The Wandering Tax Pro, Robert Flach, posts about how he refuses to use computers to prepare tax returns. He wears this as a badge of honor.
With my penmanship, preparing returns by hand has never been an option. I was fortunate to start my tax career just as the PC revolution was taking hold in the accounting world in the mid-'80s. I understand his reasoning - by doing it by hand, he understands how the numbers flow and how the forms work. But he gets this wrong:
During the session on common mistakes made by preparers at the IRS Tax Forum I attended two years ago the instructor went so far as to say that those who use tax software to generate 1040s have basically become nothing more than glorified data entry clerks. I totally agree!
As complex as the tax law is, computers are a huge productivity benefit in a tax practice. I have 1040s that have passive loss carryforwards from dozens of activities. The carryforwards have to be computed and carried forward separately for regular tax and alternative minimum tax. The returns might also have investment interest carryforwards, capital loss carryforwards, and investment interest carryforwards - all computed separately for regular tax and AMT. Doing these computations manually would add countless labor hours to the return - hours either the preparer or the client has to pay for. And then every carryforward would have to be manually entered correctly the following year, adding still more time to the process. With intelligent review, the computer gets the right answer much faster.
The biggest benefit from using computers is the ease of fixing mistakes. I know, as I prepared my share of manual returns at the beginning of my career, including consolidated corporate returns and partnership returns. With a manual return, every mistake has to be walked through multiple forms to be corrected. If you have K-1s, they all have to be re-pencilled. And everybody makes mistakes, especially when tired during tax season. When you find a mistake on review using a computer, you can fix the one number and all of the changes will flow through all of the affected forms.
Sure, you can screw up with a computer-preparered return. No doubt the tax return is a "black box" to some preparers, who just enter numbers and accept what comes out the other end without question. And sure, there can be software errors. But you can screw up manual returns too - everyone makes mistakes - and those mistakes are much harder to fix . I'm willing to bet that software catches many more errors than it introduces. Say what you will about Turbotax (we use CCH Pro-System), the returns foot.
Mr. Flach does note that he's one of the few, the proud, the little band of manual preparers. While I respect his preferences, the rest of the world doesn't use computers to do returns because they're lazy and stupid. They use them because the improvements they bring in efficiency and computational accuracy far outweigh the drawbacks.
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