Tax day is rapidly approaching, so unless you decide to file an extension, you have just a few weeks to complete your 2023 return.
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DYI vs. professional help
Tax preparation programs aren’t for everyone. Some people have complex scenarios and can benefit from a professional service. Aside from complexities, there may be other reasons why it makes sense for some to have their taxes prepared professionally. You might not want to bother; you might want professional advice, and you may be in a situation where there are gray areas or questions about what is and isn’t deductible or what strategy you should use to legally minimize your taxes. There is also tax planning, which is best handled with the advice of a professional. Many tax programs offer advice, but you might get better advice from a competent tax professional.
I’ve gone back and forth between using TurboTax and working with a CPA and find that it’s easier and faster for me to use TurboTax than to prepare the documents my CPA needs and answer all his questions. When my taxes are more complicated, I do use a CPA, but when things are fairly routine, I find TurboTax easier and less expensive.
It might be free
But for most people, a do-it-yourself approach works well thanks to several excellent tax preparation programs and websites. And it might even be free. If you have a simple return and meet the maximum income requirements, you may be eligible to file at least your federal tax return for free thanks to the IRS Free File program that partners with a coalition of online tax preparation companies called the Free File Alliance.
There are several online and software-based tax services from Intuit (TurboTax), H&R Block, FreeTaxUSA, TaxAct and TaxSlayer among others. I’m focusing on Intuit’s TurboTax for three reasons. First, it’s the one I know best. Second, it consistently gets high reviews, and third, it’s well supported not just by Intuit but other experts as well. TurboTax also offers online help (for a fee) or you can pay to have them complete your return. If you want to explore other options, I recommend you do a Google News search for 2024 tax software reviews to find some comparative reviews from reputable online publications including PCMag, Wall Street Journal and others.
Turbotax — online or desktop
TurboTax offers both an online version and desktop software that you can install on a PC or Mac. One advantage of the web-based service is that you can start for free and only pay once you’re ready to file or print your return. Another is that all the information is stored online, and you can revisit your return from any web-enabled device. You can also download the TurboTax mobile app, which you can use by itself or alongside the web version, with the option of going back and forth.
Unlike the web and mobile versions, the desktop version, that you buy in advance, allows you to view your tax forms, which, for me, is handy. The desktop version can also be used to file up to five federal returns and one state return, but if you share it with family members, others can pay to file their state return.
Whether you use the online or desktop version, filing your taxes is as easy as answering guided questions. As you work, it will show you how much you’re getting back or owe, and it will guide you through various scenarios, asking you about income, expenses and special circumstances that can affect your taxes.
One thing I love about TurboTax is its ability to pull in information directly from banks and investment companies. If you have an account with a major institution, chances are pretty good that you can link TurboTax with that institution and have your data automatically downloaded and analyzed by the program. This process can save hours of typing and avoid lots of potential human errors. Depending on where you work, TurboTax might also be able to pull in your employer’s W2 form with your income and withholding information.
If you opt for the TurboTax desktop version, the biggest issue is which one to buy. If you buy directly from TurboTax, the price starts at $50 for the Basic version. There’s also an $80 Deluxe version for “maximizing your deductions” and a $115 Premium version for “investments and rental property. The $130 Home and Business version is recommended for self-employed or people managing rental properties. You can buy these for less at Amazon.com, Costco.com and other online retailers, which typically allow you to download the software for immediate use on a PC or a Mac.
Like millions of Americans, I own a rental house and have side gigs, so I opted for the Home and Business version. There are some areas of tax preparation that I’m not familiar with, like depreciation, but it asked me the questions I needed to answer and told me where to find information.
If you feel you need help, TurboTax offers a Live Assisted service and TurboTax Live Full Service. The assisted service’s price ranges from $0 to $209. The full service starts at $129.
I don’t exactly look forward to doing my taxes, but I always find the experience useful and interesting. Whether I use a professional or do it myself, it’s an opportunity to review my financial situation both in terms of income, spending and planning. And, by paying my taxes, it’s a way I can help the government and my fellow citizens who depend on that revenue for vital services.
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Larry Magid is a tech journalist and internet safety activist. Contact him at larry@larrymagid.com.