Choosing how you want to get your tax return completed — whether you do it yourself, use a service, or engage a professional preparer — has a lot to do with the complexity of your financial life, the amount of time you have to spend on the return, and the support you want in an audit.

Online

If your taxes are straightforward and you understand what's expected on your return, preparing with an online service such as TurboTax or TaxAct can be very convenient. The service's website walks you though your return with a series of questions. Ignore boasts that some services make about the average refund their filers received. Since your refund is a function of the amount of tax you owe versus the amount you paid in during the year, it has little to do with the efficiency of their service. If for some strange reason you paid an extra $10,000 in estimated or withholding tax that you didn't actually owe, and then used a service to do the return, your extra payment and the resulting refund would skew their average. Online services are a convenience — they're not magic refund-finders.

Comparing Professionals: CPA or Enrolled Agent?

Some newly divorced or widowed people have never filed a return because their spouse formerly handled those chores. If that describes you, and you have a complex tax situation such as a business or rental property, or just can't spend the time doing the return yourself, hire a professional. Certified Public Accountants, or CPAs, have an extensive education and often specialize in complex returns for businesses and business owners. If your situation calls for hiring these big guns — and paying them — they will become invaluable advisors to you.

If you're an individual with a straightforward tax situation, or are self-employed, hiring a CPA might be overkill. Enrolled agents are tax professionals licensed to represent you before the IRS. Since they specialize in tax preparation and planning, they may be better able to help you, especially if you are looking for a strong advisory relationship but have a more straightforward tax situation.

One important key to success with any professional is your relationship with them. The smartest professional in the world won't do you any good if you can't communicate with him. Don't be afraid to ask about his business, his future plans, how long he has been working with clients like you, and how he feels about answering your questions throughout the year rather than just at tax time.

Tax Preparation Chains

Retail chain tax preparation services such as H&R Block and Jackson Hewitt can be helpful if you're not sure how to complete your online return yourself and have a straightforward tax situation that could be simplified by having someone with training input the return for you. The downside of this service is that you don't usually get the chance to develop a relationship with a preparer over a number of years.

The tax prep chains may try to sell you additional services such as instant refund loans, investments, or financial planning services. Refund loans are a waste of the fees they charge. If you file your tax return electronically and have direct deposit you'll get your refund very quickly anyway — in many cases in only a few days. If they offer financial or investment advice, do your due diligence just as you would for another investment advisor or financial planner. It's rare that these offerings are better than those sold by firms that specialize in investments.

Surviving an Audit

Most audits are resolved simply by providing the information to back up entries on your tax return or by correcting information that was reported incorrectly. Most audits are handled by mail, so surviving an audit is mostly about keeping good records and responding quickly and accurately to an inquiry. If you're called to a face-to-face audit, it can be very helpful to have a professional representing you. Professionals will often only want to represent you on a return they prepared — another good reason to build a relationship with a pro if your tax situation is complex.