The fee charged by a tax-prep service varies depending on the firm and complexity of your federal and state returns. Most base their fee on how many lines of a tax form must be filled out or the number of forms. The only question is whether buying a tax-prep software program and doing your own tax returns is an even better option or hiring a CPA

People turn to a tax-preparation software services for four major reasons:

Efficiency — Because of the complex nature of tax laws, doing ones’ own taxes can be a daunting challenge. For those not familiar with the tax processes and expectations it can be time consuming not to mention stressful. As the April 15th deadline draws near and as you panic you can make many mistakes. Tax software programs are efficient in guiding you. CPAs on the other hand do this for a living, so they know the game and will be effective but not necessarily efficient because they are human.

Accuracy — Every year there are new laws written, new tax credits introduced. What worked last year will probably change. Tax software provide up to date information on the many changes. You’d expect that may a CPA would keep abreast of the changes. However the are those who remain out of touch and hence why tax software is a better option in these cases. In many cases you will find that you may qualify for a number of credits and rebates (tax breaks the government gives you if you qualify) and deductions (tax breaks you can take for certain expenses). Tax software will help you identity your options very well and will in fact surprise you. Again CPAs are humans and can and do make mistakes. BUT they have the ability to undo mistakes in a manner that is not available to the common man. Tax lawyers do even better.

Cost —The charge for a tax-prep service compared to that of CPAs and other tax experts such as lawyers is relatively low. When dealing with CPAs and tax experts you are looking at fees in the hundreds of dollars to thousands and in some cases even millions for Bill Gates and Warren Buffet type people. In order to compete with the cost-effective tax software options many firms will offer the option for you to do your own taxes online for fees ranging from $15 to $60. They may offer options such as a tax review for a fee if you use their online services or they will provide online handholding for $70 to $100.

Fear - Tax problems and mistakes can lead to high penalties, tax liens, prison time and loss of income and property. This is where CPAs and other tax experts come in handy. They offer such services as tax audit proofing and tax audit assistance where necessary. In the event mistakes are made tax services have agreements to cover the costs, however always read the fine print.

So why use a CPA?

Simply because there is less risk during an audit with professionally prepared returns. Additionally you will get advice on planning your financial future. CPAs act as advisors to individuals, businesses, financial institutions, nonprofit organizations and government agencies on a wide range of financial matters. If you have taxes that are complex (investments, W-2, 1099, capital gains) use a CPA.

If your taxes are fairly straight forward, use tax preparation software and have a CPA look it over. When it comes to taxes and the IRS take every safety precaution available to you.

Do you have a simple tax return to prepare? Those with very simple, basic tax return, only need the free tax software which is sometimes provided by tax software web sites, e.g., Turbo Tax, H&R Block and Tax ACT. You also most likely quality the IRS Free File program. Keep an eye out for added costs when it come to e-filing and state taxes. If the prices seem very high, then bottom line the service is not free at all!

The complexity of your personal finance and investments will in large part determine your need for tax preparation software. Let’s say you are employed with a take home pay of $45,000, run a home based business say with Arbonne International that brings in a good income of about $50,000 a year. In addition to that you have rental property and you are also a whiz at playing the stock market. It is very clear then that the level of tax-prep assistance you need can best be provided by a CPA. You my friend will need excellent tax preparation, advice and planning.

On the other hand if all you have is a job with a W-2, own a home maybe a side gig of some sorts that brings you money then your tax returns are going to relatively simple and straight-forward. A simple tax preparation software will suite you just fine.

Software programs may make more sense if your tax-related paperwork is organized, forms don’t intimidate you, and you know where to turn online to determine the tax deductions, credits and rebates that are available to you.

How do you want to file your taxes? If you want to File Electronically, then you will need an online tax preparation software which will most likely include the cost of the software itself, sometimes e-filing charges and most often State filing comes at an additional fee. If you do your own returns, the IRS offers free live tax assistance (800-829-1040).

Another important consideration is the fact that tax laws are ever changing. That said DO NOT buy the previous years Tax preparation Software. The tax preparation software should indicate clearly what year it is to be used for as well as the tax references for the year prior. For example in the year 2009, you will be preparing income taxes for the year 2008. Do not ignore this piece of advice. Many stores will be selling lasts years software at a discount. Consider this a word to the wise (you only need purchase if you are doing back taxes).

In summary if you use tax preparation software to get your taxes done, then every year you will need to upgrade. If your taxes are straight forward and simple, you need the basic software programs. If your taxes are more involved with investments and properties you will need deluxe, premier and where applicable the home-based business options. Anything that exceeds the scope of this, then you my good friend must be Bill Gates or Oprah Winfrey Or Warren Buffet. In which case you need CPAs. Tax lawyers and host of other things that tax preparation software will not provide!

