Personal Finance

Please Don’t Do Your Own Taxes: What Tax Prep Service is Best For You

If anyone is into cutting corners to save money, it’s me. There’s no shame in my game, but I’ve learned that there are certain places you should never be cheap – and one of them is when it comes to your taxes. I don’t care if you got an A- in 11th grade math or even if you took an accounting class in college – I would never recommend grabbing a pen and paper and doing your own taxes. You don’t know the tax laws, and the IRS isn’t going to forgive your pouty face when you make a mistake. So what tax prep service is best for you?

Online Tax Prep Service

If your adjusted gross income was less than $57k last year, you may qualify for the IRS’s Free File program that gives this software for free – so check online at this link: If you have a pretty simple return, this is the least expensive option – but you take the risk of missing out on deductions and qualifications that you may not know about. If you don’t care and you really just don’t want to have to deal with someone potentially judging you for all of the food expenses you may attempt to deduct – then maybe this is the route for you.

1. FreeTax USA (Basic: Free, Deluxe: $5.95)

This company offers a free basic version, but just fork out the $6.95 so that you have the option to amend your return later and gain access to their audit support service (which you pray you never need). It walks you through the filing process with a tutorial that the company says will minimize mistakes so that you can get the largest return. You have the option to get your refund electronically (aka faster), and filing your federal is just an extra ten bucks.

2. H&R Block at Home (Basic: $19.95, Deluxe: $44.95, Premium: $64.95, Premium & Business: $79.95)

If you really hate the idea of having to sit in one of their green offices and speak to a stranger about your money, H&R block is letting you attempt to tackle it yourself. You automatically get their audit defense service, as well as a great customer support that can answer any questions about your return. Reviews say that the packages are easy to use, and you choose your level based on what kind of assets and income you have, and if you need special forms that make your return more complicated.

3. Turbo Tax (Basic: Free, Deluxe: $29.95, Premier: $49.95, Home & Business: $74.95, Business: $129.95)

TurboTax was one of the first to offer self-filing service, and they actually guarantee you the largest possible return. Some say that they aren’t as easy to use as other services, but if you get confused they offer a support team that helps to keep them them so popular. Not only do they give you personal advice, but they help to make sure that you haven’t made any errors in your filing.

turbo tax

Storefront Preparers

H&R Block

The big chains like H&R Block and Jackson Hewitt run sh*t when it comes to popping up all over the place and giving you anxiety when you see them

even long after tax season is over. The bigger chains have training programs for all of their preparers, but smaller operations may not, so you want to make sure that whoever you see has credentials. Another factor to consider is that the person filing for you may not be authorized to represent you before the IRS if you get audited – so if you have a tricky return you may want to suck it up and go to an accountant.

 Hire an Accountant or CPA 

If you have even the slightest concern that you may be missing out on deductions or that you may need a little extra attention for your return, I would suggest finding yourself an accountant. It is definitely pricier – my accountant is a friend of a friend and I pay $400 because I have a personal AND a corporate return – so this is kind of a great deal. On the lower end, finding a local accountant for a personal return is usually around $100-$400 (and this is also a write-off). This person is someone you can (hopefully) trust to cover all of the bases so you get the biggest refund possible, or in my case make sure I’m not overpaying the government. Another great thing about having an accountant is that you will be able to deal with the same person every year – building a relationship with someone who will really get to know your finances and ultimately get you a refund that will make up for the fees.

Where do you find one?

CPAs can handle a variety of financial activities, and are good for business taxes. Enrolled Agents focus solely on taxes, and must have worked for the IRS for at least five years or passed exams on tax codes and calculations. To find one you can check out the National Association of Enrolled Agents, although referrals are always the best way to go. Ask around to friends and family to find someone they trust. If you have to use something like CitySearch or the yellow pages, make sure to check in with the Better Business Bureau for any red flags. The I.R.S. also recommends avoiding preparers who base their fee on a percentage of your refund.

Questions to ask:

* What is your experience with my type of return? Anyone can do a simple 1040, but for example, I looked for someone who specialized with returns of people in the entertainment industry since he would be most familiar with the laws and types of deductions I could make.

* How aggressive are you with deductions? Make sure you both agree with the level of risk you want to take – or if you want to be conservative and just play it safe.

* What if I’m audited? Will they represent you if you’re audited? You may even want to ask about their audit record – it should happen really rarely.

* How much do you charge? Some will charge a flat rate, others hourly. Some may charge extra for forms or for getting your records organized. Find all this out in advance and get it in writing so that there’s no surprises at the end of it all.

Tax season always sucks, but getting it over with is always a good feeling. If you’re fortunate enough to get a refund – remember, that’s YOUR money that you’re just getting back – it’s not free! Put it in your retirement fund or pay off some debts… and then treat yourself to a drink. You may need it.

before and after taxes

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