Over the past several years, we’ve seen a boom in tax software companies offering 'Second Looks' for tax filers.
These 'Second Look' tax return review programs allow filers to have a tax professional examine their tax return before it's submitted.
While these programs could be useful in some cases, they're often just marketing gimmicks designed to get nervous filers to pay more. Here’s what you need to know about them.
Side Note: Many CPAs and CFPs will offer a review of past tax returns when onboarding new clients. This is a great time to have a conversation about past taxes and finances, as well as potentially catch things missed. This is different than the traditional marketing you may be seeing during tax season of a "second look".
What Is A 'Second Look' Tax Return Review?
A 'Second Look' tax return review means a tax pro will check your return after you've prepared it.
Before submitting you return for review, you'll use tax software to prepare it. This involves gathering all the correct documentation and following the workflows to input information appropriately.
Once you’ve finished preparing your tax return, a tax professional (typically an enrolled agent) will review your return for errors. They'll look for things like mathematical errors, glaring omissions, or any personal information that may have been incorrectly entered. If the tax pro spots an issue, they'll provide feedback to you so you can correct the issue on your own.
'Second Look' tax return review agreements vary by company. Some allow users to ask specific tax-related questions (such as whether they entered certain information correctly). Others have the tax professional review the return without input from the filer.
What Are The Most Common Tax Errors?
The second set of eyes on a tax return sounds valuable. After all, tax law changes frequently and millions of amended tax returns are filed each year to fix mistakes. However, it may be useful to focus on the types of errors that plague most tax filers and to understand which ones a 'Second Look' could fix.
According to the IRS, these are the most common errors:
A 'Second Look' reviewer will catch most of the errors mentioned above. But they can't catch issues with copying data. The reviewer will only catch the issues because the software will flag the issues for the filer. This limits how much value a 'Second Look' tax return review can add.
High-Quality Software Prevents Most Tax Errors
In the past, tax software was difficult to use, and only people who were trained on the software could use it effectively. That’s not the case anymore.
Just about anyone, including first-time tax filers, can avoid errors simply by using high-quality tax software. In the past few years, we’ve ranked TurboTax, TaxSlayer, H&R Block as some of the best software filing programs because they're intuitive and designed for regular humans, not CPAs. See the full list >>>
Using the program as intended will allow (even force) you to avoid the most common errors as defined by the IRS. If you use any highly-ranked software program, you can avoid the math errors that are easy to make with pen and paper filing. These programs also make it easy to select the right dependent status for children, the right filing status, and more.
Unless you input your numbers wrong, you’ll avoid the most common tax filing mistakes. If you do input your numbers wrong, a 'Second Look' tax return review isn’t likely to catch it either. Typically, these reviewers look for glaring omissions in your filing.
For example, if you enter information about a rental property, but don’t add depreciation, a 'Second Look reviewer may catch that. But forgetting to add expenses from a side business is less likely to be caught.
Complex Situations May Need More Than A 'Second Look'
Tax software can handle most complex tax filing situations. But entering large amounts of data can become cumbersome. And if you have a very complex tax filing situation, mainstream tax software might not be a good fit for you. But a 'Second Look' isn’t unlikely to deliver the value you need either.
Tax filers with complex situations may find that a tax preparation service delivers a good value. A dedicated CPA can think critically about the documents you provide and ask for specific omissions.
Even if you prefer a DIY approach to tax filing, you may want to take advantage of programs that allow you to consult with a tax professional during tax prep. Many companies allow users to consult with an EA or CPA along the way. This “in progress” advice from tax professionals seems like a more valuable option than a 'Second Look' when the work is already done.
Occasionally, an online tax prep company will offer a 'Second Look' as an early filing incentive. Those who qualify for the incentive should take advantage. The second set of eyes won’t hurt. And it could provide a sense of peace.
However, these programs often cost as much as the tax software you used to prepare the return. In that case, a 'Second Look' tax return review becomes an expensive security blanket. It adds little value because tax software is already designed to limit your ability to make mistakes.
In most cases, if you have to pay for a 'Second Look' it won’t be worth the money. Either use high-quality tax software or hire a firm to file taxes for you. Both options work and are likely to deliver more value.
Hannah is a wife, mom, and described personal finance geek. She excels with spreadsheets (and puns)! She regularly explores in-depth financial topics and enjoys looking at the latest tools and trends with money.