Tax preparation services are firm that prepare tax returns for a fee. Tax-preparation services are a lot like those auto tune-up centers at malls—except they’re good with numbers. Many of these tax preparation services are franchises.

A tax-prep service will take your tax-related paperwork, fill out all those scary tax forms for you and then file the paperwork after you review and sign a release with the IRS and state tax departments. There are also an handful of government funded free tax preparation services as well as online and offline tax preparation services.

Free Tax Preparation Services

Volunteer Income Tax Assistance Programs (VITA) are designed to help those in the low to moderate income tax bracket. These are people earning anywhere to from $42,000 and below and CANNOT prepare their own taxes. Those people helping you file your taxes are certified volunteers who have received tax preparation training.

VITA sites are generally located at community centers, libraries, schools. Most locations also offer free electronic filing. For more information on VITA sites closest to you call 1-800-829-1040.

Tax Counseling for the Elderly (TCE)

Persons ages 60 and older are eligible for assistance under the tax counseling for elderly program. Those offering assistance are trained tax preparers.

Volunteers providing tax counseling are most often retired individuals associated with non-profit organizations receiving grants from the IRS. For more information on TCE call 1-800-829-1040.

Association for the Advancement of Retired Persons (AARP) Tax Aide Counseling

The AARP, as part of the IRS-sponsored TCE Program, offers the Tax-Aide counseling program at more than 7,000 sites nationwide during the filing season. Trained and certified AARP Tax-Aide volunteer counselors help people of low-to-middle income with special attention to those age 60 and older. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP’s Internet site (www.aarp.org)

The Armed Forces Tax Council (AFTC)

The military also has a strong Volunteer Income Tax Assistance (VITA) Program. They are trained to address military specific issues ranging from combat zone tax benefits to the effect of the new Earned
Income Tax Credit (EITC guidelines) Military personnel and their families get free tax help!

The AFTC consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps, and Coast Guard. The AFTC oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families.

Paid Tax Preparation Services

Paid Service include reputable companies such as Jackson Hewitt, H&R Block. You also have your mom and pop variety services, the ones where come may hire the man that is dressed in all the patriotic fanfare waving his yellow taxes done sign. Let us not forget the house call tax prepares who visit and to your taxes in your home for an agreed upon fee.

1. Do your due diligence. Visit the companies websites

2. Steer clear of firms that claim the ability to get you larger than life a returns

3. Seek experience over low cost. These are your taxes and you can never be too careful.

4. You want a firm that has a system for double-checking a preparer’s work, look for companies that have safe guards in place.

5. Take advantage of online options that the companies offer.

6. Grill and ask questions to tax-Prep Services

7. Find out how their fee is determined. Most tax-prep services have a set schedule of charges. Get an estimate. Avoid any services that charge percentages of your tax return.

8. Find out who will be doing your return. What credentials do they have? Have they had problems in the past with returns they have completed and what was the resolution of these problems?.

9. Find out there policies with regards to penalties ad mistakes. Find out what happens if a mistake made by a preparer results in a penalty charge. Many larger firms guarantee their work and will pay the penalty for errors on their part. Get a clear understanding of your personal responsibility and their definition of mistake.

10. What’s your privacy policy? Is your information secure? Will they hound you the future with marketing that is aimed at pushing their services down your throat?

11. What about audits? Do they have CPAs, enrolled agents or tax attorneys that they use? And are these people accessible to you should you need them?

12. As always check with the Better Business Bureau

Whatever options you choose for tax preparation be very careful of what is known as tax preparer fraud. Be sure to look over your own taxes. Do not sign blank documents. And safeguard your privacy at all times.

TurboTax online by Intuit’s is by and large the best online tax software for ease of use, thoroughness, accuracy and cost effectiveness. Turbo Tax is laden with features some of which may be too pricey or beyond what many will require. The most notable feature being the deduction manager that allows you to discover deductions that would otherwise miss common tax return software packages.

TurboTax business tax software is available for downloading or a CD could be ordered.

Support is offered in the form of an extensive FAQ, well-populated and active forums, a blog, an automated chat system, and a support line. Technical support by phone as well as professional tax advice are offered 7 days a week fro 8am-5pm. The cost per phone or email conversation is $29.95.

