The True Cost of Do-It-Yourself Taxes

The Average DIY Taxpayer Lost b/w $347-$841

Fellow tax professional Dave Ramsey recently preformed a survey of 2000 taxpayers; about half of who prepared their own returns, and the other half who had them prepared professionally. This is what he found:

When you use software to file your income taxes, there’s a moment, an instant just before the point of no return, when you silently wonder—what if?

What if I didn’t enter the numbers correctly?
What if I miscalculated?
What if I missed a deduction or credit?
What if I claimed a deduction or credit I’m not eligible for?

All that uncertainty is one of the downsides of self-filing. Other disadvantages can hit you where it hurts most—your wallet.

Reduced Refund

Since most folks aren’t tax experts, it’s easy for them to miss deductions or credits when they self-file. They are also more likely to take the standard deduction instead of itemizing their expenses. Either of these mistakes could lower their refund.

Take a look at these numbers from our recent survey of 2,000 of Dave’s Facebook fans.

  • Self-filers got an average refund of just less than $1,500.
  • But folks who had their returns professionally prepared had an average refund of nearly $1,800!
  • Procrastinating self-filers, those who filed their returns during April, got an average refund of more than $1,800, while those who used a pro got an average $2,600 refund!

Those folks potentially lost hundreds of dollars by trying to save a buck and doing their taxes themselves. It doesn’t seem like such a smart choice now, does it?

Magnified Mistakes

The cost of DIY tax prep isn’t limited to the size of your refund. Your mistakes can also cost you in the form of penalties and interest.

The IRS checks every return for a signature (manual or electronic) and math errors and cross-checks all sources of income that are reported via W2s, 1099s, etc. So if you fail to report any income or enter the wrong number in the wrong column, the IRS will call you on it.

And if it turns out you owe taxes, by the time the IRS notifies you, penalties and interest will have already inflated that amount. You’ll be charged a penalty for paying late and you’ll be charged interest from the date the tax was due until the date of payment, and it compounds daily.

By working with a tax professional, you’ll not only have confidence that your taxes will be done right the first time, you’ll also have peace of mind that your tax professional will be there to help you if the IRS has questions about your return. File with [consumer] tax software, and you’re on your own if the IRS comes knocking…

The evidence is clear; trying to save pennies with DIY tax software can cost you thousands of dollars in unclaimed refunds, penalties and/or interest.  And one of the most important losses is your time.  Remember, even if you are using a “free” DIY tax service, you still have to take the time to for research, record keeping, learning the program and double checking all the figures.   It obvious that receiving a larger well deserved refund is more valuable than smaller refund.   However, the old adage that “time is more valuable than money” couldn’t be more true especially when the IRS reports that it can cost a taxpayer up to 32 hours simply to prepare an annual tax return!

So, save yourself time, money & the stress of preparing your income tax return yourself and contact an R&G Brenner tax professional today.  We offer a free consultation for your current year tax returns as well as your 3 previous years returns.  Plus, you can qualify for many promotions that can save you money & even make you money.


R&G Brenner Receives 2011 Best of Business Award

The Small Business Community Association (SBCA) has selected R&G Brenner Income Tax to receive the 2011 Best of Business award in the field of Income Tax Preparation for the NY Metro Area.  This is the second time that R&G Brenner has received this award.  Thanks to all of R&G Brenner’s hard working associates and staff who made this award possible.  And a special “thank you” goes out to all R&G Brenner clients.  Is is due to  your loyal patronage that R&G Brenner will be celebrating it 71st anniversary this year.  We hope to see you all again in 2012.

May you have a happy & healthy new year,

Benjamin K. Brenner, President

New R&G Brenner Midtown Office Location!

I am pleased to announce the location of our new Midtown Manhattan office!

162 East 46th Street (Near 3rd Avenue)

New York, NY 10017

(212) 682-7986  Fax (212) 687-8876

Located in the beautiful TIAA CREF building, this location is more convenient and will afford our clients the more personalized attention they deserve.  While it hurts to leave our old 2nd avenue location, we believe that this is the right move at the right time. Renovations are currently underway, however, if you require immediate assistance, our midtown representatives are temporarily working out of our Uptown Manhattan location. The midtown phone number is already being routed directly there. Thank you, and we look forward to seeing you all again in 2012!  

