What are tax preparation options?
There are multiple tax preparation options you can choose from. Once you’ve gathered all the tax documents needed, you can now decide if you want to file your taxes by hand, use a tax software, or hire a tax professional to do it for you. Each of these options has its own advantages and disadvantages.
Filing your taxes by hand will not cost you a single penny and you can learn more about tax codes, which will be useful for future filing. However, this method may take more time, and there can be higher chances of miscalculations, typos, and other errors. On the other hand, using a tax software may work better for you. It is relatively inexpensive, but it may take some time to learn how to use it. Hiring a tax professional is the easiest and stress-free choice for any taxpayer, but it is also the most costly option.
How much do I have to pay for tax preparation services?
Tax preparation prices will depend on the tax professional who will prepare your tax return. Also, the tax services price will depend on your financial situation and the complexity of your income tax return. If it’s head-spinning, then expect an increase in the price or fee. An average tax preparation fee may cost you around $273, but this will include an itemized deduction for your federal and state returns. National tax service firms such as Liberty Tax Service and H&R Block Tax Service have an average fee of $191 and $147 per return respectively.
However, if your tax situation is not too difficult, you can purchase a tax preparation software instead. It can save you a considerable amount of money. You can have TurboTax and H&R Block programs for a low price, which starts at $29.99. Now, if your tax situation is very basic and easy, you can prepare and file it for free using IRS Free File.
Are tax preparation fees deductible?
Preparing your tax will bring you an additional financial weight with all the expenses that come with it. You have to pay for computer resources such as tax software programs or pay a tax professional who will prepare it for you. Although these tax preparation fees will help you get more deductions or credits, it is not just a drop in a bucket for it can cost you more than you think. Good thing is, the IRS allows you to deduct the fees you paid in preparing your taxes.
Are tax preparation fees subject to 2 percent deduction?
Tax preparation expenses can be a write-off. However, you can only claim the amount as long as it is more than two percent of your AGI or Average Gross Income. For example, if the average gross income is $52,000, you’ll have to spend above $1,040 on miscellaneous expenses such as tax preparation and tax software just to be covered by the two percent threshold. Also, you need to itemize your deductions to fall under the two percent rule.
How much are tax preparation courses?
If you want to prepare taxes like a pro or make a living out of it, then you have to take tax preparation classes and courses. You don’t necessarily need to have a background in accounting or bookkeeping, but a knowledge of basic arithmetic is an advantage. The tuition fees will depend on the training school and courses you will choose. The curriculum includes things like filing requirements, itemizing deductions, exemption, refund, tax calculations, and more.
What are the best tax preparation software programs to use?
Hiring a tax professional for your tax preparation can cost you an arm and a leg. That is why one of the best options is to use a tax software program. It will definitely save you some hard-earned money. Although there are programs a bit pricier than others, it is still a lot more affordable than getting a professional to do your tax preparation. Below are some of the best software programs along with their prices.
- TurboTax – $50
- H&R Block – $65
- Liberty Tax – $70
- TaxAct Premium – less than $50
- Jackson Hewitt – $20-$50