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!

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

Unless you are a Certified Public Accountant, this is just not your game. You need tax software so that you don’t go to jail or worse still loose everything you have worked so hard to obtain.  When it comes to money owed, Uncle Sam doesn’t play nice.

If the recent bankruptcies of the Lehman brothers, AIG and not to mention the shady accounting practices of the Enron years that brought us to where we are today.  If the resultant domino effects have taught us anything it is that you have to get in there, pull up your sleeves and deal with your own money.  Long gone are the days of forking over your personal responsibility to another and hoping for the best. We live in a very competitive world where you can almost anything with the touch of a button.  A hand-prepared return, no matter how well is a passive downright non-productive method of handling your personal finances.  Tax software not only increases the speed and ability with which to process returns while increasing accuracy simultaneously. 

Advantages Of Tax Software
 
1. They do all calculations for you with guaranteed accuracy

2. They show your tax refund add up in real-time

3. They explain how common life changes—such as buying a home, getting married, changing jobs, or having a baby—will impact your taxes, and tells you what you can deduct

4.Show you what you’re importing and where it goes in your return.

5. Many come with downloadable Audit Support Centers which give you step-by-step guidance on everything you need to know and do if the IRS contacts you e.g., Turbo Tax  Others have audit guarantees e.g., H&R Block

6. Many will search your return for up to 350 or more deductions, including mortgage interest, education, and medical expenses, to get you the biggest refund.

7. Tax Software, depending on your needs will provide extra guidance for investments sales such as stocks, bonds, mutual funds, and employee stock options plans.  Additionally many will help you qualify for deductions for your IRA contributions that will reduce your taxable income, thereby boosting your refund.

8. If you have a home based business for example, tax software programs will help you determine which depreciation method will get you the biggest deduction for your large purchases.  Which  one of you doesn’t want to know which depreciation method will get you the biggest deduction You will also be guided on whether you are eligible for a bigger vehicle deduction using actual expenses or the standard mileage rate.  You will also be shown what startup costs new businesses can deduct.

9. For those people who are property owners, you will be walked through the painless process to find as many as 20 deductions for landlords, from travel to advertising to repairs to insurance.  Additionally you may get guidance about how to deduct points, appraisal fees, and recording costs to maximize refinancing deductions depending on your needs.

10. For the serious entrepreneur you will get with some tax software packages expanded Schedule C guidance showing you precisely which expenses you can deduct for your vehicle, supplies, home office expenses, and more to maximize your business deductions.  You will also be led by hand through the process of tax write-offs for your industry to help you spot commonly overlooked deductions helping you ensure you don’t miss a thing.

The most outstanding feature of Tax ACT is its price coming in at a very cost effective $16.95 Tax Cut Ultimate package especially considering it offers both Federal and state filing. This service supports federal and 43 state electronic filings. You can print and mail as many copies as you want (one can never be too paranoid about taxes).

As with other tax preparation software, it comes with an easy to use interface as well as the standard questionnaire/interview format to help you navigate your tax returns with ease. Not only that, they have totally embraced new technologies and offer introductory videos to help you along the way. To top it off, there is a searchable Help Center where you can find support by keyword.

Tax ACT is a class act and it is no wonder that it won the “TopTenREVEWS Bronze Award” for 2009.

Tax ACT comes in Standard, Deluxe, and Ultimate versions

* Standard - Free version with e-file for a federal return, but does not include access to online support materials.

* Deluxe - Includes expert tax help and advice. Deluxe is priced at $7.95, plus an additional $9.95 for state. Surprisingly, Deluxe supports a number of income streams that are only supported by the $80 and up ‘Home & Business’ versions of other tax preparation software. It covers investments, home ownership, securities, and rental income.

* Ultimate - Essentially a bundled version of the deluxe includes both Federal and State tax returns for $16.95

ADVANTAGES OF TAX CUT ULTIMATE

1. Tax ACT Ultimate Online has phased out the manual form entry instead offering a streamlined interview process that’s so simple to follow. Were it not for the fact we are dealing with taxes here, I venture to say while using this software you’ll almost forget that this is a tax-related service.

2. Investors can import capital gains transactions from programs such as GainsKeeper©.

3. Tax Act provides the “Life Events” a nifty and handy feature. The “life events” feature has the ability to determine the future tax impact of life events such as marriage, adding children to your family, income adjustments, divorce and more.

4. Tax ACT Ultimate Package guarantee their calculations. In fact, they will pay your penalties and interest if the software makes a calculation error.

5. Once your federal 1040 is completed, the state return only takes a matter of minutes to complete because all it does is automatically transfer federal information.

6. Tax ACT Ultimate is also available in a software download version for $19.95 and a CD for an additional $5.95. The software includes federal and state filing and all of the convenient features of the online version. The advantage of the software version is you can use the same program each year as long as you update the software.

CONS OF TAX CUT ULTIMATE

1. The disadvantage is that you have to install the software on your computer, update it yearly, and it costs $5 more than the online version plus shipping fees.

2. Tax ACT’s interface is considerably less sophisticated and therefore more tedious than its higher priced competitors. For example only one interview question is presented per page, so it can be extremely difficult to click back through to a specific form.

3.The tiny font makes it so that the menu options are particularly prone to mis-clicks.

4.Interview questions are filled with tax language that the average filer might not always understand.

5.Tax ACT will not import data from Quicken or any other tax service.