Do you need a “second look” tax return from a tax professional?

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    Second look at the tax return

    In recent years we’ve seen a boom in tax software companies offering “second looks” for tax filers.

    These “second look” tax filing programs allow applicants to have their tax return reviewed by a tax advisor before filing it.

    While these programs can be useful in some cases, they are often just marketing gimmicks designed to trick nervous filers into paying more. Here’s what you need to know about them.

    Side note: Many CPAs and CFPs offer past tax filing reviews when they are onboarding new clients. This is a great time to have a conversation about past taxes and finances, and to catch up on things that may have been missed. This is unlike the traditional marketing you might get a “second look” during tax season.

    What is a “second look” check of the tax return?

    A “second look” check of your tax return means that a tax professional will review your tax return after you have prepared it.

    Before submitting your return for review, use tax software to prepare it. This includes collecting all correct documentation and following the workflow to enter information appropriately.

    As soon as you have finished preparing your tax return, a tax professional (usually a registered representative) will review your tax return for errors. You’re looking for things like math errors, blatant omissions, or personal information that might have been entered incorrectly. If the tax professional detects a problem, they will give you feedback so you can fix the problem yourself.

    Tax return ‘second look’ review arrangements vary by company. Some allow users to ask specific tax-related questions (such as whether they have entered certain information correctly). Others let the tax advisor review the tax return without any input from the applicant.

    What are the most common tax mistakes?

    A second look at a tax return sounds valuable. After all, tax laws change frequently and millions of amended tax returns are filed every year to correct errors. However, it can be useful to focus on the types of errors that plague most taxpayers and understand which errors a “second look” could fix.

    According to the IRS, the most common mistakes are:

    • Tax status issues. Single, head of household, married Submit separately? Finding out your status can be a challenge. Fortunately, good tax software can help by asking a series of questions and then advising you which login status to choose based on your answers.
    • Information on relatives. Submitting information about loved ones correctly can be challenging, especially for those with unrelated loved ones. Again, this is an area where good software can help.
    • Attach forms correctly. When doing taxes by hand, it’s easy to forget which forms need to be added. Follow the workflow of your control program carefully to ensure that all required forms are completed and attached.
    • Math mistake. Finding the appropriate methods for calculating credits, deductions, income, and expenses can be a challenge. But most good quality tax software can do all of these calculations for you and can even alert you of additional deductions and credits you are eligible for.
    • Problems copying information. Adding too many zeros, omitting a negative sign, or superimposing digits can result in an incorrect tax return. The best way to avoid these types of errors is to have a computer algorithm process it for you. Unfortunately, most tax software only enables this type of algorithm for W-2 forms (and possibly certain 1099 forms). Having a CPA or registered agent in charge of taxes for you may be more helpful.

    A “second look” reviewer will spot most of the above errors. But they cannot intercept problems copying data. The auditor will only detect the problems because the software marks the problems for the filer. This limits the value a “second look” tax return review can add.

    Good quality software prevents most tax errors

    In the past, control software was difficult to use and only people trained in the software could use it effectively. That is no longer the case.

    Almost everyone, including tax beginners, can avoid mistakes simply by using high quality tax software. Over the past few years we have ranked TurboTax, TaxSlayer, H&R Block as some of the best software filing programs because they are intuitive and designed for ordinary people, not CPAs. See the full list >>>

    By using the program as intended, you can avoid (even force) the most common mistakes as defined by the IRS. Using a high level software program can help you avoid the math errors that are easy to make with the pen and paper tray. These programs also make it easy to choose the right child maintenance status, enrollment status, and more.

    If you don’t enter your numbers incorrectly, you’ll avoid the most common tax return mistakes. If you enter your numbers incorrectly, the tax return will probably not attract attention in the “second look” either. Usually these reviewers look for blatant omissions in your submission.

    For example, if you enter information about a rental property but do not add an impairment, a “second look” inspector can determine this. But forgetting to add expenses from a side business is less likely to get caught.

    Complex situations may need more than a “second look”

    Tax software can handle the most complex tax return situations. However, entering large amounts of data can be cumbersome. And if you have a very complex tax filing situation, popular tax software may not be the right choice for you. But even a “second look” will probably give you the value you want.

    Taxpayers with complex situations may find that a tax preparation service provides good value. A dedicated CPA can think critically about the documents you provide and ask for specific omissions.

    Even if you prefer a DIY approach to tax returns, you may want to take advantage of programs that allow you to consult a tax professional during tax preparation. Many companies allow users to consult with an EA or CPA along the way. This “ongoing” advice from tax professionals seems like a more valuable option than a “second look” when the job is already done.

    Related: Tax Pro vs. DIY Tax Prep: Which Is Better For You?

    Final thoughts

    Occasionally an online tax preparation company will offer a “second look” as an incentive for early filing. Those who qualify for the incentive should benefit. The second pair of eyes doesn’t hurt. And it could convey a sense of peace.

    However, these programs often cost as much as the tax software you used to create the declaration. In this case, checking the tax return in a “second look” becomes an expensive security blanket. It offers little added value, as tax software is already designed to limit your potential for errors.

    In most cases, a “second look” is not worth the money. Either use good quality tax software or hire a company to file taxes for you. Both options work and are likely to offer more value.

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