS alone. Yes, tax software vendors "are standing by" as long as you're willing to "wait for the next available customer service representative" -- who probably isn't a tax expert. (Well, what do you expect for your $40 to $60 investment?)

The peace of mind of the DBP approach

  • The professional tax preparer knows the answers to questions you might not have thought of, or simply don't know to ask.
  • You'll be confident that you have included every deduction and gotten the best result from your tax filing.
  • Any IRS questions or audits will be handled by the professional you hired.
  • The savings in time and the increased tax savings/refund are positive return on the fee you pay the professional.

Then there’s the valuable but intangible peace-of-mind factor knowing that everything was done by an actual person -- and correctly. Also, when you hire a tax professional you get the benefit from advice on tax strategies that could save more money in the future by avoiding the mistakes of the past.

Contact Dmitry Dukhon at Dukhon Tax to help you get organized, file your returns and answer any questions you may have. We can be an invaluable resource for you to make the process as smooth as possible.

Plan Ahead for Your 2015 Tax Filing

Experience can be a good teacher, but we shouldn’t learn everything through our mistakes. For example, if the IRS penalized you last April because you underpaid your taxes, you can fix that for this tax year. Consider having your employer deduct more from your wages, or at least going the estimated tax payment route.

assistance with filing taxesWe may be halfway through 2015 but there is still time for you to map out a strategy for this year. Here are 3 things you can start doing right now:

  1. Get organized.Getting organized might not cut your taxes, but good record keeping avoids the number 1 and number 2 hassles of tax preparation: 1) Bad records keeping makes it impossible to do a thorough and timely job on your tax return; and 2) The IRS requires documentation if you get audited.To get organized, at a minimum you should:
    • keep last year’s tax return handy
    • use personal finance software to keep track of tax-related income and expenditures
    • throughout the year collect and group receipts and papers that affect your taxes and keep everything in a separate file
    • safeguard the W-2s, 1099s, bank interest, mortgage statements, etc., that typically arrive in January
    • plan to store your files for at least 3 years (7 years is optimum, since IRS audits can go back that far.)


  2. Itemize your tax deductions.
  3. Visit the IRS website and see Topic 500 - Itemized Deductions. You will need Form 1040, Schedule A and its accompanying instructions. Before you get to Schedule A, however, there are deductions like IRA contributions that don’t need to be itemized and can reduce your taxable income. You’ll find them in items 31 through 38 on IRS Form 1040A and 48 through 54 on Form 1040. For each deduction you’ll need to attach a corresponding IRS Form.Don’t forget to look into tax credits, which can also reduce your tax bill dollar-for-dollar. They are, however, less common than tax deductions.
  4. Gather the tax forms you need.
  5. Go right to the source on this one. The IRS has a complete catalog of forms and publications on its website. While there’s still time, it won’t hurt to review the forms and instructions for changes or additional documentation. Make a list of the forms you need; download them and shake your head in wonderment at the enormously complex tax code we live under.Above all, be on time.The end result of all that planning is that you have a complete and accurate tax return ready for submission on or before the tax-filing deadline. Even if unforeseen circumstances keep you from meeting the due date, you still must make a reasonable estimate of your tax liability and pay any balance due with your extension request. Even though the IRS holds all the cards, your ace in the hole will be your preparation and planning.…And Get Help.If after reading all the advice above, you’d rather leave tax planning to experts so that you can get on with your life and business, consider working with a knowledgeable tax advisor. Contact Dmitry Dukhon at Dukhon Tax to help you get organized, file your returns and answer any questions you may have. We can be an invaluable resource for you to make the process as smooth as possible.