How to Choose the Best Tax Preparation Software
Every year, right after the holiday season is complete, it begins: the non-stop advertisements for tax preparation services. There is a short period of time between January 1 and Tax Day where every tax preparation software available is competing for your business: on television, radio, the Internet, everywhere you turn.
Some people may be hesitant to use "do it yourself" software to file their returns, either because they are worried they'll make a mistake or simply because they never have before. It doesn't help that H&R Block is claiming that there was over $1 billion in missed deductions in 2013.
But Consumer Reports says the reality is that most people really can use tax preparation to successfully complete their returns, and the amount of money you will save using the software instead of a professional service makes it worth it.
Once you have made the decision to use the software, then you must decide which one to use, and with TurboTax.com, TaxHawk.com, TaxACT.com, H&R Block at Home, FreeTaxUSA.com, TaxSlayer.com, and so many others, the possibilities almost seem endless.
Thankfully, there are some good guidelines you can follow to help you make your choice.
Consider Your Needs
Considering your needs may seem like obvious advice, but many people may think they need software that includes far more features than they actually need. The truth is that a lot of people's tax needs will be perfectly met by really basic - and affordable - tax software.
In fact, the IRS offers something they call Free File, which gives people who have an adjusted gross income of less than $57,000 per year access to 15 different companies who will prepare and file your federal returns for free. Some of these services will even include free state returns as well.
Another seemingly obvious piece of advice is to consider the cost of the software. Since the purpose of filing your taxes yourself is to save money, it doesn't make much sense to pay for expensive software. Unfortunately, the cost of some tax prep programs is not always clear or straightforward.
Many times the price a software prints is actually a baseline cost, and this price may not include both federal and state returns or all the features and upgrades you have expected to be a part of the software you have purchased. It is important to read all the fine print and details before you decide which software is right for you.
No matter how simple - or complicated - you believe your tax return will be, there is a list of features the software you choose should provide, no exceptions. Whatever software you purchase must be able to:
- Operate in "real time," which means that they are able to implement changes in tax codes as soon as they are made so you will not miss out on any deductions.
- Ask you simple questions to guide you through your tax return.
- Automatically select and fill in all the forms you need, as well as the ability to import data from other personal financial software you use.
- Provide you with easy navigation tools which will allow you to move backward and forward as you need to, without losing any of your work.
- Double check your return for any potential mistakes or missed fields.
- Have the ability to flag all possible missing deductions and anything that may trigger an IRS audit.
- Electronically file your return so you can get your refund faster.
- Tell you when you should expect to receive your refund.
- Provide you with free phone support, even on weekends, so you have someone to contact if you have questions.
The Bottom Line
Unless you have issues that make your taxes very complicated, you should be able to successfully use popular tax preparation software to complete and file your tax returns. Even so, you don't want to just use any old software. The little bit of extra time it will take you to evaluate and choose which software will be best for you in terms of your needs, costs, and features will be well worth it in the end.