Saturday, January 24, 2009

My Dislike of Tax Organizers

I routinely do my taxes on my own, by hand with the help of a computer spreadsheet. However, when I was on an international assignment, my taxes were done by accounting firms hired by my company. Although, I appreciated having my taxes done, I did not appreciate the process used.

The major accounting firms which have done my taxes use a information collection system called a tax organizer to obtain data about the client. It is designed to request information on every possible aspect of the client's financial life that could affect a tax return. The tax organizer is very comprehensive, often asking questions that are not related to my situation.

In addition, a complete tax organizer is sent to every client, even if the information needed is relatively simple. For example, I recently received a tax organizer because I need to file a 2008 foreign tax return due to deferred compensation I received in 2008. After spending a couple hours using the program and filling out 90% of the information, I e-mailed the contact for clarification on several items I could no longer answer with extensive effort. It turns out that I didn't need to submit the specific information requested. In addition, they already had all the compensation information from my company, which saved me from working on another section.

After several more e-mails, I figured out that they really only needed me to confirm the dates I lived in the foreign country, my current address and the names of my dependents. The rest of the information was unnecessary or already provided by my company. To save time and effort, I think they could have asked me directly for three pieces of information instead of having me complete a multi-page tax organizer.

I don't know if my experience is common with accounting firms. However, tax organizers are one reason that I will continue to do my own taxes. In the time it takes to get all the information and complete one , I probably can get most of my tax return done :-)

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

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