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Online or in Person? CCH Outlines Tax Preparation Methods

(RIVERWOODS, ILL., February 14, 2005) – If you’re getting the feeling that the rest of the world is passing you and your trusted pencil by as people either head for their computers or turn to their accountants at tax time, you are probably onto something. With a tax code that is filled with not only rules, but thousands of exceptions and exclusions to the rules and phase-ins and phase-outs, the idea of going it alone may soon become extinct, according to CCH INCORPORATED (CCH), the nation’s premier provider of tax and accounting productivity software, research and services (

“Whether you decide to file your tax return online or use an accountant – someone is sitting down at a computer and completing the return with electronic support,” said Kevin Robert, president and CEO of CCH Tax and Accounting, the developer of CompleteTax, ( online tax preparation and filing service for consumers and ProSystem fx Tax, the market-leading software for tax professionals.

Not only are more taxpayers using online software to prepare their taxes, but they are also being increasingly encouraged by the Internal Revenue Service (IRS) to file tax returns online. For the 2003 tax filing season, as of the end of August 2004, nearly 48 percent (more than 61 million) of the nearly 128 million tax returns filed were done so electronically, an increase of almost 16 percent over the previous year, according to the IRS. The majority of e-filed tax returns, 42.7 million, are still filed by tax professionals – presumably the same professionals who prepared the returns. However, more than 14.5 million individuals e-filed their own tax returns last year, up almost 22 percent from the previous year.

Deciding whether to use an accountant or tax software generally is a personal preference – assuming you have a basic knowledge of PCs and the Internet and a tax situation that is not exceedingly complex.

Below, CCH provides an overview of the general issues that individuals should consider when evaluating outside tax preparation support.

Evaluating Self-prepared Online Options

Among questions you should ask in evaluating online tax preparation software:

Is the site created and managed by a trusted name in the tax arena?

The ability to put up a site does not mean that the operators are experts in accounting or taxes. Check out the site’s owner, its credentials, how long it has been providing tax information and if tax information and software is its primary business. If you’re still unsure, ask your accountant. In fact, many CPA firms are now offering private-label versions of online tax preparation software for clients that fit in the do-it-yourself category.

How easy and secure is it?

A key benefit of preparing your return online is that it requires no downloading or updating of software. But that doesn’t mean that all programs are equally easy to use. The program should be easy to navigate and help you organize your information in a way that’s orderly and intuitive. Also, it should offer a glossary and provide clearly written and easily accessible explanations of how to handle various tax situations you may encounter.

Security is also essential and you should ensure the online tax service encrypts your data using recognized Internet security standards.

Can you work at your own pace and check your work?

Online tax preparation sites allow you to password protect your work, coming back as often as you need, and some even have visual gauges showing you how much of the return you’ve completed so you can track your progress. Make certain the program you use also automatically checks for errors or oversights and provides links to the pages where the problems occur so you can quickly spot and correct potentially costly mistakes.

Once you’ve entered your tax information, the program will calculate your tax obligation and populate your tax return. Check to see that you have the ability to print and review the final forms one last time before they’re electronically filed with the IRS or state revenue department. You also should have the choice to print and mail the forms if you choose.

What becomes of your return after you file?

One benefit of using some online programs is that they will save your prior year’s return, allowing you to print the return should you need another copy. Also check to see that it allows you to roll over basic information from one year to the next, saving you more time when you begin this year’s tax return.

What is the total cost of preparing and filing both federal and state returns?

It can be frustrating for taxpayers to navigate the complex pricing structures used by many of the tax software providers. Some promote a federal price or free federal filing but don’t point out the significant added costs for completing and filing a state tax return. Others have a multi-tiered pricing structure that can quickly add up to equal the fees of some tax preparers. However, most do-it-yourself taxpayers should be able to find a good tax program for under $40, including costs for preparing both a federal and state return, as well as e-filing.

What are the payment and refund options?

Over the past few years, several new payment and refund options have been introduced. For example, some sites now allow you to deduct the cost of using their program from your expected tax refund. Some sites also have partnerships with firms that provide an advance payment of your refund. If this is a feature you’re interested in, make certain the associated fees and interest are reasonable. Most sites also allow direct deposit of your refund into your bank account, allowing you to access your refund faster.

What are the help and support options?

Ideally the tax prep program you’re using should be straightforward so that you do not need support. However, you will want this safety net, so look to see that the program offers the support features you want, for example, via e-mail or live online. Premium support features, such as live phone or online chat may come at a nominal charge.

Hiring an Accountant

While the Internet offers a tremendous resource to help individuals with their taxes, it may not be a substitute for professional help. If your tax situation is complicated, you should seek the guidance of a CPA or tax attorney.

Among the questions to ask accountants you’re evaluating are:

What is your experience and specialty?

Some tax professionals have specialties in areas such as estate planning or gearing their practice to particular types of professionals, such as physicians or small business owners. If you have specific concerns, make sure your tax professional is qualified to provide the special assistance you require by asking for references. Also, if you have financial interests in states other than where you live, make sure your tax professional is familiar with those state laws.

How do you keep current with the tax law?

Does the preparer use current-year computer software to prepare your returns? Also, ask if he or she has access to tax research services, such as CCH, should the need for research arise.

How do you bill your clients?

Before you ask your tax professional to do anything, get a good idea of how he or she bills and the level of detail provided. Is the charge an hourly rate or a straight fee? How will you be billed? Will you be billed for research time if needed? To avoid confusion, get the billing and payment terms in writing.

How do you characterize your professional style?

Find out how aggressive an approach the preparer takes to minimize the tax burden. Would you prefer that he or she is aggressive, even if it means incurring questions from the IRS or risking an audit, or would you prefer a practitioner who takes a conservative path, even if it means paying a few extra dollars?

If I am audited, will you represent me?

Ask if he or she would represent you if the IRS questions your filing or decides to audit you. If so, ask if he or she has much experience with IRS audits. While some experience is good, too much can be a warning sign.

What do you need from me?

Before providing information to your tax professional, ask exactly what information is needed and in what form. Many professionals provide print or electronic “organizers” to help you sort your financial records. Some ask that all tax information be saved on a diskette, which can be downloaded into tax return software. The more organized you are before you give your tax preparer your records, the better he or she is able to prepare you.

Before making a final decision, check to make sure your CPA is licensed by your state’s CPA association and whether any complaints have been filed against him or her. Also, even though you’re having a professional prepare your return, take a good look at it before it’s filed as you are still responsible for the accuracy of the information.


CCH INCORPORATED (, based in Riverwoods, Ill., is a leading provider of tax and accounting information, software and services. CCH has served tax, accounting and business professionals and their clients since 1913, providing them with the most authoritative, timely and comprehensive tax resources. CCH is a Wolters Kluwer company ( Wolters Kluwer is a leading multinational publisher and information services company.

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