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.