For the 2008 tax season, Intuit in conjunction with the IRS has introduced a free edition for those who will file using the 1040EZ. You will fork over a $25.95 fee to file your State taxes if you use the Turbo Tax free edition version which is sufficient for many w-2 income earners. TurboTax Deluxe ($29.95) come with guidance and support for itemized deductions, while the Premier ($49.95) provides additional support for stocks and bonds and as well as rental property income. If you are self-employed or operate a small business, you will need TurboTax Home & Business ($74.95) .

TurboTax Deluxe is the best software packages for those tax payers preparing and e-filing common tax returns which will include itemized deductions. This package will cost you $29.95 for the federal tax return and comes with an array of features the most notable being “The Its Deductible”. This tool cab be used to find accurate values for charitable donations. Then there is the ever popular “The deduction maximizer” which computes and searches for over 350 tax deductions, many of which will delightfully surprise you. The accuracy of these two features, as well as the help they offer you to maximize your tax refund are unbeatable. State filing will cost you an additional $34.95, but don’t forget the deduction maximizer tool, so pony up the fee with a smile on your face.

TurboTax Premier is a good fit for the individual that has investments as well as rental property i.e., asset income. This is the version for those transactions that result in capital gains (profits as a result of the sale of an investment). Turbo Tax Premier has an in-built feature that is able to fin all capital gain and losses automatically. Such an feature will come in handy for landlords and ladies with rental property.

TurboTax Home & Business

Business taxes are a rather involved process. This is largely due to the fact that businesses are eligible for tax deduction many of which are easily missed. The sole proprietor, consultant, or owners of part-time business can use TurboTax Home & Business software with the assurance they are going to be getting many a legal and document able deduction. Anyone with some tax knowledge can use TurboTax Home & Business tax software instead of hiring a tax professional saving you hundreds of dollars. State filing will cost you an additional $34.95.

TurboTax business

TurboTax business tax software is for S Corps, Partnerships, a C Corps, or an LLC’s type of incorporation. Using this software, business owners could file their business tax returns for a fraction of cost of hiring an accountant. The value of this package is that you are guided to determine the best depreciation methods and options.

Turbo Tax supports its own book-keeping software – Quicken, making it easy to import information. It also imports financial information from Microsoft Money 90 major US banks and it will import W2 data from several different payroll companies. When in doubt pick it’s TurboTax and you will not go wrong.

Other options you might want to consider are Tax Act Ultimate, Tax Cut Premium, Complete Tax, Online Taxes

It appears that as times get tough, the IRS gets kinder. The IRS has teamed up with nineteen software companies to make tax preparation free or low-cost for most Americans. To be eligible for this offer you must begin at the IRS Free File page. If you go directly to the company’s website, you won’t qualify for the free service. It is noteworthy to mention that the free file options DO NOT cover complex tax situations, you will need a paid service or professional tax preparer. These tax preparation software listed showed themselves to be Cost effective, easy to use, accurate and very quick.

1. H&R Block TaxCut (Free File version)

Comes highly recommended as one of the best in the nation. You will not have to worry about pressure to upgrade to paid versions. You will however incur a $24.95 state return fee. You get free access to the TaxCut Premium software along with tools, forms, and tips. TaxCut is easy to use and fast and you can e-fie.

2. TurboTax Freedom Edition

TurboTax (Free File Edition) is very easy to use, fast, and accurate. TurboTax come with windows and Mac versions. The free version of TurboTax is available to filers with adjusted gross income of $30,000 or less, or qualify for the Earned Income Tax Credit (EITC); or served Active Duty Military with AGI of $56,000 or less. TurboTax also provides free state tax filing for the states of (AL, AR, AZ, GA, ID, IA, KY, MA, MI, MN, MO, MS, NY, ND, NC, OK, OR, RI, SC, VT, WV.) All other states will need to add a state return will cost $9.95.

3. Tax ACT

You will get numerous messages to upgrade to a paid version which can get rather annoying since it is supposed to be free. Catches common W-2 errors and typos. Adding a state return will cost $12.95. Tax ACT is fast and easy to use.

4. CompleteTax

CompleteTax uses an interview based software format. Calculations are quick and fairly simple. Adding a state return will cost an extra $9.95. Recommended.

5. TaxEngine

TaxEngine provides rather a rare feature especially among the Free file group. Tax engine will automatically calculate the payroll taxes your W2, quite the free give away. TaxEngine’s provides a very user friendly program making it easy to prepare your tax return without any hassles. State tax return will cost an extra $10.

6. TaxSlayer

TaxSlayer has a very user friendly interface that cuts through the usual tax prep clutter. Tax slayer offers a free state tax return if you are preparing a federal return. If you are preparing only a state return, the fee is $9.95.