Tax Preparation Complexity

Category: Finance.

Have you ever wondered just how hard is to file a tax return?

And even if you did have to claim several items in your return, today s tax software applications are up to date with all the changes made to tax laws, those who use these programs usually end up saving quite a lot in tax return fees. If you are single or even married and don t have many claims or exceptions to report then you might want to consider filing return yourself. It has been recommended by many tax experts to e- file tax returns because it is faster than regular mail- in paper returns. Tax preparation Complexity. The amount of possible errors decreases to virtually zero and you get your refunds much faster usually in less than a week time compared to 2- 4 weeks for the paper return. Many people may think tax preparation is a simple task.

It is well said than done, as the complexity will come into picture when you want to figure out various tax deductions and credits. Just add all income, figure out all deductions and credits, and subtract it from the income to get taxable income and pay the tax for it. If this is the case then you are not alone, in fact even those who fill returns as single with no dependents may benefit from itemized deductions at some point in their life. All you need to know is what expenses qualify to be deductible and even if you don t know these programs are smart enough to show you a list of possible items you can include in each section to get the most out of tax return. With these situations in mind tax software vendors provide step- by- step instructions that guide people through every single deduction in their products. Money Saved.

When your turn comes a tax" expert" will read a series of questions for which you will be charged a fee. When you go to file your taxes at a local branch the process goes like this: you make an appointment, then get there early and wait to be helped. The most important thing to note is that these experts are reading directly from tax software in their computer and they are not looking for anything in special. Knowing this is the case the most intelligent step is to get an updated tax program and fill out your return yourself. They are basically reading what the computer shows them. It will not only save you a lot of money in fees but you will also save time. Wouldn t you rather save this money and spend it in something else?

Today s tax return fees at recognized places such as H& R block can start at around$ 80 for simple returns to all the way to$ 200+ for complex ones with extra deductions, etc, credits. Tax software cost anywhere from Free as in the case of TurboTax and TaxAct to around one hundred for more advanced software. If you decide to fill your tax return online then the fees can decrease and the total cost might be around$ 15- $3 Preparing and e- filing your return using online programs will help reduce the chance of audit. They all comply with current tax laws and the price difference will reflect in the feature count. Today s advanced tax software programs are sophisticated enough to warn a user about possible audits, when they deviate from normal rates and averages for similar people their class. For instance: your average checking account balance for the year is$ 100K and you reported you only made$ 10K, now that is an obvious red flag. If you are worried you might do something wrong then don t be, people who are audited normally have something in their records which grabs an auditor s attention.

If on the other hand you forgot to report$ 50 you got for your birthday you may not get hammered by auditors. There will be millions of tax returns filed electronically this year, make sure your tax software is updated to enjoy the beauty of technology and lighting fast returns.