Options for Doing Taxes On Your Own
Tax preparation can be a big annual expense, thanks to our complex tax code that is very difficult for average folk to figure out on their own. I've long advocated a simplified tax code for this reason, but while politicans talk about it year after year, and mention it election after election, it seems that nothing ever really gets done, and we continue to be stuck with an overly complex system. Because of this, there is a huge cottage industry that helps people prepare their tax returns each year. These services are run by huge companies like H&R as well as large CPA firms. And the worst part is that, even the simplest returns can end up costing hundreds of dollars for people who go to such tax preparation firms.
But what happens when you go to such a firm? Typically you are asked a series of questions and the employee simply enters your information into a software program. In other words, the software is doing all the work, and the process is mostly automated. So why couldn't you just obtain your own software and do all the "data entry" on your own instead of relying on somebody else to do it? That's the question I asked myself years ago, and that is how I came upon a program called Turbotax (There are a few other competing programs as well, but they are of inferior quality and you really shouldn't consider them, even though they are sometimes cheaper).
It turns out Turbotax has been around for some time, and it is the #1 program for tax preparation that's used by self-preparers. The program is quite easy to use, and you just need to answer a bunch of questions, just as you would had you hired a professional. Then, Turbotax does the rest and generates your forms for you. You can then submit them electronically, and you are done. The total cost for doing this can be free if you have a very simple tax return (The Turbotax free edition can be obtained at http://freetrialspot.com/turbotax.php if you are interested in checking it out). Other users will usually have to pay 40 or 50 dollars, which is still much less than what you'd otherwise pay.
With that said, I should mention that in some cases, it's still a good idea to hire a professional. Examples might be when you are involved with real estate transactions, or unusual tax-related situations that will require the expertise of a tax professional. So you shouldn't try to always use Turbotax, but in most years, it will be more than enough for preparing your returns, and can save you hundreds of dollars.