Tax Help That Can Be Worth the Money
Let’s face it: Filing your taxes can be complicated. Even for relatively “simple” returns, changes in tax laws from year to year can be hard to keep up with for the average American taxpayer. As a result, according to a survey commissioned by The College Investors, about 46% of Americans used tax software to file their taxes in 2021. But, with so many options now available, which type of tax software is best for you to use? And is it even worth it for you? Here’s a quick overview of some of the best tax software options, including how much they cost, along with ways you can decide if software is right for you.
TurboTax was a pioneer in the tax software business and remains by far the largest provider in the industry. As such, you’re likely to find just about any kind of tax help you need, including live professional help. TurboTax Live, which is a newer offering by the company, allows you to get unlimited live tax advice from a professional who can even complete your entire return on your behalf if you so desire.
Pricing for TurboTax Live ranges from $199 for the full-service option at the Basic level, all the way up to the most expensive tier of $389 for self-employed returns, with state taxes incurring additional charges. This can be a good option if you feel more comfortable working with a professional tax advisor but don’t want the hassle or often added expense of hiring a more traditional CPA. For strictly online services, fees range from $0 for the Free Edition to $119 for the Self-Employed version. State taxes cost an additional $44.99.
H&R Block can be a great option for many taxpayers due to its hybrid structure. Originally, H&R Block was solely a bricks-and-mortar tax service option, where Americans would have to show up in person with all of their tax information to get help filing their returns. Now, in addition to still maintaining numerous branches, H&R Block has a completely online tax software option to complement its network of on-the-ground professionals. For in-branch tax filings, fees start at $69, with $65 for each additional state tax return. Online tax software packages range from $0 for the Free Online edition to $114.99 for the Self-Employed version, with an additional $44.99 for state tax filing.
One of the neat features of this hybrid option is that you can also choose to upload your tax information online and then meet with a tax professional virtually via chat or live video feed — and you can still maintain the option to meet someone in a branch as well. Fees for this service start at $80. For many taxpayers, this can offer the best of both worlds when it comes to tax prep.
Hiring a Professional
Although tax software continues to grow in popularity, some taxpayers simply aren’t comfortable entrusting their personal financial information to an online tax service. Others might prefer the live interaction they can get with an in-person or over-the-phone consultation with a licensed CPA. Still, others might have tax returns so complicated that even the best tax software might struggle with completing it properly.
Whatever the case, there will always be a need for licensed tax professionals like CPAs. The average cost of a CPA to file a Form 1040 for a client ranges from about $220 to $323, according to the National Society of Accountants. While that’s slightly more expensive than most tax software, for many Americans, the security of working face-to-face with a licensed professional is well worth the cost. Some would argue that good CPAs can even generate lower tax liabilities for clients as well, so that is something to factor into your equation.
IRS Free File
For those who want to file their tax return electronically on their own but don’t want to pay up for an expensive tax service, the IRS Free File is a great option. For taxpayers with an adjusted gross income of $73,000 or less — which constitutes the bulk of Americans — the IRS guides your tax preparation with simple questions and allows you to file your tax return for free. Some state tax preparation and filing is also free. National tax figures show that about 70% of Americans qualify for this service, yet many people think the only option is to pay for tax software. That is not the case, and for many taxpayers, IRS Free File is a great option.
More From GOBankingRates