Software for Preparing Taxes at Home
When filing your yearly taxes you can choose to file on paper, have your taxes prepared by an agent or use tax preparation software to walk you through the process. Tax preparation software can be used to file both simple and complicated tax forms, though you should be comfortable with filing taxes on your own before choosing this method of preparation.
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Software
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There are several different companies that produce tax preparation software, and within each company are different software levels depending on your tax filing needs. If, for example, you earned under $58,000 during the year you can Free File through the IRS with no need to purchase software. Those who earned more and only have W-2 and 1099 forms to file can use basic software such "Turbo Tax Basic," H&R Block at Home Basic" or "TaxACT Free Edition." If you invest money, own property or act as a contractor or own a home-based business you can use the Premiere and Deluxe editions of the same software. When selecting your software, make a list of anything you may feel will complicate your taxes beyond simple income and work from there on selecting a software level. Always make sure you buy the most recent edition of the tax preparation software. For example, do not use the 2008 software to file your 2010 taxes, as tax laws may have changed.
Pros and Cons
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There are pros and cons to filing your taxes with at-home preparation software. One of the upsides is that the software will walk you through the filing process and explain the forms or steps that you would be unsure of if you were filing on paper. The software is also generally cheaper than going through a tax agent. Tax software makers will also claim responsibility for errors caused by the software, such as improper calculations. However, one downside to the preparation software is that if you are filing complicated forms or have multiple deductions, income sources and assets, you may end up not gaining the maximum refund or the minimum amount of taxes owed. In addition, if you make an error on your end such as an improper number entered or a false deduction, you are responsible for the error, not the tax software maker.
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When to Use
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If you are filing basic tax returns or keep records of all your deductions and extra income over the course of the year, then you should examine using preparation software. The software will include an online support staff that can answer any basic questions you have as you make your way through the filing process. However, if you have complicated filings and no prior experience filing, you may want to forgo tax software and have your taxes prepared by a tax agent. Also, if you have been the subject of a previous audit or are worried that you may become the subject of one due to irregularities in your records, seek the advice of a tax agent.
Tips
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When filing with tax preparation software it is vital to understand that the software does not know if the information you are entering is correct. Before moving on to a new screen in the software, check your entries twice to make sure they match your records. When you have finished filling out all the information into the software, take the option to review all your work once more before submitting to the IRS and only choose to do so when you are confident in all of your entries. Also, if you have any questions about information you are being asked for, contact the support line for an answer before moving on. Finally, if no amount of support is helping you file, do not proceed with the rest of the process, instead bring your information to an agent.
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