Happy Holidays,

Benjamin K. Brenner, President

Same-Sex Couples Face Tax Hurdles

This past June, New York became the 6th state to legalize same sex marriage.  Regardless of ones individual beliefs concerning same-sex marriage, this much is clear:  Tax laws–which are already complex & confusing–are that much more baffling for same-sex couples. This is mainly due to the fact that the Federal Government does not recognize same-sex unions.  Same-sex couples must file separate federal returns, however they can file jointly in New York State and some other states that recognize these unions.

“What was supposed to be this way of expressing our love was going to seriously confuse our taxes, investments, estate planning, really all our finances,” says [Maggy] Porter, a registered nurse. “Our CPA is great, but even he seems pretty bewildered”

While marriage can save heterosexual couples a bundle, it could cost same-sex couples thousands of dollars in extra taxes and professional advice…

“Filing taxes for same-sex spouses is much more complicated, more expensive and time-consuming, and there is very little guidance from the IRS or elsewhere,” says Pan Haskins, a certified public accountant in San Francisco.

While the makers of popular do-it-yourself tax programs like Turbotax & H&R Block are modifying their programs to navigate these complex rules, financial planners are recommending that same-sex couples hire a tax professional to navigate these tax labyrinths:

New York State advises couples do two sets of federal returns — official individual returns for each partner, and a dummy return as if the pair were filing jointly. The joint return is “not to submit but to use it as a work sheet so that you are bringing the correct income information onto a joint state return,” says Ed Walsh, spokesman for the state Department of Taxation and Finance.

Some same-sex spouses are fed up enough to submit that joint federal return. Haskins reports, in her experience, the IRS has so far not challenged same-sex married returns. (IRS forms don’t ask for gender identification.) But she warns couples who file federal returns jointly that they risk financial penalties and a potential audit. “This,” she says, “is still the Wild West of financial planning.

If you would like more information regarding same-sex tax implications, contact an R&G Brenner representative today.  The following are some tax tips to consider for same-sex tax filers:

CONSIDER HOLDING ASSETS JOINTLY:  Income or expenses from joint assets can be allocated all or in part to either owner’s return.

INCOME: (e.g. interest, dividends, capital gains) may be shifted to the partner with the lower income, while deductions (e.g. mortgage interest, real estate taxes, capital losses) may be claimed by the partner in the higher income tax bracket. This could lead to tax savings for both partners.

TAXES ON HEALTH INSURANCE:  Unlike heterosexual marriages, employer-based health coverage for same-sex spouses is not tax-exempt, and employers must report it as income to the IRS.

Source: Newsday

Tax Benefits Increase for 2012

Even in the face of severe federal & state deficits, many tax benefits are due to raise for tax year 2012 (calendar year 2013).  By law, tax provisions are required to keep pace with inflation.  The new dollar amounts affecting most taxpayers are:

Individual Deductions and Credits

  • Personal and dependent exemptions are $3,800, up $100 from 2011
  • The new standard deduction is $11,900 for married couples filing a joint return, up $300
    • $5,950 for singles and married individuals filing separately, up $150
    • $8,700 for heads of household, up $200
  • Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $70,700, up from $69,000 in 2011.

Credits, Deductions & Related Phase Outs 

  • The maximum earned income tax credit (EITC) for low- and moderate- income workers and working families rises to $5,891, up from $5,751 in 2011.
  • The maximum income limit for the EITC rises to $50,270, up from $49,078
  • The foreign earned income deduction rises to $95,100, up from $97,300–an increase of $2,200.
  • The modified adjusted gross income threshold at which the lifetime learning credit begins to phase out is $104,000 for joint filers, up from $102,000
    • $52,000 for singles and heads of household, up from $51,000
  • Annual deductible amounts for Medical Savings Accounts (MSAs) increased from the tax year 2011 amounts; please see the table below.

