How do I Choose the Best Method for Income Tax Preparation?

Nicole Madison
Nicole Madison
Nicole Madison
Nicole Madison
Most regular employees in the US need a W-2 to complete their tax returns.
Most regular employees in the US need a W-2 to complete their tax returns.

It can be difficult to know how to choose the right method of income tax preparation. There are many choices, and selecting one can be a bit of a challenge, especially when they all appear to be efficient, beneficial options. The first thing to know is that no one method of income tax preparation is right for all people. The right method depends on the unique needs and preferences of each tax payer.

People may file their taxes online through programs like TurboTax.
People may file their taxes online through programs like TurboTax.

Years ago, people most often filed paper tax returns by mail, spending many hours with a pencil and calculator at hand. Today, there are few people who believe this method is the most efficient, and hardly anyone would call it the easiest. Now, there are many types of income tax preparation software that allow users to simply input their information. The software then handles the calculations for the tax payer, reducing the number of human errors the tax payer is likely to submit and allowing him to complete his returns much faster.

The choice of preparation methods depends on issues including the complexity of filer's tax situation, and the filer's familiarity with tax codes and calculation methods.
The choice of preparation methods depends on issues including the complexity of filer's tax situation, and the filer's familiarity with tax codes and calculation methods.

Some income tax preparation software is designed to allow a taxpayer to complete his tax return, print it out, and mail it to the taxing agency. In the United States, many types of software allow the user to handle both federal and state tax returns at the same time. This often proves to be a benefit for those who wish to save time spent preparing their taxes. Often, these programs also allow the tax preparer to submit his tax returns online; this eliminates the need to stand in long lines or worry that returns will be lost in the mail. Typically, users are able to obtain an Internet receipt that confirms submission to taxing agencies.

Many online income tax services allow people to prepare and file a simple 1040 form for free.
Many online income tax services allow people to prepare and file a simple 1040 form for free.

While tax software often provides handy features like audit and error checks as well as deduction suggestions, some people feel more comfortable with going to a tax professional for income tax preparation. This is especially true when their tax returns are particularly complicated, include business income, or involve the income of multiple family members. Having a professional handle the tax return often allows the tax payer to feel more secure. Essentially, calculation mistakes won't be the fault of the tax payer, and professional tax preparers may have insight into deductions the tax payer may miss on his own. Additionally, the tax payer doesn't have to spend time working on the tax return on his own.

Cost can be a factor in choosing the best method of income tax preparation, but there are some practically free methods, such as paper returns that require only the purchase of postage. A person may also file online for free in some cases; information about free online filing can be found at on the IRS website. Tax preparation can be found at varying price ranges, and often the cost is directly related to the complexity of the return. For example, those with businesses, home offices, and real estate may sometimes require more expensive and complex software. Hiring a tax professional may be the most expensive option, but prices vary with this choice as well.

Nicole Madison
Nicole Madison

Nicole’s thirst for knowledge inspired her to become a writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

Nicole Madison
Nicole Madison

Nicole’s thirst for knowledge inspired her to become a writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

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    • Most regular employees in the US need a W-2 to complete their tax returns.
      By: Mariusz Blach
      Most regular employees in the US need a W-2 to complete their tax returns.
    • People may file their taxes online through programs like TurboTax.
      By: mkreul
      People may file their taxes online through programs like TurboTax.
    • The choice of preparation methods depends on issues including the complexity of filer's tax situation, and the filer's familiarity with tax codes and calculation methods.
      By: Route66Photography
      The choice of preparation methods depends on issues including the complexity of filer's tax situation, and the filer's familiarity with tax codes and calculation methods.
    • Many online income tax services allow people to prepare and file a simple 1040 form for free.
      By: steheap
      Many online income tax services allow people to prepare and file a simple 1040 form for free.