There are numerous ways to prepare your taxes these days: do-it-yourself, filing through a professional service or filing through your computer. Depending on your personal situation, how you choose to file can often help you save money. Take a look at the pros and cons of a few different tax preparation strategies below to help you choose which way will most benefit you when tax time rolls around.
If you are young, single, and don’t make over $100,000, you can probably opt to do your own taxes. If you don’t choose to itemize, the forms are easy enough to fill in. You can always check the IRS website to find out if you should file a 1040EZ or whether you’d do best to itemize. If you don’t have heavy deductions, like home mortgage interest or other forms of non-standard income, many reasons for going to a professional or itemizing disappear.
There are great benefits to having a professional help you file your taxes. They know exactly how to get the best return you can and you never have to worry about making a mistake. Of course you pay for their expertise, though you can deduct the money you spend on tax preparations the next year if you itemize, and not all professionals are equal. You have to be careful to find someone who isn’t just doing preparations during tax season and works in some other industry the rest of the year. It’s best to find a professional who has the experience required to give you a solid understanding of your tax situation.
Having a professional help you to file your taxes can also come in handy in the event that you are audited. You should have all the necessary documentation when you file your taxes and many times you can avoid an audit simply by using a professional preparer. They are very good at organizing your returns and putting them in a folder that you can easily file when you get home. If you should still be audited, you can go back to the same professional to help you with the audit process.
New online and pc applications allow you to prepare your taxes yourself from the privacy of your own home. While it may not answer every question you may have, many of these programs are very detailed and will be able to help you with most fo your filing. Many of these programs provide free preparation for easier forms, but require you to buy them when you are filling out the longer forms. These programs will walk you though the deduction process step-by-step and can make complicated forms much easier to file. One nice feature is that you can pay for the product by using your refund, if you are getting one, and direct deposit your Federal refund straight into your bank account. One drawback is that you will have to print and organize all your documentation yourself. Just remember that you need to be able to look back on at least the last three years of filings accurately in case you are audited.