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Hire a CPA or DIY?

There’s been a DIY vs CPA trend in many industries because people are trying to conserve money

Taxpayers can’t fill their own teeth or cut their own hair, yet in recent years at least some 30 million Americans filed their tax returns from home computers versus hiring a CPA.

Earlier this year an online CPA survey revealed that 43 percent of Americans now file taxes from the comfort of their home.

The CPA survey noted that a digital tax-prep tool is the most popular option among tax filers, with more than a third. Tax-filing software is a popular option most likely due to the lower costs associated with filing digitally, as well as the ease of using a program to automate calculations and file online. Only 28.5 percent of respondents said a CPA files their taxes.

That supposed “ease of use” seems to motivate many self-filers. Many people who self-file believe they can buy software and it will automatically prepare a correct return. And it will if that person has a clear understanding of their own source documents, accounting and the question presented on the screen. That could not be farther from the truth states Miami CPA Gustavo A. Viera.

Have you ever sat down and seen how long it takes people to use software such as TurboTax? A return that I could have input, printed and e-filed in five minutes [can take] 90 minutes to complete on TurboTax, and then you can’t see the completed return until you e-file. I don’t see self-filing cutting into my business, but I charge a minimum of $250 a return so I can devote myself to my existing clients.

DIY vs CPA Cost – Not even close

The main reason I am concerned about the increase in self-filing is that they are wrong wrong wrong! I can’t imagine how much money the IRS is unable to collect because of the antics of self-filers. They post on the wrong forms and lines, don’t pay SE tax when required and take ridiculous deductions that are not even close to tax law.

I’m concerned for those who self-file in that the code is getting so complex that they’ll find themselves in situations of hearing from the IRS with errors and penalties due. I am not concerned that it will cut into my CPA practice. We may prepare fewer returns but may also find ourselves helping more taxpayers who’ve received correspondence from the IRS. This is where the fees really start to stack up.

CPA IRS Representation Is UP

Representation work is proving just one of the unintentional benefits for CPA from self-filing. Although I’ve had folks do their own returns in the last five to 10 years, inevitably they end up coming to me with the mandatory IRS letter, not understanding what they did wrong. And once burned, they usually end up using our services from then on.

More people doing their own income tax preparation means more audit and appeal representation work for the CPA.

Show them the value of a CPA

Viera sees a few varieties of DIY filers –- and noted some ways to turn them into paying clients.

The changers come in whenever they have a change, see how we handle it and then go back to self-preparing. If we build a good relationship with these clients, at some point they’ll stop doing it themselves or they’ll refer others that don’t want to do taxes themselves.

Fixers’ are the ones that have the CPA fix what they’ve messed up. They usually become great clients after their first IRS scare. The not a chancers would never consider doing it themselves.

There are a lot of different types of clients out there. If a CPA can show them value in what we do and educate them on why they need us, we will always have enough tax clients.

I spend more time now educating my clients about their own errors after the fact then preventing the errors up front. Often, untangling those errors will require more work than to have prepared the return correctly in the beginning, so those self-filers are actually adding to my billable hours and bottom line.

 

About 

Gustavo A Viera is the managing partner of Gustavo A Viera, PA. His experience spans more than 25 years. He started his career in public accounting at PriceWaterHouseCoopers where reached the level senior audit manager. His Fortune 500 experience includes positions as CFO – Latin America Region for both Hewlett Packard and Telefonica of Spain. Gustavo also writes a blog twice a week that addresses trending accounting and tax issues. He is an SBA Advisor and teaches workshops for aspiring entrepreneurs. His office is located at One Alhambra Plaza Floor PH Coral Gables FL 33134, and is admitted to practice in the State of Florida as a licensed Certified Public Accountant. Gus welcomes questions and he can be reached at 786-250-4450.

About the Author

Gustavo VieraGustavo A Viera is the managing partner of Gustavo A Viera, PA. His experience spans more than 25 years. He started his career in public accounting at PriceWaterHouseCoopers where reached the level senior audit manager. His Fortune 500 experience includes positions as CFO - Latin America Region for both Hewlett Packard and Telefonica of Spain. Gustavo also writes a blog twice a week that addresses trending accounting and tax issues. He is an SBA Advisor and teaches workshops for aspiring entrepreneurs. His office is located at One Alhambra Plaza Floor PH Coral Gables FL 33134, and is admitted to practice in the State of Florida as a licensed Certified Public Accountant. Gus welcomes questions and he can be reached at 786-250-4450.View all posts by Gustavo Viera →

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