Are you wondering where to get your taxes done? What’s the best option for your tax situation? Maybe you want the cheapest place?
Tax preparation and filing can be simplified by doing a little research to choose the best option for you.
You can still go to an accountant or a retail tax preparation service, but an increasingly popular option is do-it-yourself software for tax preparation. And yes, there are some places to get your taxes done for cheap or even free.
Of course, you want to be sure you’re spending your money wisely and getting the best help possible for your tax situation. One of my Twitter followers tweeted me this:
How do you recommend people get their taxes “done”? Should we go to an accountant, or one of those places that have the guy dressed as the statue of liberty standing outside waving a banner, or TurboTax (or the like)?
The 3 Top Places to Get Your Taxes Done
As the question implies, there are three major players in the tax preparation game:
- Do-it-yourself tax software (e.g., TaxSlayer) ~$60 (starts at free)
- Full-time public accountants (CPAs and Enrolled Agents) and other traditional practitioners ~$323
- Retail tax preparation services (you know, the ones with the Statue of Liberty out front?) ~$175
Best Websites for Filing Taxes
In an increasingly online world, there are many websites that can assist you in getting your taxes done cheap or even free. Let’s talk about three useful online tax-prep resources: TaxSlayer, TurboTax, and H&R Block Online.
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TaxSlayer
You can electronically file your tax return with TaxSlayer. Here’s a link to their free version for those with the simplest tax situations, which even includes free state filing. For their other versions, state filing is $39.95.
- The Classic version is just $19.95, and probably fits most tax situations.
- The Premium option is $39.95, which includes access to live chat assistance and Ask a Tax Pro
- The Self-Employed version is $49.95, this if for those who are 1099 workers or self-employed
For all versions you can combine e-file with direct deposit to get your fastest possible refund.
TurboTax
TurboTax is a longtime tax software provider. They, like TaxSlayer, offer one free option for simple tax circumstances. Their paid tiers are similar in features to those of TaxSlayer, but do cost a bit more.
- The Deluxe version is $39 and covers situations like owning a home
- The Premiere is $69 and includes stock investing
- The Self-Employed is $89 and is set up to handle 1099 or self-employment income
Essentially, the more complex your tax situation, the higher the cost will be. And like with TaxSlayer, the free option is the only one that gives you a free state return, otherwise, state returns are $39. TurboTax is well-known for maximizing deductions and getting you the most accurate tax return possible. You can get started with TurboTax here.
Related: TurboTax Review: Get Your Best Tax Return This Year
H&R Block
H&R Block, which you may know for its human tax preparation, also offers online tax preparation. The free option provides both federal and state filing for free.
- The Deluxe Online version is $28 and helps you maximize deductions and HSA contributions
- The Premium Online version is $44 and is best for freelancers, contractors, and investors
- The Self-Employed Online version costs $68 and works best for the self-employed and small business owners
For each of the paid versions, you’ll pay an additional $37 for state filing. Try out H&R Block here.
Related: H&R Block Tax Software Review
Average Price to File Taxes
Prices to file taxes can be all over the map because everyone’s situation is so different. I’ve put together some averages based on reliable sources that should give you an idea of what to expect when you go to file.
1. Do-It-Yourself Tax Software
Most people who don’t itemize their taxes should be able to get away with a completely free federal and state tax return. For those who itemize, the average price to file will be around $70 per return (according to TurboTax and H&R Block websites). For those who have a business, rental property, or other investments to report, the average price is going to be around $150 per return.
2. Full-Time Tax Pros (aka your local CPA)
According to the National Society of Accountants, it will run you an average of $294 per return to work with a CPA. That nearly $300 price tag is for an itemized 1040 filing with state tax return.
An unitemized 1040 with a state tax return will only set you back $188. When I used to prepare taxes, I didn’t charge this much (more like $75-$125). However, that was over ten years ago, so pricing has likely adjusted since then.
3. Retail Tax Prep Offices (H&R Block, Liberty Tax, etc)
CBS news reported that “The average fee at the national tax service firms H&R Block and Liberty Tax Service is $147 per return and $191 per return, respectively.”
Need to get your taxes done? Here are the 3 best places to get your taxes done this year. #taxes
Why Do-It-Yourself Tax Software is Cheapest
One thing to note is that each tax preparation option is working at a different price-point. Software is typically the cheapest–but don’t assume that cheapest means worst. Tax software can absolutely be the best option for you.
That’s because tax software has become extremely sophisticated over the years. Don’t look to a professional to outsmart the software, since they are probably just using a professional version of the software themselves.
Ultimately, tax software is cheap because all software is cheap. It’s a digital product that is easy to store and replicate. It may also offer the best tax preparation experience for a number of taxpayers and can be an excellent choice for your tax return.
Why Pay a CPA
That being said, going to a flesh-and-blood tax professional may be the best option for many taxpayers. That’s because a professional CPA can help you navigate the difficult tax questions like business structure, tax planning moves, etc. that pop up throughout the year.
Software has a harder time with this. You can’t have lunch with software to discuss your small business.
