Tax Preparation

5 methods to chop tax preparation prices

As millions of Americans begin the annual tax preparation ritual this year, many will buy tax software or hire human accountants – and it probably won’t come cheap. Tax software can easily cost $ 100 or more for many people, and human tax professionals charge an average of $ 203 to file a tax return, according to the National Association of Tax Professionals.

However, there are ways to cut the cost of tax preparation or even get it for free.

1. Verify that you qualify for the free file

According to NerdWallet’s 2021 tax study, 56% of applicants will prepare their federal returns this year, and many will rely on tax software to get their jobs done. However, not everyone has to pay for this software. Individuals with adjusted gross income of $ 72,000 or less can receive free tax software from Intuit, TaxAct, TaxSlayer, and other companies through the IRS Free File program.

How to get it: IRS.gov.

See: Not sure whether to file taxes early or wait? 5 questions to help you solve the problem

2. Check for giveaways on tax software websites

Tax software companies typically charge fees for their software, but many also offer a free version for those with simple tax returns. The definition of “simple” in each company can be different. In general, however, the free options are for people who do not want to list deductions and whose sources of income are primarily job-related rather than from investments, businesses or other funds.

How to get it: Tax software provider websites.

3. Ask for a discount

If you want to hire someone to do your tax return, you don’t necessarily have to pay the average fee of $ 203. Most tax professionals offer discounts. According to NATP, nearly half of tax professionals (46%) give breaks to clients’ family members, 40% cut prices for students, and 29% shrink the bill for seniors. According to the survey, many tax professionals also offer discounts to new customers, returning customers, or individuals such as veterans, police officers, or clergymen.

How to get it: Discuss the topic with your tax advisor.

More: Tax refunds will take longer this year – but think twice before receiving an advance on your tax refund

4. Find free tax clinics in your community

Federal grant programs fund free clinics nationwide to support voluntary income tax for people with disabilities, language barriers, or incomes of $ 57,000 or less. There is also free senior clinic tax advice for those aged 60 and over, as well as free assistance through the Department of Defense’s MilTax program for active service members and some veterans. These clinics work with a variety of community organizations in all 50 states. (Due to COVID-19, some websites may be closed, others are just drop-off websites or just virtual websites.)

How to get it: Search for a local clinic on irs.treasury.gov/freetaxprep or Militaryonesource.mil.

See: Can you claim the home office tax deduction if you have worked from home? Read this first

5. DIY some of the other things

You don’t have to pay anyone to find out how much you owe the IRS or to get copies of old tax records. You can request this information online directly from the IRS. You can also get a filing extension for free by filing the one-page IRS Form 4868 and filing it with the IRS by April 15th. If you can’t pay your tax bill in full by April 15, you can apply for an installment plan or even request a compromise offer to settle your tax bill.

How to get it: IRS.gov.

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Tina Orem writes for NerdWallet. Email: torem@nerdwallet.com.

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