More on Taxes. Upcoming Course Attendees Speak Up (and I debate their points)


I’ve been combing through the survey responses given by attendees to the upcoming tax course (enrollment ends this Friday at midnight — the course is entirely free). The course begins in exactly one week and it’s going to be fantastic! Educational, to say the least.

On the survey, one of the questions I asked was whether the respondent uses a tax preparer (human, not software) and if they don’t, their reasoning. I want to discuss the main reasons why a human preparer isn’t used. Some of the responses scared me a bit. Others made sense. 🙂

(Before I dive into this, let me be clear that I am not directly trying to make the case that everyone should use a tax preparer — hardly. I am trying to make the case that everyone needs to be much better informed about the black box we call the tax code.)

I’m worried about the cost. It’s expensive. Benefit doesn’t outweigh the cost.

The first two sentences there don’t make sense. To be worried about the cost isn’t a real reason. I’d have to ask why they’re worrying. My guess is that it’s because they feel it’s too expensive, or that it’s not worth the potential savings.

To “it’s expensive”–that needs to be qualified. Do we say something is expensive based on some fixed number in our head? Is a car expensive, but a tricycle inexpensive? Or do you need to evaluate “expensive” as it compares to the value of what you’re getting? That’s why I like that third related reason, where the respondent is weighing the cost and benefit of a tax preparer and making a decision.

Be careful about this. My hope is that the course will help people see that they would be benefited by help, or that they clearly wouldn’t be. But either way we’ll be making an informed decision and that’s what matters.

My situation is simple (straightforward, easy, etc.)

Simple because you understand it and have managed to file your taxes without ever being audited? How do you know you aren’t leaving money on the table? How do you define simple? Is your understanding of The Code great enough that you’re confident in saying you have a simple situation?

This is a tough one. How do you know what you don’t know? Scary! I imagine there’s someone out there operating a sole-proprietorship where they’re leaving thousands of dollars in tax savings on the table because they’ve had a “simple” situation for 10 years and nothing’s changed.

Again, my hope is that the course will help you understand “simple” a bit better, and motivate you to educate yourself more re: The Code.

I don’t trust my finances to someone else. I like the control.

It may just be a control thing — that’s fine. But the same person that doesn’t trust their finances to a tax preparer will trust their finances to a software package? I see a huge disconnect here. If you have privacy concerns, that’s a different story, but just know that the software was written by “preparers” in a sense.

What’s scarier about this isn’t the software side of the equation. It’s the you side of the equation. I would imagine that the odds of you making an error are much higher! Do you know the implication to your answering question 13c that way?

I tried an advisor and felt like they were simply doing data entry on my behalf.

People that have had this experience definitely need to find a new advisor! I had that same experience for two years and you’re right — it’s awful. You’re paying them to do nothing more than you could do yourself–except you’d be faster at it because you’d know all the answers to the questions.

I’d encourage you to hunt for a new advisor if you feel that the only thing they’re doing is simply plugging and chugging numbers. Your advisor should be informing you frequently about possible tax strategies you can employ that will save you money. If your advisor is in touch multiple times outside of the tax season then you’ve probably found yourself a gem.

I shouldn’t need an advisor. The tax code should be rewritten.

The tax code is absolutely crazy in its complexity. It truly is mind-boggling. But this answer just doesn’t cut it! This upcoming tax course will have nothing to do with policies or politics and everything to do with the situation we’re currently in, and what we can do to keep more of our hard-earned dollars in our own pockets.

You may hold a very strong belief that the tax code needs a rewrite, but that doesn’t change the fact that today, you’re being taxed under that code. You should be aware enough to minimize your taxes, and then continue your fight for tax reform as needed.

I don’t have anyone to prepare my taxes that I trust.

This one’s huge. At YNAB we’ve had the hardest time finding good developers that 1) share our vision and 2) can code to our standard. It’s a time-consuming process to find the “right fit” — trust your gut on this one. If you have any doubts about a preparer that you’re interviewing, walk out! (And yes, you interview them).

These are just a few of the reasons people aren’t looking to a preparer. Some of them are quite valid. Participating in next week’s tax course will certainly arm you with the knowledge you’ll need to knowingly decide if the benefit of a tax preparer will be worth the cost.

To those reading this that haven’t yet signed up for the free tax course, you can do that below. The course starts next Tuesday and will run through the week. It’ll be… easily digestible to fit any schedule 🙂 Signup closes Friday at midnight.

You can now view the tax course on demand, during your lunch hour 🙂 It’s educational and entertaining (and yes, it’s about taxes). Check it out!

Get ready to gain new tax insights beginning next Tuesday 🙂

Update 2/24/10: You can see my comment below, but based on some feedback I received, my apologies if I came across as condescending or belittling in this post. That was NOT my intention.

Here it is in a nutshell. I just want you to make an informed decision about how you handle your taxes. Remember, it’s likely your single largest expense (if you’re on a wage, it’s 7.65% from every paycheck, forever), so it deserves some attention! If you gather information, educate yourself, and feel comfortable using tax preparation software (personal preference, knowledge of your own situation, etc.) that that is the correct choice. On the flip side: if you gather information and, through learning more, decide you should be going about it a different way, that’s the correct choice.

There are certainly cases where you don’t need a tax preparer. After reading this over again, it sounds like I’m saying that a preparer is the only way to go. Not hardly! I just don’t want people blindly going one direction without having their eyes wide open. Hopefully that makes more sense.

About the Course
This will be on demand. I’ll be presenting a video each day for five days beginning next Tuesday. It will be mainly video and just a little bit of text. My goal is to keep each video to less than ten minutes. Also, my goal is to have these tax videos be not boring 🙂

The course will be high level. As I looked at the survey responses it was very apparent that we can’t drill down to specific situations because so many people have so many different situations. It just isn’t feasible. At this high level though, my goal is to have you understand the framework and then make decisions from within that framework. I’m hoping you’ll learn some principles that will help you make decisions in a more informed way.

And of course I hope you love the course and that it meets your expectations. I think most everyone will walk away learning something that will help them have their eyes more wide open concerning taxation.