Tax season is fast approaching, and as the April 15, 2013, deadline approaches, many citizens are faced with the decision as to whether they should file their taxes using online tax software or enlist the assistance of a tax professional. Both online tax software and tax professionals have their own set of advantages, but which one is actually better for your bottom line? Here is a look at whether online tax software really saves you money.

Low Cost In Comparison with a Tax Preparer
Many Americans rely on online tax software to file their income taxes year after year, and it is easy to see why. Many online tax programs allow taxpayers to file their taxes free of charge or for a nominal fee. These programs are convenient, easy to use and often get you your refund quicker than if you were to have a tax professional prepare your taxes. The trouble is, while online tax software can get your refund quickly, it isn't necessarily accurate. Computers make mistakes, and something as important as your tax return could benefit from a human touch.

E-Filing Means You Get Your Money Faster
According to the IRS, over 100 million taxpayers opted to e-file during the 2011 tax season. When you have an accountant or another tax professional handle your taxes, they will typically mail your return in, prolonging the refund process. When you use online tax software, you have the option to e-file, which means you can get your tax return in your bank account much quicker. E-filing requires that you provide your direct deposit information. Once your refund is released, it is deposited into your account and you have instant access to the money.

A Tax Professional May Be Able to Get You More Money Back
When it comes to more complex tax returns, a tax professional may be able to get you more money back in your tax return. Every year the tax code seems to get more complex, and in 2013, there have been several changes in the tax law. Tax professionals are well-versed in the U.S. tax code, and they will know exactly what tax breaks and deductions you are eligible for.

You Are Less Likely to Face an Audit When You Use a Tax Professional
Not only do tax professionals know how to get you the most money on your return, they also know how to keep your return off the IRS's auditing radar. While online tax programs work well for simple tax returns, they may not be your best bet for complex returns with multiple W2s, deductions or tax breaks. The careful eye of a tax professional can double and triple check your return and ensure that there are no glaring errors before sending your information to the IRS.

The Bottom Line
Online tax software is a good option for taxpayers with a simple tax return without deductions or tax breaks. The upfront cost is highly affordable, and the turnaround time from when you file to when you receive your tax refund is minimal. It is easy to see why so many people opt to use online tax programs. If you have a more complex tax return, you may want to seek professional assistance from a tax expert.

If your tax return has multiple W2s, if you are filing jointly with or separately from a spouse for the first time, if you've had a year of tremendous income growth or if you have several deductions, exemptions or tax breaks, you may want to have the keen eye of a tax professional on your side. Everyone makes mistakes, and while computers can calculate data, they cannot tell you all the deductions and tax credits you are eligible for. Online tax software can definitely save you money, but if you have a more complex tax return, it is best to leave it up to the professionals.

Related Articles
  1. Savings

    What Your Credit Score Means for Your Love Life

    Wondering if your significant other wants to commit and is reliable? The Fed might have the answer.
  2. Investing

    3 Healthy Financial Habits for 2016

    ”Winning” investors don't just set it and forget it. They consistently take steps to adapt their investment plan in the face of changing markets.
  3. Saving and Spending

    What Baby Boomers Need to Know About IRA RMDs

    Mandatory minimum distributions from traditional IRAs and qualified plans cannot be avoided. But there are several ways to minimize their impact.
  4. Taxes

    Why People Renounce Their U.S Citizenship

    This year, the highest number of Americans ever took the irrevocable step of giving up their citizenship. Here's why.
  5. Retirement

    5 Reasons Millennials Lead in Saving for Retirement

    Say what you want to about millennials but the one thing they are doing better than any other generation is saving for retirement. Here's why.
  6. Investing

    3 Small Steps to Maximize Your Investing Goals

    Instead of starting the New Year with ambitious resolutions, why not taking smaller manageable steps that can have a real impact.
  7. Taxes

    Taxes: H&R Block Vs. TurboTax Vs. Jackson Hewitt

    There are more and more tax services to help ease the pain of filing income taxes. Here's our take on three of the biggest.
  8. Investing

    7 Creative Ways to Save for an Early Retirement

    Take note of these out of the box steps you can take towards securing yourself an earlier, more comfortable retirement.
  9. Taxes

    Confused About Estimated Tax Deadlines for 2016?

    If you run a business or have investment income, pay attention to this year's estimated tax deadlines. Here are the details, and what's new for 2016.
  10. Retirement

    Retirement Plan Tax Prep Checklist

    Here's a list of items you need to have in order by tax time, including paying attention to those pesky required minimum distributions.
  1. How do I file taxes for income from foreign sources?

    If you are a U.S. citizen or resident alien, your income (except for amounts exempt under federal law), including that which ... Read Full Answer >>
  2. How Long Should I Keep My Tax Records?

    The Internal Revenue Service (IRS) has some hard and fast rules regarding how long taxpayers should keep their tax records. As ... Read Full Answer >>
  3. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  4. Is homeowners’ insurance tax deductible?

    While your fire or homeowners' insurance premiums may be included in your property payments, they are nondeductible expenses, ... Read Full Answer >>
  5. Are mutual fund expense ratios tax deductible?

    The short answer to whether mutual fund expense ratios are tax deductible is "No," but the long answer, however, is more ... Read Full Answer >>
  6. Does the IRS charge interest on penalties?

    The Internal Revenue Service (IRS) charges interest on any overdue taxes owed, but it does not charge interest on penalties. ... Read Full Answer >>
Trading Center