How to Make Doing Your Own Taxes Easier
While my high-school classmates were running track and playing basketball, I was on the math team. I was and still am a numbers geek. I’m such a geek that I actually enjoy doing my own taxes. For years I crunched them with pen and paper, but eventually I switched to using tax-preparation software.
There are a lot of tax-preparation software options out there to choose from. Here’s how you can pick the right vendor to suit your needs.
Online vs. Desktop
The security of your personal information is only one aspect of deciding whether to access tax software via the vendor’s website or install it on your own computer. Flexibility is another important consideration. With an online version you pay for what you need at the end; whereas downloadable software, by necessity, requires you to decide and pay up front for the features you’ll get bundled into a Basic, Premium or Deluxe version. It’s possible you’ll buy something more than what you use.
You could potentially need three types of assistance as a tax-preparation-software customer: help with the software itself, questions about taxes and IRS rules, and help should you ever be audited. Almost every vendor will answer software questions, whether via email or live chat. At a minimum, most vendors offer a knowledge base of specific tax-related questions, but some have toll-free phone numbers and live chat available. Before you purchase tax-prep software, be sure you understand how the vendor will help should you be audited; some will only verify the accuracy of their calculations, while others will provide a one-on-one consultation.
A majority of the tax-preparation-software vendors claim to offer free federal returns. They do offer free returns, but only for a very specific set of people. You can use the IRS’ free file wizard or browse this list of 15 participating vendors to see if you qualify for a free federal, or even a free state, return. If your household’s adjusted gross income is more than $57,000, then you definitely don’t qualify for a freebie.
For those who plan on paying for software, here are some things to take into consideration:
- Complexity increases cost. The more forms you file, the more you are likely to pay for your return. Itemizing deductions, or reporting business income or rental-property income will likely increase your cost.
- eFile fees. Usually eFile fees are included at no additional charge for paying customers, but not always. Check your vendor’s website to be sure you aren’t hit with a surprise fee.
- State returns. It’s almost impossible to get a free state tax return processed and filed. Popular tax-software vendors charge anywhere from $9 to $40 to help you with your state return. Again, be sure you understand this cost before you get started.
One last thought about tax season: If you want to put off doing your taxes, you can request a six-month extension. Most tax-prep software will electronically file that extension for you, free of charge. But, remember that if you owe money to the IRS, you still need to pay it by April 15, even if you don’t complete your return until the fall.