Filing My Tax Return Online
Filing My Tax Return Online or Use a Tax Preparation Service?
I’ve asked this question a few times, and depending on the individual, I’ve received a different answer. Those who knew more about taxes said filing my tax return online is the way to go. A few others who may not have known much about taxes, but were turned off by high tax preparer fees, agreed with them.
Others who doubted their ability to file taxes online said they would use a professional tax preparer. Some others said that a family member would prepare their taxes for them. They didn’t want the hassle and possible liability of an incorrect return.
Basically, the method you select for filing your taxes depends on a lot of different factors. Some of them are knowledge of taxes, your own personal money management situation, cost, and complexity. The most important one, however, is how complex your tax return is.
Every individual determines for himself how complex their tax return is. That, and cost, will be the deciding factors used in filing your tax return. If I had a very complex return, I would definitely consider using a professional tax preparation service rather than filing my tax return online.
The National Society of Accountants surveyed their members who had just finished the 2018 tax season. For a Form 1040, and one resident state return with no itemizing or other schedules, the average fee charged was $188.
Adding itemized deductions and one Schedule C for a simple side gig, the average fee jumped to $481. This is one of the reasons many have said I’ll be filing my tax return online. Keep in mind that fees are different depending on the area of the country where you live.
Fees for filing taxes online also vary significantly depending on the software vendor and the type of return required. My firm offers a flat fee of $25 for filing a federal and one state return, no matter how many schedules or forms that you may need.
COMFORT & FLEXIBILITY FACTOR
One gentleman who had been taking his taxes to a local CPA, said I’ll be filing my tax return online now. I can do it from the comfort of my home, when I have the time to do it, and no high preparation fee.
For those of you, for whatever reason, wait until the last minute to get your taxes done, might find it more convenient to do your own taxes online.
TAX SITUATION COMPLEXITY FACTOR
The basic rule of thumb to decide on how you should file your taxes is the overall complexity of your return and your knowledge of taxes. If you have a complex return and just aren’t comfortable in tackling the job yourself, by all means take it to a competent professional tax preparer.
A competent professional tax preparer will be able to prepare an accurate return and will make sure you get all tax credits you’re eligible for. If you take on this job yourself, the possibility of messing up are great, as is the possibility of an IRS audit.
An audit can be very costly with interest and penalties, and eventually having a professional file an amended tax return to correct the problems adds to the cost.
However, if you have a simple return, there’s no reason to pay the high fees of a professional tax preparer. Our online tax filing program was designed to make it super easy for a novice to file their taxes online.
Ours is based on an interview style which asks you questions. Simply answer the questions, enter the information from your tax forms sent to you, and the program will know exactly what kind of return you need to file.
You should check out our program and our flat rate pricing of $25. You can complete your return and review it with no obligation. Only pay if you like the program and decide to e-file it.
Some of the situations that might suggest that your tax return is complex are moving to a different state, getting divorced, renting a building you own, and most common, starting a side gig and filing a Schedule C business schedule.
Our online tax filing program can handle any of those situations and many more. However, if you don’t have some basic understanding of income taxes, and aren’t comfortable that you can prepare an accurate return yourself, take it to a competent professional tax preparer.
The main issue of doing your taxes online, and little or no knowledge of your personal tax situation, could lead to an inaccurate tax return. Tax credits and knowing what type of income is taxable or non-taxable, could cause more problems. I would look for help rather than try filing my tax return online myself.
The bottom line, and many taxpayers aren’t aware of this, is that you, the taxpayer is responsible for the tax return. It doesn’t matter who prepares the return, when you e-file it, or mail it in, you are responsible for the contents…right or wrong.
FOREIGN INCOME OR ACCOUNTS FACTOR
Another situation where it is usually desirable to engage professional help has to do with foreign income and ownership of foreign assets. There are US citizens that live and/or work in a foreign country, and this can quickly make a simple return very difficult.
In addition to the tax return filings, there are other reports that must be filed if you fall within their filing requirements. With certain specified foreign financial assets, a FATCA report may be required. Another one, and more popular because of individuals indicted for non-filing, is the FBAR report.
This one comes into play if you have aggregate balances of $10,000 in foreign financial institutions. I personally prepare a couple of FBAR reports for my clients. The clients took a look at the report and pleaded with me to do it for them. The report is filed online and is in great detail.
There are more aspects to the report besides money in a foreign institution, and penalties for non-filing can be very extreme. As an example, I read about one individual who didn’t bother filing the FBAR, knowing full well that he should have.
He was deemed to have intentionally not filed the report, and paid a penalty of 50% of the deposit account balance. He had just over $250,000 in a foreign bank, and his penalty was $125,000.
Whatever your tax situation, simple or complex, be sure to file a tax return and/or a foreign report. If simple, see what our many clients say about filing my tax return online. Our flat rate fee of $25 is hard to beat. If your return is complex, consider having an experienced competent tax preparer do it for you.