According to the Internal Revenue Service (IRS), nearly 100 million taxpayers e-filed their tax returns last year. The IRS encourages e-filing, emphasizing that e-filing is the “safest, fastest and easiest” way to file. However, many Americans are unsure about filing such important information electronically. The IRS suggests three safe methods to e-file income tax returns: Free File software, commercially purchased tax preparation software and a professional tax preparer.
Free File Software
Taxpayers whose goal is saving money should give the Free File option a try. The IRS contracts with a group of commercial software companies — some with instantly recognizable names — to provide this free service. The service works in conjunction with Free File Fillable Forms to address most taxpayer situations. Unfortunately, the Free File service is only available to taxpayers with an adjusted gross income of $57,000 or less.
Tax Preparation Software
Commercially available tax preparation software has proliferated in recent years, and each program has its advantages and disadvantages. Taxpayers often weigh the option of saving money on the upfront purchase price or saving money on the total tax bill. The issue of which software to purchase is usually resolved by a simple question: How complicated is the tax return?
Many finance and software specialists have reviewed competing tax preparation software, so taxpayers should take time to evaluate products before choosing one to trust. Several products consistently land in the top tier, however, and they are worth special consideration: TurboTax, TaxAct, TaxCut, Complete Tax and Jackson Hewitt.
Professional Tax Preparation
Hiring a professional to prepare taxes may seem like an unnecessary expense, and in many cases, this is true. However, some taxpayers do benefit from professional help although they need to recognize that “tax preparers” are not necessarily accountants.
Accountants are best for taxpayers who have unusual circumstances, such as those who are self-employed or own small businesses. Sometimes, those who have experienced a major life change, such as a divorce, also benefit. Accountants should be well versed on every available means of reducing their clients’ tax bills.
The bottom line is that taxpayers should embrace e-filing. This is a safe and fast alternative to submitting paper returns. In addition, with so much tax preparation software available, e-filing actually reduces errors. Regardless of which method taxpayers use, e-filing is a viable way to complete a dreaded chore while minimizing the tax bill.
