The Taxman Cometh

Each year American citizens are faced with options when it comes to filing their tax returns. While plenty still prepare their own forms, and others prefer to hire professionals to do the dirty work, growing numbers of people are shelling out cash for tax preparation software. If you decide to go this route, it is important to understand some general guidelines.

Choosing a Brand
Begin by selecting a brand. TurboTax and H&R Block At Home are the industry leaders, but several others exist. Choose a company based on their reputation, and the clarity of their website. (i.e. Are packages and pricing apparent, or do you have to sift through pages of commercial ads before finding necessary information?) Once you have made a choice, research product reviews as you would with any internet purchase.

Choosing a Package
After choosing a brand, you will most likely be faced with package options. These start with a basic edition, meaning federal form only, and no frills. A deluxe or mid-range edition will help you locate deductions that may otherwise be overlooked. Going with a premium package will extend the reporting and deduction assistance for business owners. Depending on the package, prices range roughly $15-$60. TurboTax adds to each end of this spectrum with a free federal 1040EZ, and a $75 Home and Business version to file personal and small business returns.

What to Expect
Before making a tax preparation software purchase, be aware that:
--It is only good for one tax year. Changing laws mean you have to re-buy the software annually.
--You must meet the technical system requirements. See the company's website for details.
--State refunds usually cost extra-- about $28-$37 per state.
--It may cost extra to efile. While more brands are including this feature free of charge, it is not a given.
--You should still print your own copies for your records.

Whatever tax preparation software you choose, do not be afraid to ask questions. Thousands of people become new tax prep do-it-yourselfers every year, and it may go a little slowly at first. If you are filing a joint return with a spouse, go through the learning process together if possible. Finally, it never hurts to get those returns done and filed early; April 15th comes around quickly!