CPAs are usually the most expensive option, but you’re paying for someone to help you with a complex tax situation or simply to give you that extra assurance.
Check Out: Get a Quality CPA to Prepare Your Taxes
Retail Tax Prep – Splitting the Difference
Right down the middle is the retail tax preparation–the places where you see the dancing Statue of Liberty outside. This option generally costs less than a CPA but more than DIY tax software, and it offers the middle ground in terms of professional support, as well.
Retail tax prep is there to serve the client who wants a bit of help but doesn’t want to pay a premium practitioner on an ongoing basis. If you don’t have tax questions throughout the year, but still feel a little overwhelmed by tax preparation, the retail option could be the best choice for you.
Check Out: These 7 Strategies Save Us Thousands Each Year in Taxes
Free Tax Preparation Assistance Resources
There are a few places that will provide free assistance to you if you qualify. Usually, this is reserved for the elderly/disable, or folks with low-income.
For instance, the Volunteer Income Tax Assistance (VITA) program will provide free tax help to people who generally make $66,000 or less, persons with disabilities, and limited English-speaking taxpayers.
Another is The Tax Counseling for the Elderly (TCE) program, who offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors.
Finally, AARP’s Foundation Tax-Aide is a program that provides free tax preparation assistance to low- and moderate-income taxpayers, with special attention to those 60 and older.
Getting Ready to Do Your Taxes
If even thinking about filing your taxes has you breaking out in a sweat, you’re not alone. Our tax code is lengthy and confusing, so it’s very common for people to dread doing their taxes. But just getting started can feel empowering, and there’s no need to stress.
This year, start by getting a folder (paper or digital) and collecting anything you think you might need. Also, review last year’s tax return. This will give you, or your CPA, an idea of what this year’s taxes will probably look like and will help you get ideas about the information you will need.
Once you know the forms and documentation you will need for this year’s taxes, commit to keeping track of these things this year. Being organized will make doing your taxes next year less stressful. For example, if you find out this year you need all your medical receipts, create a system for keeping track of those throughout the year. That way you don’t have to go digging next year.
Which Option is Best for YOU?
My honest and short answer is that it depends. For most of us, choosing online tax prep software will work perfectly well. Most people who have used online software will tell you it is very intuitive and thorough. If you’re debating about a deduction, the software will walk you through the pros and cons. If you aren’t even sure of which forms you need, the software will explain. The process is incredibly comprehensive and educational.
However, if you simply feel more comfortable going to a licensed tax professional in person, there’s nothing wrong with that.
That said, there are plenty of options that make it easy to file your taxes online. The point is that filing online is the way to go if you don’t have an extremely complex financial situation. Remember that you can go through the process of preparing your taxes with an online software and if you aren’t satisfied when it comes time to file–you don’t have to pay! (That’s because you won’t file.)
You can take the information and walk into an H&R Block or have a tax professional complete it for you.
The bottom line is that the more complex your financial situation is (i.e. rental properties, heavy stock trades, crypto, small business, income from multiple states,) the more likely it is that you should use a professional, like a CPA, to help you with tax planning and filing your taxes. For the rest of us, filing online is the way to go.
Simplify Tax Time With Quickbooks Online
Self-employed folks may feel extra layers of stress around tax time because their finances can be rather complicated, with income from multiple sources, for example. Quickbooks Online is a practical tool that simplifies tax preparation for the self-employed.
With Quickbooks Online, self-employed folks can get real-time estimates on their quarterly taxes, plus handy filing deadline reminders. This helps ensure you’re paying your quarterly estimated taxes on time and accurately, removing much of the confusion of tax season.
They’ll automatically track your income and expenses and help you find all of your eligible tax deductions. Using Quickbooks Online can be illuminating for an entrepreneur because they’ll automatically update your income and expenses to reflect how much you’re truly bringing home. Their tax estimates show you an accurate picture of your finances.
For self-employed people and side hustlers who do any driving required for work, Quickbooks Online provides automatic business mileage tracking. It takes the pain out of tracking business mileage, as well as keeping your various driving categories (business, personal, medical, etc.) separate.
The Simple version of Quickbooks Online is ideal for a small business owner or someone with a side hustle. There are also a couple of more expensive versions in case you need more robust services.
Learn more about Quickbooks Online here.
Related:Get the Most from Your Mileage Tax Deduction
Take Time to Understand Your Taxes
I can’t stress this enough: there is no substitute for your own personal knowledge of your tax information. Unless your situation is extremely simple, no one but you could possibly know all of the details of your financial situation.
You should really strive to understand your own taxes, even though it will require some effort. Start with last year’s return. Look at the different sections (income, deductions, itemized deductions and exemptions, credits, and tax payments) and learn how they work together.
If you use a CPA, have them thoroughly review the return with you so that you understand what they did. A tax preparer of any kind (software, retail, professional) should really just be for assurance, not so that you can turn a blind eye to what is going on.
Want to use the CPA that I use to get my taxes done? Check out my Dad’s CPA firm, Taylor & Associates.
The post Where to Get Your Taxes Done in 2023 (The 3 Best Places & Prices) appeared first on Part-Time Money®.
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