If you’re a new parent and you’re not sure where to start at tax time, consider hiring a professional tax preparer.
“Everyone who is even remotely unsure of how to prepare their own tax return, or has questions regarding tax law (income, deductions, credits, etc.), should seek professional assistance,” Cindy Hockenberry, an enrolled agent and supervisor at the National Association of Tax Professionals, said. The alternative, a tax-prep software program, may be chancy, she suggests, since parenthood may put you in new territory tax-wise. Taxpayers who are unfamiliar with tax laws are “still responsible for the accuracy of the return,” she said. “Reliance on a software program will not relieve them of tax liability, interest, or penalties if an error is made.”
But Consumer Reports has found that, for most people with relatively simple needs, off-the-shelf tax software available in stores or online tax-prep programs are probably adequate.
If, for instance, you and your spouse get most of your incomes from paychecks, have most of your investments in your 401(k)s, and don’t own more than one home, the software is likely to be just fine. Young families with small businesses or complex investments in, say, real estate, should visit a CPA or enrolled agent.
The tax software products we’ve reviewed, including TurboTax and H&R Block At Home, do a very good job of asking specific questions about changes in you life that might lead to a tax break, and walking you through questions to ensure you get them. They’re also relatively inexpensive. The main reason not to use them is that they take time to use, and people may feel unsure of themselves when using them for the first time. A simple return can take as little as an hour—probably more for returns with itemized deductions.
Another potential advantage of a professional tax preparer: Catching all the deductions you have coming to you, based on your unique situation. “Deductions are overlooked all the time,” Hockenberry said. Questions you might be asked (either by an accountant or tax-prep software) that could affect your return include:
- Did you incur expenses for day care?
- Did your child attend summer camp?
- Was it day camp or overnight camp?
- Did your child attend college?
- Did your child have a summer job?
- Did your child have investment income? How much?
If you decide to prepare your taxes online or use tax-prep software, see our guidelines for staying safe online, and read more about tax prep online.