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MoneyWatch: Managing Your Money
By Joshua Rodriguez
Edited By Matt Richardson, Angelica Leicht
/ CBS News
It's tax season again. Chances are that if you haven't received your W2s or 1099s by now, you're vigilantly watching for them. And once you get them, you probably plan on going through the same process you go through every year.
It all starts with making sure you have all your documents in hand and making a trip to your accountant. Soon enough, you'll get your tax refund in your bank account or mailbox - minus the tax preparation fee, of course. That is, unless you paid the hundreds of dollars the process often costs in advance.
Then again, is it really worth going through that hassle and paying hundreds of dollars every year to work with a tax prep professional? How hard can it be to file your own taxes?
Get this software now to easily file your tax return on your own.
Is it hard to file your own taxes?
The United States tax code is complex and there are several variables to consider when you file your taxes. So, if you plan on doing it manually, you're likely in for a significant task. However, you don't have to do your taxes manually to do them on your own.
Today's technology often makes quick work of complex tasks, even items like filing your annual tax return. As is the case with a tax professional, preparation software will ask you questions to get a better understanding of how much money you earned, how much money you paid in income taxes and what deductions you might qualify for.
Using the data from the questions you answer, these services navigate the complexities of the United States tax code for you. Once complete, you simply read over your tax documents and sign off on them before the software files your taxes electronically for you.
Not only is the process usually more efficient than commuting to your tax professional's office, it's often less expensive as well. Depending on the details of your return, you may even be able to file it for free.
See if you qualify to file your taxes for free here now.
When it's worth doing your taxes on your own
It's worth it for most people to do their taxes on their own. According to TurboTax, nearly 90% of individuals file their tax returns using the standard deduction in place of itemized deductions. That means that most taxpayers have a simple tax return and will likely benefit from the efficiency and simplicity of tax preparation software.
But what if you're in the other approximate 10% of the American population that uses the itemized deduction? Is tax preparation software still a strong solution? In most cases, the answer is "yes." Quality tax preparation software solutions can file itemized deductions as well. So, as long as you have a solid understanding of the deductions you take advantage of, doing your taxes on your own may still be a good way to go.
When it's worth hiring someone to do your taxes
Although most people can benefit from doing their taxes on their own, there are some people who will likely be better off hiring a professional. Whether or not you're one of those people depends on the complexity of your tax return and your knowledge of your deductions. It might be worth reaching out to a tax professional if:
- You are using itemized deductions but aren't sure about the qualifications and limitations of those deductions.
- You're not sure if you're making the most of your itemized deductions.
- You own a business.
- You have a complex tax return inclusive of multiple streams of income, significant investments or a long list of itemized deductions.
Best tax preparation software to use
Doing your own taxes can be simple as long as you take advantage of the best servicers. But what are the best tax preparation software programs to use? Two leading options include:
- TurboTax: TurboTax offers a free service that it says about 37% of tax filers qualify for. You may even qualify for free human assistance. If you don't, you'll pay up to $89 to file your own taxes. If you'd like help filing your taxes, you'll pay up to $169 if you don't qualify for the free service.
- H&R Block: Filing your taxes with costs anywhere from $25 to $89. Although the company doesn't offer a free solution, it does offer a high-quality tax preparation solution at a fraction of the cost of hiring a tax professional.
The bottom line
Although the United States tax code is a complex one, it's not difficult to do your taxes on your own. That is, as long as you use a quality software solution to guide you through the process. Consider signing up for TurboTax, or another leading software solution now to get started.
