Is using tax software ever a good idea?
A flood of new software and apps hit the market each year, all promising to make your tax returns a quick and easy process and to save you oodles of money. You may find the concept of using tax software an interesting idea, especially if you can save as much money as the advertisements claim. Let’s take a closer look at the pros and cons of doing your taxes with the aid of software.
What Are the Advantages of Using Tax Software?
Using software is certainly cheaper than hiring a certified tax professional. Tax return software costs in the range of $50 and over. Plus, by doing the work at home, you save the gas of driving to visit your favorite tax professional.
Software programs can save the time and effort of booking an appointment with a professional, meeting with them, and discussing all options for saving your tax dollars. When preparing your taxes using software, you can work when it’s convenient to your schedule.
These tax software programs are usually easy to use, with clear instructions. All previous tax data usually transfers automatically from tax returns from previous years.
The Disadvantages of Using Tax Preparation Software
Tax Software isn’t the best solution for every taxpayer. In some cases, the software can not handle out of the ordinary tax situations. Attempting to prepare your taxes in this manner can quickly turn into a complicated nightmare if you fall into any of the following categories:
- Are self-employed
- Own a business or several businesses
- Have multiple taxable assets
- Inherited money or property during the tax year
- Want to itemize deductions
- Divorced or widowed during the tax year
Also, you may not feel comfortable using tax software. You may feel overwhelmed when contemplating all that tax data spread out before you. A hectic schedule can be another reason why you just can’t spare the time or concentrated effort to prepare your taxes.
Tax software may not be the safest route when it comes to the threat of hackers. Unless you have implemented some very powerful security measures, any information stored on your personal computer or laptop is a security risk. Professional tax firms employ the means to keep your information much safer than a home computer.
Some tax software claims to have online support if you run into a snag using their product. But can you imagine the frustration of trying to explain a complicated tax issue to someone on the phone? As an added bonus, the fee of a certified tax professional is usually a tax deductible expense.
Hiring a Pro is the Way to Go
A certified tax professional has the proper training to deal with the complex tax situations most software will not be able to handle. It’s true that a tax professional may cost more than purchasing software in the long run. But they will be able to guide and counsel you on complicated tax matters. A professional can also suggest tax strategies that will reduce your overall tax burden and lower quarterly payments.
If you are on a budget and every dollar counts, you may want to use the cheaper route of tax software. However, that may be the more expensive option in the long run. If you make a mistake on your income tax, it could mean paying a hefty amount of interest. In the case of an IRS audit, a tax professional can mediate on your behalf, something a tax software package can never do. With a certified tax professional, you have the assurance that your tax return is mistake-free and the chances of an audit are significantly less.