Medical Savings Accounts (MSAs)

Self-only coverage

Family coverage

Minimum annual deductible



Maximum annual deductible



Maximum annual out-of-pocket expenses



  • The $2,500 maximum deduction for interest paid on student loans begins to phase out for a married taxpayers filing a joint returns at $125,000 and phases out completely at $155,000, an increase of $5,000 from the phase out limits for tax year 2011. For single taxpayers, the phase out ranges remain at the 2011 levels

Estate & Gift 

  • For an estate of any decedent dying during calendar year 2012, the basic exclusion from estate tax amount is $5,120,000, up from $5,000,000 for calendar year 2011. Also, if the executor chooses to use the special use valuation method for qualified real property, the aggregate decrease in the value of the property resulting from the choice cannot exceed $1,040,000, up from $1,020,000 for 2011.
  • The annual exclusion for gifts remains at $13,000.


  • The monthly limit on the value of qualified transportation benefits exclusion for qualified parking provided by an employer to its employees for 2012 rises to $240, up $10 from the limit in 2011. However, the temporary increase in the monthly limit on the value of the qualified transportation benefits exclusion for transportation in a commuter highway vehicle and transit pass provided by an employer to its employees expires and reverts to $125 for 2012.
  • Several tax benefits are unchanged in 2012. For example, the additional standard deduction for blind people and senior citizens remains $1,150 for married individuals and $1,450 for singles and heads of household
If you would like more information on inflation adjustments and it can affect your tax status, contact an R&G Brenner representative today for assistance.

October 17th Deadline for Tax Return Extensions Approaching

Oct. 17 is a key deadline for millions of individual taxpayers who requested an extension to file their 2010 tax returns. The IRS expects to receive millions of tax returns from taxpayers who used Form 4868 to request a six-month extension to file their returns.

Some taxpayers can wait until after Oct. 17 to file, including those serving in Iraq, Afghanistan or other combat zone localities and people affected by recent natural disasters. More information is available in IRS Publication 17 (2010), Your Federal Income Tax.

If you filed an extension and need to submit a tax return before this deadline, please contact us as soon as possible so we may assist you.


Free Tax Prep Sites: Inaccurate Returns & Privacy Breach Concerns

The old adage that “you get what you pay for” is compounded when applied to free income tax preparation…In fact, a free tax return may cost taxpayers more than they bargained for.  The title of a report filed by the Treasury Inspector General for Tax Administration (TIGTA) sums it up frankly: Accuracy of Tax Returns, the Quality Assurance Processes, and Security of Taxpayer Information Remain Problems for the Volunteer Program.

The TIGTA audits of the Volunteer Income Tax Assistance (VITA) sites–a program sponsored by the IRS which caters to low-income tax payers, the elderly & the disabled–found that their accuracy rate was far below 50%.  Of the 36 tax returns that undercover TIGTA auditors had prepared at VITA sites, only 14 were considered to be filed correctly. That is a whopping 61% inaccuracy rate.  What is particularly alarming is the deliberate “modified facts” that some volunteers engaged in to inflate potential refunds, as well as the absence of a thorough vetting process to weed-out potentially unscrupulous volunteers:

The accuracy rates for tax returns prepared at Volunteer Program sites decreased sharply from the 2010 Filing Season. Of the 36 tax returns prepared for TIGTA auditors, only 14 (39 percent) were prepared correctly. Tax returns were prepared incorrectly because volunteers did not follow all guidelines. For example, volunteers did not always use the intake sheets correctly. For three (14 percent) of the 22 incorrectly prepared tax returns, volunteers knowingly modified the facts the auditors presented…[Furthermore] Current steps and processes do not ensure the integrity of volunteers, even though the volunteers have access to taxpayers’ Personally Identifiable Information, such as Social Security Numbers, driver licenses, and home addresses.

TIGTA Inspector General J. Russell George had the following to say:

The findings of this review are very troubling…The Volunteer Program plays an important role in helping many taxpayers, notably those who have low incomes, and the elderly, disabled, and limited-English proficient, participate in the tax system. Like all taxpayers, they deserve to have their tax returns prepared accurately. I am pleased that the IRS has agreed to our recommendations to address these problems.

Some of the important TGITA recommendations agreed to by the VITA program are as follows:

  • Include anonymous shopping visits as part of the quality review process
  • Improve controls over Volunteer Standards of Conduct (Form 13615)
  • Develop a process to ensure all volunteers are following the guidance focusing on the integrity of the Volunteer Program and the security of taxpayer information
  • Review the IRS fraud hotline procedures to determine best practices

R&G Brenner recognizes the valuable service that the thousands of VITA volunteers provide to millions of taxpayers across the country. However, it is apparent that the quality of these returns leaves much to be desired considering the continually changing & vastly complex tax code.  When you pair this with the fact that most VITA volunteers receive little or no compensation, it is not hard to see why so many returns are being prepared incorrectly, and that an environment for potential identity theft is being sewn.

