Filing your taxes is an important civic duty and a vital part of keeping the country running smoothly. It’s something everyone has to do each year by April 15, but that doesn’t mean it’s fun. You may argue that filing your income tax return is downright tedious.
That’s why millions of Americans seek help with their tax returns every year. Popular options include professional tax preparation, personal accountants and free help from the IRS. More confident individuals may not require one-on-one help and may opt for online programs or software to guide them through the process.
Professional Tax Preparation
Professional tax preparation is a common choice, but not one without downfalls. A professional tax preparer charges an average of $129 for basic federal and state returns and $229 for itemized returns. You may be better off financially if you do your own taxes.
However, if you’re expecting a large tax refund or have complicated claims, it could be beneficial to have a professional prepare your taxes. They can often catch credits, deductions and other opportunities for savings that untrained individuals might miss. In that way, professional preparation can pay for itself.
In many cases, tax prep services also come with extra benefits, such as audit assistance and reviews of past tax returns.
The most popular tax preparation companies are H&R Block, Jackson Hewitt and Liberty Tax Service.
H&R Block has helped Americans file their taxes since 1955, and today it prepares one out of every seven tax returns. It offers professional, personalized help in person and online. It also offers software for individuals who want to do their own taxes. H&R Block has additional resources like a free Second Look Review, so you can make sure you received your full refund from the year before.
H&R Block’s personalized online help program, Block Live, allows you to video chat with a tax preparer in real time. Costs vary based on which forms you need to complete. H&R Block professionals will complete federal 1040EZ forms free, but the state version costs $39. Other versions of the 1040 cost more. The federal 1040A with itemized deductions can cost up to $300, while the state form can cost up to $100.
Costs for in-person help are similar but can vary based on what forms you need to complete and how complex your financial situation is.
Jackson Hewitt is another main tax preparer, with 6,600 storefronts nationwide. It offers in-person help for all tax forms, as well as an online program. In-person prices depend on the complexity of each tax return, as well as the store’s location.
Professionals will also look over tax returns from the previous two years to check accuracy. Additionally, if your taxes are prepared by Jackson Hewitt and you are audited, a Jackson Hewitt professional will appear with you at the audit to explain your tax return, free of charge.
Liberty Tax Service
Liberty Tax Service has offered tax services for more than 15 years. It offers in-person tax preparation by professionals, as well as software for individuals who want to file online on their own. It also offers an array of support services. Liberty guarantees satisfaction and accuracy, and a professional will accompany you if your Liberty-prepared return is audited.
In-person filing prices vary by the types of forms you need to file, as well as by location.
Tax Preparation Software and Online Programs
Tax preparation software and online walkthroughs are a common alternative to professional tax preparation help and are often offered by major tax service companies like H&R Block. Tax software tends to be significantly cheaper than personal assistance, with even the most comprehensive programs costing around $100 or less. For individuals with simple tax returns, free options are typically available.
Here are some popular options for tax programs and software:
- H&R Block offers online products that range from free to $50 and software products between $20 and $80.
- Jackson Hewitt offers three online tax programs. The basic one is free, while the most advanced is $45.
- Liberty Tax offers e-smart tax, an online tax program with a free version and more intricate versions costing up to $40.
- TurboTax has the best-selling tax software on the market. Prices range from free for the 1040EZ form to $100 for a comprehensive home and business package.
- TaxACT offers software and online programs, ranging from a free version to a home and business bundle for $55.
- TaxSlayer has a free online version as well as premium editions up to $30 for federal returns and $10 for state returns. Active duty military personnel can file free with TaxSlayer.
- The IRS offers free online filing for all taxpayers. Those with incomes of $57,000 or less can use free IRS software.
Some people have long-established relationships with their accountants and prefer to have their taxes done by someone they know and trust. An accountant will typically give you more personalized service, making an effort to be thorough with your financial history. He or she will also keep your records on file and give consistent tax returns year after year.
The cost of a Certified Public Accountant (CPA) varies greatly. It can depend on variables like the type of accounting agency and the CPA’s level of expertise. If you decide to go to a CPA during tax season, ask for a cost estimate ahead of time. Most accountants charge between $50 and $200 per hour.
The Internal Revenue Service (IRS) provides free tax help for qualifying individuals. IRS-certified preparers volunteer all over the country from late January to April 15 each year. They run two main programs, both of which are free: Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE).
VITA is available for people who make $51,000 or less. It offers basic income tax return preparation. This means tax filers utilizing this service must know which special credits they qualify for, such as a Child Tax Credit or Credit for the Elderly.
TCE is open to all taxpayers. However, those 60 or older receive priority, and volunteers specialize in pension and retirement issues. Most TCE locations are run by the AARP Foundation’s Tax-Aide program.
Self-assistance services are also available at many VITA and TCE sites. There, taxpayers can ask volunteers quick questions and can use computers to file their returns.
Taxpayers can call one of several free hotlines for assistance in English or Spanish:
- To order forms, instructions and publications, call (800) 829-3676.
- To ask questions related to your personal taxes, call (800) 829-1040.
- To ask questions related to business taxes, call (800) 829-4933.
- To hear prerecorded messages on various tax topics, or to check the status of your refund, call TeleTax at (800) 829-4477.
- If you use TTY/TDD devices, call (800) 829-4059 for assistance.
Taxpayer Assistance Centers are free and open for taxpayers with more complex issues. There, IRS representatives can help with adjustments, questions and problems. They can also help you get on a payment plan if you cannot afford to pay your taxes in full or already have tax debt.
What to Bring
Before you get your taxes done, you need to round up all of your paperwork.
The IRS suggests you bring these documents and information with you to any tax preparation appointment:
- Picture ID
- Social Security cards for you, your spouse and any dependents
- Individual Taxpayer Identification Number (ITIN) assignment letters and proof of foreign status for you, your spouse and any dependents who do not have Social Security cards
- Birth dates for you, your spouse and any dependents
- Wage and earning statements such as Form W2 and Form 1099 for all jobs
- Bank statements of interest and dividends
- A copy of your tax returns from the previous year (if possible)
- A blank check or other proof of your bank account and routing numbers
- Any daycare information, including total cost and the provider’s tax identification number
Also note that if you are married and filing a joint tax return, you and your spouse must both be present in order to sign necessary forms.
More complex filings call for more documentation. H&R Block, Jackson Hewitt and Liberty each have their own list of necessary information, which may include items such as odometer readings, job search expenses and charitable giving. Before going to a tax preparer, check that specific company’s list of necessary documents and make sure you have all necessary paperwork with you.
If you’re unsure about how to file your taxes, you’re probably better off seeking help from a professional. Determine your needs and how complex your return will be, and then choose the option that suits you best and falls within your budget.