Unless you are a certified public accountant, board-certified tax attorney, or an enrolled agent, you should hire a tax professional who is licensed to represent taxpayers before all administrative levels of the IRS to prepare your tax returns. And yes, I am very well aware of all of the inexpensive off-the-shelf tax preparation software programs that are available today. However, here is an excellent reason I very strongly recommend that real estate investors never, ever use any of these software programs to prepare their tax returns: Who from the tax preparation software conglomerate is going to represent you in front of the IRS when you're audited because there was an unreported glitch in their software program that flubbed up your tax return? Answer: Absolutely no one! That is because you are on your own when you rely on XYZ tax preparation software to prepare your tax return. This is not the case when you hire a properly licensed tax professional to prepare your tax returns. For example, I have used the same enrolled agent to prepare my state and federal tax returns since 1985, and I have never had a single tax return questioned by anyone. However, the main reason I continue to use the same tax professional is that part of the tax preparation service is free representation in front of the IRS—without my having to be present—if there are ever any questions about the return or in the event of an audit. It's akin to having a free IRS audit insurance policy!
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