For many, a tax return is the most important financial document they will file each year. Therefore, it is of the utmost importance that your tax preparer have a vested interest in the accuracy of your filings.  Here at R&G Brenner, we offer many promotions including a $50 introductory fee for new clients that qualify for tax assistance.  We can’t compete with “free”, but we can guarantee that our tax professionals, enrolled agents & CPA’s will have an attentive vested interest in preparing your return accurately, and getting you back every penny you deserve.  Remember, it’s not “free” if you are forced to spend considerable time retriving old tax documents, and money on penalties and interest correcting mistakes.  Contact R&G Brenner for more information, and to have your tax return reviewed for accuracy free of charge.

Sources: TIGTAWebCPA

Tax Filing Deadline Extended But Beware

The IRS has extended the deadline to submit your 2010 income tax returns to Monday 4/18/11.  New York State has also adopted the extended filing date and will accept 2010 tax returns as on time if electronically filed or mailed on or by Monday 4/18.

Rumor has it that a popular radio station in the New York area has given the wrong information and stated that NYS tax returns are due on the regular filing date, however this is incorrect.  Both Federal and NYS tax returns are due on the extended filing date for the current tax filing.

LATE FILERS BEWARE: The extended deadline only applies to the current tax year.  If you are filing a 2007 tax return that is due a refund you will only have until today 4/15/11 to submit it on time to receive your refunds.    The deadline is not extended on late tax returns so make sure to send in those tax returns and have them postdated today.

IRS Awards Whistleblower $4.5M

The IRS has implemented a rewards program for whistle-blowers that will get them a portion of the taxes administered from the case if they notify the IRS of a discrepancy.

An in-house accountant who raised a red flag about a tax lapse that his employer then ignored, leading him to tip off the IRS, has received $4.5 million in the first IRS whistleblower award.

The accountant’s tip netted the IRS $20 million in taxes and interest from the errant financial-services firm.

The accountant had notified the IRS a few years prior with his complaints ignored.  He continued to pursue the case with assistance and turned over the information to the IRS.

In the accountant’s case, the IRS did not deem the issues he raised complex. But the agency said the information he shared pointed out new questions for a routine IRS audit that was already under way.

This program has the potential to bring in a lot of revenue for the IRS and the informant is rewarded for their service to the agency.  They hope that the awards will make more tipsters talk.


IRS Correspondence Audits By Mail Increase

Taxpayers are way more likely in recent years to receive an audit letter in the mail requesting documentation to verify income, deductions or credits claimed than they are to receive an in person examination.

Of the more than 1.6 million Americans who were slapped with audits last year, 78% dealt with correspondence audits, while only 22% were asked to come in for an in-person examination.

Part of the reason the IRS is shifting its gears is due to the expense of in person audits.  A correspondence audit costs the IRS less money because it requires less time and attention on their end.

While a face-to-face examination with an IRS agent can involve going through an entire return, correspondence audits usually ask taxpayers to provide information about very specific items on a tax return, like income, expenses or deductions.

Though correspondence audits are easier for the IRS agents they are still very scary and cumbersome for the taxpayer.  Often times these letters are written using complicated tax terminology and can be very difficult for the average taxpayer to understand.  And being that the letter is mailed there is no real way for the IRS to even know if the taxpayer received the letter let alone understood it’s contents.

Out of a sample of 754 taxpayers who claimed the Earned Income Tax Credit and were audited, more than a quarter of them had no idea they were even being audited, the Taxpayer Advocate Service’s most recent survey found. Nearly 40% of the same respondents didn’t know what information the IRS was asking them to provide.

If you ever receive a letter in the mail regarding your income taxes the best advice we can give is to have a tax consultant review the information requested along with the tax return in question and give you a detailed list of the items you will need to back up.  This way you will be prepared when submitting your documentation.  Need audit assistance? Call us at 1-888-APRIL-15!

Source:  Yahoo Finance