For all of us, filing taxes is a huge pain wrapped in a series of never-ending questions. With the rise of e-filing, smartphone, and tablet apps, in addition to the traditional filing methods, it seems like there are way too many options to pick from.
So how do you choose the best filing method for you? Consider four things: accuracy, cost, convenience, and audit.
Popular Tax Filing Options
For the most accurate return, with a guarantee that someone else pays the penalty for errors, there are few options better than hiring a professional tax prep specialist. But there are many online options that have years of high performance to recommend them.
TurboTax, made by Intuit, is the most well-known and popular tax prep software. You can buy and install it on your computer, but we recommend the online version. A series of step-by-step questions will guide you through all the necessary paperwork. To preserve accuracy, you can’t file if the software detects anything incorrect or missing in your information. And, as a bonus, you can use their hotline to call a tax professional for free if you have additional questions.
H&R Tax Prep Programs is similar to TurboTax. It offers different versions for individuals with basic taxes, those who are self-employed, or homeowners to ensure that no information is missed. However, some users report that the state tax section is difficult to navigate and that the resulting state penalties eat into their federal refund.
The Tax Counseling for the Elderly program, or TCE, provided by the IRS and AARP, is a service for those over 60 years old. These specialists work specifically to ensure accuracy in returns with pension plans or retirement funds. You do not have to be an AARP member to use this resource.
How much does filing taxes cost?
Using an accountant to prepare your taxes greatly reduces your workload but increases the cost, while doing everything by hand does the opposite. Other tax prep options fall somewhere in the middle.
If you have simple taxes or make less than $51,000, the cost of doing your taxes can drop dramatically. If you qualify for a 1040EZ, H&R Block will prepare your taxes for free, and you can choose how to file. And the IRS’s Volunteer Income Tax Assistance program, or VITA, will help those with incomes under $51,000 prepare and file for free. Look up free tax prep locations by zip code.
There are several free tax prep programs online, and most will let you file your federal return for free. However, costs can be added on for state tax filing, amending a previous year’s return, or due to the complexity of your taxes. These fees can range from $7.00 to $40.00, so be aware that costs can still add up.
Both TurboTax and H&R Block offer free, basic online programs for those with simple taxes, but the price of both increases from $19.95 to $79.95 the more complicated your taxes are.
Choosing the Easiest Way to File Taxes
Obviously, the easiest way to deal with tax season is to hand off your documents to a professional. But this doesn’t mean that there aren’t other easy options.
Online software, such as H&R Block’s or TurboTax, will let you e-file both your federal and state returns, saving you the hassle of printing and mailing. Both now offer programs that can be downloaded to a tablet as well.
If you are eligible for a 1040EZ, tablet or smartphone apps are quick to use and incredibly convenient. Intuit’s SnapTax will take you through the steps in almost no time and is submitted immediately after you finish. With H&R Block’s At Home 1040EZ you can take a picture of your W-2 with your smartphone and the program will move the numbers to the correct boxes in the IRS forms for you.
What about a Tax Audit?
An audit is one of the most terrifying possibilities when it comes to filing your taxes, so whatever option you pick, make sure you know you are protected.
If you are using H&R Block At Home Premium, you can prepare your return yourself, then pass it on to an H&R Block professional who will review it and sign off as the preparer of record. This will cost you about $80.00 for federal returns, with additional fees for state returns.
Like other tax decisions, how you choose to prepare and file your taxes will be unique to you and your situation. Last year, you may have needed to file for free and save some money. This year, the convenience of having someone else do the work may outweigh the costs. Shop around, research your options, and figure out which choice is best for you and your finances.
Disclaimer: Katharine is not a tax preparation specialist and this article is not a professional endorsement of any tax prep system.