Show Me A Real Live Cpa

In the long run, face-to-face tax help beats spiffy Web sites by a mile

Take it from me: There's a lot you can learn from being fired. Me, I learned about taxes. I'd always done my own, but being bounced from a job in 1997 meant working as a freelance business writer until early 1999--and actually running a business as opposed to doling out critiques. For the first time, I turned to tax-preparation software and an accountant. Now I can use the Internet for tax help. But is the Web right for the job?

To find out, I went to three leading tax Web sites:, Yahoo! Finance Tax Center, and Kiplinger and Quicken are linked to two top tax-software packages, Kiplinger TaxCut and Intuit Inc.'s TurboTax. All three help you get organized before doing your taxes and tell you something about how to handle investments to minimize the bite. Any of them lets you file online (at Quicken, you follow a link to sibling site, with an ease of use comparable to tax-prep software. And all feature bulletin boards where you can ask for help.

It sounds simply spiffy. So why did I leave unconvinced that I want to file my taxes online? Two reasons: First, I don't think these sites are flexible or interactive enough to be a plausible substitute for an accountant. And second, I just don't see that there's any real benefit to sharing all my tax information with Quicken, Yahoo, or Kiplinger. I leave plenty of information all over the Web, but not at this level of detail. Bottom line: One problem with online tax prep can be fixed as the state of the art improves. But the other probably can't.

Marketing information about taxes is a conundrum for any of these sites: One either has a very simple tax situation or one needs more than a Web site or even a CD-ROM can easily deliver. Most people--the IRS says 77%--don't itemize and don't really need help. Even for those who do itemize, most don't need to know much. If you've done one Schedule A, you've done them all. Take off the state taxes, the mortgage interest and points, charitable contributions, and, in a minority of cases, medical expenses above 7.5% of your gross income and miscellaneous deductions above 2% of your income. Then move the numbers to your 1040. As the Sopranos say, bada-bing.

Then there are the folks with small businesses or big investments. Their April is a miasma of depreciation allowances and home-office deductions. How much personal use is enough to disqualify your home office deduction? What records do you need to document your business mileage? What capital gains rate do I pay for that short-swing investment, and should I think of that before or after I sell?

For a lot of us, at least the first time we encounter this situation, a Web site isn't going to be enough. Me, I spent a whopping $70 to hire an accountant. In two hours at my kitchen table, he explained the rules and what I could do. He answered my questions as soon as I asked them and told me to call him if I needed him while doing the return. Then I spent about $25 on TaxCut and knew what the program was talking about instead of figuring it out on the fly. Together, they saved me at least $1,000.

I didn't get that same confidence when I visited these Web sites. It gave me the creeps to see postings on a Quicken bulletin board in which someone told a fellow online community member to go ahead and deduct a computer because she wouldn't get audited anyway, or a Yahoo user who asked God knows whom for "ingenuity" when seeking advice on IRA withdrawals. The posts seem at best agnostic about obeying the law. As it happened, the particular person on Quicken who asked the question can deduct her computer--it's used exclusively in a home-based business. But the discussion's moderator was so distracted by the horrific advice doled out by some doofus that he or she mistakenly said the computer wasn't deductible. The truth is, the people who posted questions would be better off pulling Internal Revenue Service publications off

The sites, however, do have lots of content, from get-organized lists to detailed summaries of key tax issues. Yahoo! has the longest list of issue summaries, and they're pretty good. Articles by Kiplinger's personal-finance journalists are also worth reading. But what if you have a question? That's where the sites can't match what you can get for relatively few dollars in the real world. You hope the Yahoo! bulletin-board poster who calls himself "AnotherLawyer" really is one, but you really don't know (let alone whether he's a tax lawyer). You can interpret the documents for yourself and hope you get it right. Or you can do what I did: sit with a smart guy whose name you know and whose references you've checked, and pick his brain until you're satisfied.

But even if every poster to Yahoo!'s Tax Center were honest and every person working for were recruited from Harvard Law and answered queries in real time, online tax prep is still a shaky idea. Why? Because anyone doing a complex 1040 online shares troves of valuable information and gets little marginal return.

Smart consumers share information online only when it gets them something extra. Basically, the information and electronic-filing service these sites provide can be had for the $25-30 that good tax software costs. Quicken and Kiplinger charge about $10 for online federal filing. But I have no great desire to reveal to a Web site tons about my freelance customers, my investments, and my house. It's fundamentally different from knowing I bought Proust at Christmas or that my last vacation was to London. That's information you share with strangers all the time, and I could care less if and spread it all over the Web. I accept that Quicken says it doesn't use specific tax return information for marketing purposes or sell it to third parties without customer consent. But even if sites keep my information to themselves, it takes more than pushing small-business articles or tax newsletters my way to make sharing it a good deal.

Most people don't think they need laws to protect their privacy online, but they should take common-sense steps, such as doing their taxes in private. The bet here is that they will. And when I win that bet, darn it, I'll report the income to the IRS.

To learn more about how the Web can help with your taxes, see Clicks & Misses at