According to the Tax Foundation, nearly 40% of all Americans prepare their own tax returns. Of that number, a whopping 90 million choose to do so by filing online. Whether you opt for a DIY tax strategy based on the simplicity of your tax return or even to want avoid paying a tax preparer the fees for doing the work, there are several options for choosing the appropriate tax preparation software.
Choosing the Right Software
If you are beginning the process, there are some factors to consider:
- Security: After a quick web search you found an online tax preparation software you can use for free! Although that may sound great, remember that you will be entering your personal information such as social security numbers, bank account information and earnings reports. Choosing a reputable name brand provider such as TurboTax or TaxCut would be in your best interest.
- Cost: Do you earn less then $56,000? Then you may qualify for the IRS’s Free Filing Program. If not, comparison shopping can unearth plenty of affordable options from a $14.95 charge for the TaxCut Basic online program to a $109.95 business tax software purchase from TurboTax. Don’t forget to check the additional charge for online filing.
- Check Reviews: Before committing, why not take a test drive to gauge your personal comfort with the program. Although Consumer Reports stated that “TaxCut screens [are] kinder to the eyes” in their 2007 comparison of TurboTax and TaxCut, you may prefer TurboTax.
- Research: Check consumer websites as they will provide you with unbiased information regarding the programs in question.
- Understand Your Needs: Individuals with no dependents and simple financial information may not need the deluxe versions of the software. However, large families with multiple dependents, deductions and small business may need to splurge and buy the most comprehensive versions. The most expensive programs include access to tax advice and IRS publications.
- Computer Requirements: Whether you are a PC or a Mac, you need to purchase the right operating platform for the program.
- Extras: Don’t forget that when it comes to tax time, you need to file forms with both the Federal and State government. Not all tax preparation programs include the software necessary for the latter.
When it comes to tax preparation, one size does not fit all. Only you can make the final decision of what program will be loaded onto your computer. Once installed, tax preparation should be an easy step by step process, or you bought the wrong program.
Which tax preparation software do you use and why?