Tax preparation software are a godsend to taxpayers. They are designed to ask the right questions to simplify complex procedures and form selection. Based on your income, filing status, and the number of dependents, they choose the right forms, fill them out, and then e-file for you.
But, here’s the thing: Not all tax prep software are created equal. Some can only cater to simple returns, while others can handle complex multiple deductions. Here are seven steps you should follow to find the right tax prep software:
Know the Complexity of Your Tax Situation
First things first, take a closer look at your financial status. If you’re a salaried employee with a single W-2 and straightforward deductions, a basic or free version is more than enough. However, those with numerous income sources and investments will need upgraded tax prep software.
Some tax prep software offer tailored solutions for freelancers or small business owners. When analyzing the complexity of your tax situation, see if you have had any major life events this year. This includes:
- Getting married
- Starting a family
- Buying or selling a home
- Making retirement contributions
- Accepting a promotion
A reliable tax prep software will alert you regarding any new policies and make sure you remain compliant. The bottom line is that choosing a tax prep software that matches your situation will save you time and frustration.
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Consider the Features of Different Tax Software
A reliable tax preparation software does more than just number-crunching. It acts as your personal tax assistance, double-checking everything and making sure you save as much money as possible. Look for the following features when choosing a tax prep software:
- Step-by-step guidance
- Auto search for deductions
- Audit protection
- Pension optimizer
- Return review
One of the standout features of tax prep software is the ability to file electronically. The process is pretty simple: You complete the tax return through the software program, attach all the necessary documents, and electronically send the return to the IRS.
Some tax prep software also allow you to import the information from your W-2s and 1099s, so you don’t have to manually enter basic information.
Compare Pricing
According to the IRS, an average taxpayer spends around $240 to file their taxes. The good news? You can spend a lot less if you choose the right tax preparation software. Here, the most important thing you can do is compare the prices of different tax preparation software. Programs range from free to $100 or more.
Most tax software follow a tiered pricing model, which includes Basic, Free, Premium, Deluxe, and Self-Employed versions. The more deductions and credits you have, the better tax package you need.
Pro Tip: The best tax software doesn’t have to be overly expensive. With careful research, you can find a software that doesn’t break your bank.
Look for Free Options and Other Discounts
As hinted earlier, if your tax returns are simple and straightforward, you don’t need overly complex prep packages. Free tax filing programs will file the basic 1040 form using W-2 and unemployment income.
Many people wonder is Turbotax free for military? The answer is yes! Enlisted active duty and reserve military filers can file taxes through any TurboTax Online product without paying anything. This offer applies even when you’re filing jointly with a non-military spouse.
According to a survey, nearly 37% of taxpayers qualify for the TurboTax Free Edition. It’s only a matter of thorough research and attention to detail.
Consider Ease of Use
The interface of a tax prep software holds utmost importance. Start a free trial or a demo and see how easy it is to upload documents and jump from one section to another. Reliable tax prep software have a “Guide Me” mode that allows users to understand each and every section of the platform.
Tax preparation software, such as TurboTax, usually follow two formats: interview style and fill-in-the-blanks style. Interview-style questions work well for beginners, whereas fill-in-the-blanks style ensures ease of use for those who prefer direct form entry.
Make sure the platform showcases your progress and flags mathematical errors in real time.
Evaluate the Quality of Customer Support
The tax legislation is continuously changing. It’s natural for you to have questions when using a tax prep software, especially when the due date is fast approaching. This is why it’s important to assess the quality of customer support offered by a tax prep software.
A reliable tax prep software can connect you to a tax expert in minutes. You can reach out via email or phone. This will help resolve technical difficulties, compliance issues, and other situations where the software capabilities fall short.
Robust customer support is critical for ensuring a smooth and stress-free filing experience.
Take a Look at the Company’s Reputation
A tax prep software might have free versions or a robust customer support system, but if it doesn’t have a good industrial reputation, you should take your business somewhere else.
Leverage third-party software rating platforms to get unbiased ratings. You should also read previous customer reviews and see what kind of complaints have been left.
Pay close attention to the tax prep software’s security measures. Remember that business tax returns are not public documents, and they should only be seen by you and your preparer. Make sure the software offers robust security features, such as authentication protocols and password protection. This will keep your financial information secure and ensure peace of mind.
The Bottom Line
Tax preparation software have made tax filing quite simple. But, if you don’t choose the right software, all your money and time will go down the drain.
Start by analyzing the complexity of your tax situation. The last thing you need is an overly expensive prep software for simple individual returns. Ensure the software features an intuitive and user-friendly interface. Get quotes from different platforms and shortlist the ones with discounts and free versions. Analyze the quality of customer support and overall company reputation to make an informed decision.
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