Online Tax Preparation

Adam Krause
by Adam Krause, Contributor

More and more American taxpayers are turning to the Internet each spring for tax advice and tax preparation services.

Here is a guide to some of the more popular sources for online tax preparation. The most trusted brand name in online tax preparation is TurboTax, which offers a free federal tax return and a state tax return for $30.99. The software asks you questions and then fills in the tax form for you. After you have entered your information into the necessary fields, the tax preparation program will e-file your taxes to the IRS for you.

Some of the other tax preparation competitors include TaxACT, which also has an edition that will help you prepare your federal tax return for free. Similar to TurboTax, TaxACT recommends that you use the “pay service” if you are a returning user, since it saves all of your relevant tax information from year to year. Another good option is to file your taxes online using the 1040.com e-filing service.

The IRS also offers its own e-filing and tax preparation services. Tax preparation for your federal return is free using the IRS FreeFile service, as long as your income is under $57,000. However, you can e-file your taxes free regardless of your income bracket if you are willing to fill out the tax forms yourself. Electronic filing is not just a way to make sure you get your return faster, but is advantageous from the IRS’ point of view. Besides cutting down on paper expenses, it has a much lower error rate because of calculations built into the software.

With the increased number of ways to e-file for free online, it seems there are less reasons to fill out tax forms yourself with pen and paper ― especially considering the cost of postage and higher error rates. But the question of whether to pay for a tax preparation program is another issue.

If you already have tax software on your computer, you could use that for your tax preparation and just upload the proper tax forms into the IRS’ e-filing tool.

Alternatively, you could go the more expensive route and employ a professional tax preparer to make sure your taxes are done correctly. If you are a small business owner, you  have a complex tax situation, or you’re in an income bracket that requires you to file quarterly, hiring a tax professional may be worthwhile. Many online tax preparation services do have a live chat option, but that’s not quite the same as sitting down with a trained individual and getting face-to-face tax advice about your situation.

Click HERE to file your taxes online.