Are self-prepared IRS Tax Returns subject to audit more than ones that have a paid preparer?

Question

Are self-prepared IRS Tax Returns subject to audit more than ones that have a paid preparer?

Answer 1

Accoding to the IRS, yes they are.  

Answer 2

Statistically they are, however that is not because the IRS targets them. The same screening methods are applied to professionally prepared returns as self prepared.  Since many people that prepare their own tax returns are inexperienced they tend to be prone to mistakes that trigger the additional review by the IRS.  Most of these are not really audits but requests for additional or missing information.  A person with some experience and understanding of tax laws using the available software would do just fine.  However a good number of those who attempt to self prepare their returns do not know a deduction from a credit or an exclusion from an exemption.

Answer 3

Hi Christopher,

I wouldn't think so.  I've been self preparing my personal and business taxes for over 12 years.  The first 3 years I had a family friend/accountant help me & check my work but that was before TurboTax and H&R tax software became widely available.

I've never been audited.  As a matter of fact they even sent me money once because I had overlooked a deduction (that was state taxes, but still...)

If you really need the help of a licensed tax preparer then definitely use one.  Otherwise a quality tax software program should do you just fine.

Side note:  one of the major networks did a segment around tax tax time as to which was more reliable and cost effective.  They took the same tax info to a licensed CPA who specializes in tax preparation, a tax preparer at H&R, and used a software program.  All three methods used came up with the same information (amount owed/refunded).  Not sureprisingly, the CPA's service cost the most followed by the H&R rep and then the software.  Just something to consider :-)