The Tax Man Cometh

3/18/2013

Benjamin Franklin is attributed to saying that the only two unavoidable things are death and taxes. Tax day, April 15, is only one month away. If you have not already started on your taxes, you need to start soon.

With computer software programs, it is more and more tempting to file your taxes on your own. I know many clergy, active and retired, who do their own taxes. However, I would strongly encourage everyone to use a tax professional when filing your taxes. You will discover it is worth your investment.
 
Several years ago, I decided to stop using my tax advisor. I thought I should not have to pay someone to “fill in numbers.” I sat down with the previous year’s tax return and all of my current year figures. I went through the forms and discovered that I owed money! I was not happy as I mailed off my tax information to my advisor. I was very surprised when I received the return back – I did not owe money! Instead, I was receiving a refund greater than the amount the accountant charged to file my taxes. 
 
I have not attempted since to do my own taxes. I do not have time to keep up with all the changes to the tax code. Plus, clergy taxes are not easy to figure out. The software programs are not designed for clergy taxes and you will not find them very helpful. 
 
Dave Ramsey recently wrote an article about the tax software programs available. He asked his Facebook followers to share their experiences. The results may surprise you.
 
Janet wrote, “One year, [I] went to a tax preparer because [my taxes] were too complicated. At no charge he went back and reviewed our past three [returns] and found mistakes I made every year. Convinced me not to take a chance and let the professionals do it.”
 
Monica responded, “[I] could have received a higher [refund] last year had I spent a few dollars more using a tax expert rather than the software. Never again!”
 
Kelly wrote that she and her husband use both the software programs and a tax professional. “Hubby continues to run the software and we compare to the CPA. Until his numbers are closer to the CPA we will not lean on the software.”
 
None of the above persons were clergy who have to balance the housing exclusion, housing allowance, social security self-employment, and adding in fair market rental value of a parsonage, just to name a few issues. 
 
Why do software programs not work as well as advertised? An enrolled agent, Evie, gave some insight on the issue. “There are items where judgment is needed which isn’t present with software. Also, you want to make sure that whomever you consult with is able to help you save taxes.”
 
It is these judgments where the tax professionals can save you money. The professionals also know the common mistakes that are made and the most common items that lead to audits. The professionals keep up to date on all the changes in the tax codes and can help you better plan for your tax liability for next year. 
 
As Beau Meyer said in the Ramsey article, “My account doesn’t earn my business for what he does. He earns my business because of what he knows. Tax prep is easy. God tax planning is what you don’t get from software.”
 
If you have filed your taxes already using software programs, that is alright. But, you may want to re-consider your decision for next year. If you have not filed your taxes yet, contact one of the professionals on our website who specialize in clergy taxes. Go to www.pasbf.org find the list. 
 
The taxman is coming. Do not put it off any longer. Be sure to file by April 15.
 
(All the quotes in this article are from Is Tax Software Worth It? Get Answers from Real People by Dave Ramsey, 2013.)