TurboTax vs. the Professional

Are Do-It-Yourself tax return products stealing your potential clients?   Some professional preparers feel that way. Intuit surveyed accountants about their concerns and retaining/attracting new clients came in near the top. The customer studies found that tax-driven firms tend to lose about 12 tax clients per year for a variety of reasons, including life changes such as marriage, divorce or death.   The percentage of self-prepared returns remained steady from the 2001 through 2006 tax years—at roughly 38 percent, compared to 47 percent prepared professionally and 15 percent in stores. But the most notable trend was that people who previously prepared their returns manually were moving to software as opposed to professionals, cutting the percentage of manual returns roughly in half to 11 percent.   Intuit doesn’t have to concern itself a great deal with this trend given the fact that it owns TurboTax, a consumer product with 14 million customers. But it created a business division dedicated exclusively to the needs of accountants a few months ago and in response to firms expressing the need to “replenish” their client bases, introduced online marketing tools to help them reach prospects on several search sites, such as Google and Yahoo Local.   The question shouldn’t be how your vendor can help you with this problem however, but rather how you can help yourself. After all, the younger generation of Do-It-Yourselfers might start convincing their Baby Boomer parents to follow their lead, saving money on preparer fees.   I overhead a conversation last week in which a single 30-year-old TurboTax user did just that. He was on the phone with his mother, a recent widow who had previously relied on her husband to handle the tax return and who was concerned with possible errors that could result from taking on the responsibility herself.   “Just use TurboTax. It’s so easy, there’s no way anyone could mess it up,” he told her.   When he hung up, I asked him whether she was aware of all the things to consider when filing on behalf of a deceased spouse: whether to file jointly or separate, that she needs to write “deceased” on the top of the tax return and where to sign her own name on her husband’s return.   Not surprisingly, he was unaware of these factors because he only accounts for himself. But I bet a ton of returns get filed incorrectly every year due to similar factors and the filers’ lack of knowledge that such rules even exist.   If any of your clients have lost a spouse, moved, had a child or experienced another significant life change that could alter the way they fill out their returns this year, that translates into an opportunity for you to reach out to them by demonstrating you can add value—and that you know and care about what’s going on in their personal lives.   Many of your clients haven’t received their W-2s yet and may be on the fence about whether to give you repeat business. There’s nothing wrong with a bit of self-promotion to help sway them toward your front door.