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The following is a guest post from Manny of Back Taxes Help:
With less than 2 months left until the 2009 tax deadline, it is a good idea to start thinking about how you are going to file your taxes this year. Getting your taxes completed can be expensive if you are not aware of all of the available options, but no matter how you are going to file, there's a deal for you.
When figuring out how to get the best deal for filing your taxes, it's important to keep various factors in mind, such as your income level, age, Military status, the complexity of your tax return and how comfortable you are using tax software.
Below are various methods for filing your taxes, listed by price:
Options to File & Prepare Taxes For Free
Many people do not realize that there are many options available to having your taxes prepared and filed for free. This year, about 70% of people will qualify for free tax preparation and e-filing through various tax preparation programs and services. Here are the most common ways individuals can file their 2009 tax returns for free:
- Take Advantage of Free File: The IRS has partnered with the Free File Alliance LLC (group of private sector tax software companies) in order to provide free federal income tax preparation to taxpayers with an adjusted gross income of $57,000 or less. On the IRS website, they list the various companies with whom they have partnered. Each company offers slightly different services and some do not work with all states, which was why the IRS has created a search tool to help you pick the best company for you based on your location, income, age, and other tax return factors. All of these companies simplify the tax filing by asking simple questions that put the answers right on your tax return, while checking the math and accuracy. Most of these companies do offer state tax return preparation, but typically additional fees apply. Using these free file options are a good idea if you do not itemize your deductions and have a straightforward tax return.
- Volunteer Income Tax Assistance Program (VITA): VITA is a program that offers free tax help to low and moderate income people (typically $49,000 or less). This help is available to those that cannot prepare their own tax returns, and the individuals that assist in tax filing preparation have received training to prepare basic tax returns. In order to receive this assistance, you will have to find a location where a VITA is provided. Typically they will locate themselves in community-based areas, such as community centers, libraries, and schools. To find the most convenient site, call (800) 829-1040.
- Tax Counseling for the Elderly (TCE): Tax Counseling for the Elderly is a program that offers free tax return help to individuals that are 60 or older. Those who provide help are typically retired individuals that are associated with a non-profit organization that has received grants from the IRS to help individuals. AARP is the nation's largest free, volunteer-run tax assistance and preparation service that is part of the TCE program, with more than 7,000 locations during tax filing season. In order to locate the closest AARP Tax-Aide site, visit the AARP website or call them at (888) 227-7669.
- Military Volunteer Income Tax Assistance: Individuals in the military and their families can receive free tax preparation assistance through the military Volunteer Income Tax Assistance Program. This is different from the normal VITA program because the individuals that are preparing the tax returns are trained to handle military-specific tax issues. The Armed Forces Tax Council is in charge of the operations of military tax programs worldwide and are partners in VITA. In order to use this service, check with your installation for locations where you are able to receive help.
Self Preparation: Tax Software Deals
If you do not qualify for any of the free file options listed above or do not want to use a tax professional or complete the tax form manually by hand, you will have to pay for your tax software and filing. One thing to be aware of is that you have to search different sources to find the best price on any software. Even going directly to the source is not necessarily the cheapest route. If you are looking to save a few dollars on your purchase, it is a good idea to do your research.
Below are some of the lowest prices currently available. Since there are many different tax programs available, I am only providing a comparison of the two most popular ones on the market: TurboTax and H&R Block Software.
H&R Block at Home 2009 Deluxe Federal & State & eFile
H&R Block Premium 2009 Federal & State & eFile (Best for self-employed / rental property owners)
TurboTax Deluxe 2009 Deluxe Federal & State & eFile:
TurboTax Premier 2009 Federal & State & eFile (Investments & Rental Property):
General Prices of Tax Professionals
If you are not confident preparing your tax return through the help of software or on your own, it is a good idea to consider a tax professional. There are various types of tax professionals, thus resulting in varying prices. Each type of tax professional comes with their advantages and disadvantages, so it is important to look at the complexity of your tax situation when making a decision as to what type of professional to use. The average prices provided below are for the preparation of a federal tax return, schedule A, and state tax return.
- Tax Preparation Service (ie H&R Block, Liberty Tax, Jackson Hewett, etc): Price = About $170. These services are generally best for fairly straight forward tax returns. Most of these individuals have prepared many tax returns in the past and know how to get you the maximum deductions, but they typically are not the most qualified people when it comes to filing taxes, as they mostly only deal with taxes on a part time basis. However, if you want someone to prepare your tax return for you, using one of these services is typically the cheapest option possible.
- Enrolled Agent: Price = About $200. Enrolled agents are typically cheaper than using a CPA. Enrolled agents are experienced tax professionals that can help with a variety of tax situations and tax filings. These agents are year round tax professionals, and like CPAs, they can help with more complicated tax returns.
- Certified Public Accountant: Price = About $205. Typically CPAs are year round professionals and have more experience than a professional who only works as a tax preparer during the tax season. If you have a complicated tax return, it would behoove you to seek the assistance of a certified public accountant over a standard tax preparation service.
Ultimately, there are many ways to save this year on your tax filing. Start planning soon, so you can ensure you receive the best deal on filing your taxes, and be sure to take advantage of the various programs that are offered to help taxpayers if they apply to your situation.
Manuel Davis is a tax professional and writer that helps individuals with back tax returns and various other major tax problems. If you need help with a tax problem or you want to find more tax tips you can read more at his tax blog.