Making tax season a bit less taxing
Let's face it: nobody likes tax season. The forms are numerous, the equations complex, and the results sometimes terrifying (I owe how much?). But with a little help from tax preparation software, you can take at least some of the stress out of settling up with the IRS.
Income tax software is a computer program that can be used to store, complete and print your tax return. It comes with all of the necessary forms and even includes helpful information about tax calculations and tax law in order to help you maximize your savings. Many programs even allow you to file your return electronically, saving paper and getting you your refund faster.
You can also find tax preparation programs on the Internet. Unlike a software tax application, which is installed on the hard drive of your computer, a Web-based application stores the information on the Internet. That being said, the security for most Web-based tax programs is the same as for online banking.
If your tax return is fairly complicated, or if you prefer to file by mail, a software application might be better. For simple returns and filing electronically, an online application may be easier. In the end, it's really a matter of preference.
Features and Benefits
Using tax software to complete your income tax return provides:
- Accuracy. Tax programs do the math for you and double-check your return, reducing the chance of errors and thereby lowering your risk for an audit.
- Instruction. Part of the frustration of doing your taxes is trying to figure out the forms. Many tax preparation programs eliminate this hassle by asking questions about your finances and then doing the appropriate calculations so you don't have to. Some also indicate deductions you may have missed.
- Consolidation. Most programs allow you to complete your federal and state tax returns at the same time.
Some of the most popular income tax preparation programs on the market are:
- TaxACT Deluxe
- TaxCut Premium
- CCH CompleteTax (a Web-based application)
When shopping for tax software, ask yourself these questions:
- How complicated is my tax return?
- Would I prefer software or a Web-based application?
- Am I going to file electronically?
- Will this cover both federal and state taxes?
- Do I have to pay a separate filing fee?
Most tax software starts at around $15 for the basic package. Deluxe or premium packages can run as much as $50, though most are about $30. Filing fees may be extra, but most packages include e-filing in the purchase price.
Beware of free tax software. Often, only the preparation service is free and you will be charged a filing fee for both paper and electronic filing. However, while not entirely free, these programs still represent a low-cost option.
Note: The cost of tax preparation software is tax-deductible.
Tax software can help take the stress and confusion out of filing your return. It isn't a miracle product, though. Even the best products still take time to work through, and they still rely on you to input the information. The guided interface makes this easier than the standard tax-guide-and-forms method, but you'd be well advised to give yourself plenty of time, especially if it's your first time using a tax preparation program.