Tax Preparation

Three Issues to Know Earlier than Paying a Tax Preparation Service

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Filing taxes is not fun for most people, but it’s easier than ever with online tax preparation services. In some cases, you may be asked to pay for the assistance of one of these online creators. Before doing this, however, there are a few things that are important to consider.

>> MORE: Here is the average cost of getting your taxes done

Payment for a tax preparation service may not be required. So make sure you understand your situation and whether it warrants paying a fee. If you think a payment is required, before choosing one, compare several services and hire a professional to do all of the work for you.

1. You may be able to file taxes for free

Most tax preparation services offer a free version and paid versions. But even if you’re asked to pay for certain forms or features, it’s important to know that you can still likely get the process done for free.

ProPublica found in early 2020 that 14 million people paid around $ 1 billion for tax preparation services if they could have filed for free. In some cases it may have been a simple misunderstanding, in other cases the nonprofit found that certain tax preparation companies were engaged in fraudulent practices.

If your 2020 gross adjusted income is less than $ 72,000, the IRS FreeFile program is free to file. Even if you make more, Credit Karma offers a free tax preparation service with no fees.

2. Online tax service is not created equal

To make tax filing easier, you might be tempted to just use the first program you see (or the most popular one). However, each tax preparation service offers different features, costs, and user experiences. So it is important that you take the time to compare different options in order to find the best solution for you.

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Factors to consider include pricing, ease of use, tax forms supported, features, audit support, and the payment and refund process.

Comparing services can take time and you may need to go through at least part of the process with more than one company. But finding a good one can save you years of time. Read our guide to comparing online tax software to determine which features and prices are important to you.

3. You might be better off hiring a professional

Tax preparation software can help you file your taxes by walking you through a simple process. However, if your tax situation is relatively complex, even the help of tax preparation software may not be enough.

I have used TaxAct, TurboTax, and Credit Karma for several years but hired an accountant two years ago because my business situation is more complicated than ever. While hiring a professional costs me a lot more, it is worth ensuring accuracy and saving me hours and hours figuring out all of the complicated tax code details for my situation.

Compare different tax preparation services

You can easily compare different tax preparation companies like TurboTax, TaxAct, H&R Block, FreeTaxUSA and more. Then you can find out which one is best for you and whether or not you have to pay.

>> NEXT: 9 Best and Cheapest Online Tax Preparation Services in 2021

Our editors endeavor to ensure that the information in this article is correct at the time of publication. Be aware, however, that offers are subject to change. We encourage you to review all of a product’s terms and conditions before applying.

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