Tax filing software can save time preparing and e-filing federal and state income taxes. It can also save you money on fees, says CPA Kenesha Coleman.
A good tax software program should scan your information and check whether you’re eligible for deductions and credits that may affect your refund. It should also run a diagnostic before you file to ensure your return is accurate.
Cost
Online tax filing software is generally cheaper than hiring a professional to prepare taxes. However, this is only true for some. You should seek a professional’s assistance if you have a complex tax situation, such as self-employment income or rental property.
The cost depends on your software and how complex your tax return is. Some programs offer a free service tier for simple returns, such as those with W-2 wages, unemployment income and limited investment earnings.
Some online tax services offer free filing if your adjusted gross income is below a certain threshold, such as $72,000 in 2022. This is an excellent option for taxpayers who can’t afford to pay for the professional tax preparation but need help filing their returns.
The best tax filing software can help you file your taxes efficiently and accurately, saving you money in the long run. These programs also maximize deductions and credits for your specific financial circumstances.
Some tax software programs will automatically update to keep up with changes to the federal tax forms during the year. This ensures you are always preparing your taxes with the most up-to-date information. Some will even allow you to download and print your return for future reference.
Time
Tax season can be hectic, and tax filing can add even more stress to an already-complicated task. However, you can file your taxes for free and avoid paying a premium on software.
Tax preparation software is intended to make completing your income tax return more convenient. It arranges your tax data, lists the tax records and forms you must gather, and figures up your income, credits, and deductions.
Good tax preparation software may save you time and assist you in finding chances for income adjustments, tax deductions, and tax credits. Several solutions also conduct a diagnostic to ensure your tax information is correct and compliant with local and state rules. You may even receive discounts on this tax preparation program when you utilize digital coupons like TurboTax coupons.
Another essential factor is whether your chosen program offers tax forms and schedules for your situation. For example, if you’re a military member, look for a program that supports tax breaks like combat pay exclusion, moving expense deduction, uniform deduction, reservist’s travel deduction and job search expenses.
Most tax-filing software providers update their programs several times a week, which means they might include updates for new federal tax forms before you submit your return. This is especially true during tax season when many IRS forms change yearly.
Efficiency
Besides the apparent benefits of filing your taxes using a computer, tax software can also help you save money by automating much of the process. It keeps track of your filings, provides step-by-step instructions, and calculates how much you owe, or the government owes you.
Some programs can even connect to your employer or investment company and automatically download your data. These features can be helpful for people who work remotely and have a lot of income and expenses.
Another benefit of tax software is avoiding paying expensive fees to a human tax preparer or attorney. The cost of these services varies, depending on your filing situation and the type of taxes you must prepare.
However, suppose you have a complicated tax situation with high-deductible health insurance or investment income or are worried you may be audited. Having a human prepare your taxes might be worth the extra expense.
Security
Suppose you have a complicated financial situation, such as self-employment income or investments, or have bought or sold a home. In that case, paying an extra fee for tax software that includes live support, accuracy, and maximum refund guarantees may be worth the investment. These premium services usually cost about $1,000 to $6,000 and will help you file your taxes quickly, maximizing deductions and giving you peace of mind that your return is correct and your refund will be on time.
However, you should know that the IRS does not require these software companies to meet NIST-recommended information security standards. So, you should check the terms and conditions and privacy policies of any software or paid preparer before you engage them.
Cybercriminals always look for new ways to hack into systems and steal personal information. As such, the IRS and its partners have outlined six critical steps tax professionals should take to protect their computers, email and sensitive taxpayer data.
Establishing a robust, sustainable cybersecurity program is the first step in ensuring cybersecurity. This includes system monitoring and incident detection and response. It is a daunting task, but it can be accomplished with tools, procedures and policies that keep your business safe from intrusions, fraud and identity theft.
