Free tax filing services VS. premium services
When it comes to filing your taxes, there are countless options available, but navigating through each and understanding what suits your needs is a complicated process. At the same time, however, you shouldn’t settle.
Just because your tax filing situation appears to be simpler than it may be doesn’t mean you should take the risk of using a platform that doesn’t meet your needs. Whether you want to file your taxes for free or you want to know the advantages of using a premium tax filing service, this blog post can help you. Here’s what you need to know when comparing premium tax filing options to free filing services.
What are free tax filing options?
Free tax software is a great option for those with simple returns, allowing you to submit your taxes without spending a dime. However, you must meet certain criteria to qualify for free filing, as each tax software has its own definition of a simple tax return. Generally, a simple return consists of a basic 1040 form, which includes limited interest and dividend income, standard deductions, and W-2 and unemployment income.
When should I use a premium tax filing service?
If you are self-employed or a freelancer, you won't receive a W-2 and will need to upgrade to a paid plan that supports more tax forms and schedules beyond a basic 1040. For example, self-employed individuals need a plan that supports Schedule SE, while freelancers must file a Schedule C, which accounts for freelance income and expenses found on a 1099 form (similar to a freelancer’s W-2).
Even if you have W-2 income, you may still need to upgrade to a paid plan that includes specific schedules, such as Schedule B for interest and ordinary dividends, or Schedule D for capital gains and losses, for earnings from the sale of your home, car, stocks, and bonds.
In general, paid tax software may be less of a choice and more of a necessity for your tax situation. You may also want to consider paying extra to benefit from enhanced features that can include help from a tax professional.
What are the differences between free and premium tax filing services?
When it comes to tax filing, free services like TurboTax, H&R Block, TaxSlayer, and TaxAct may seem like attractive options at first glance. These services can help you submit simple returns without paying any fees. However, there are some drawbacks to consider.
One of the main issues with free tax filing services is that they may not be as comprehensive as premium options. While they can help you with basic forms like the 1040, they may not include support for more complex tax schedules, such as those required for self-employment or capital gains. This means that if you have a more complicated tax situation, you may need to pay for a premium service to ensure that your taxes are filed correctly.
Another potential problem with free tax filing services is that they may not provide the same level of support as premium options. If you have questions or concerns about your taxes, you may have limited access to customer service representatives or tax professionals who can assist you. This could result in delays or errors in your tax filing process.
What are some of the benefits of hiring a tax professional from a premium service?
When it comes to filing taxes, having a tax professional by your side can be extremely beneficial. Here are a few reasons why:
- Experience: Tax professionals, such as Certified Public Accountants (CPAs) or Enrolled Agents (EAs), have extensive experience in preparing taxes. They know the ins and outs of tax laws and regulations and can ensure that your taxes are filed accurately.
- Saves Time: Tax preparation can be time-consuming and stressful, especially if you have a complex tax situation. A tax professional can help you save time by taking care of your taxes, so you can focus on other important things.
- Maximizes Deductions and Credits: Tax professionals can identify all the deductions and credits that you may be eligible for, which can help you save money on your taxes.
- Avoids Errors and Audits: Filing your taxes incorrectly or making mistakes can lead to audits and other penalties. Tax professionals can help you avoid these errors and ensure that your taxes are filed correctly.
What does this mean for my return?
One thing that many often overlook is the potential to make back what you paid for a premium service. For example, I had a friend who used one of the generic free services to file their taxes in the past. It helped them when needed, and after filing their taxes, they received a $1,000 refund. At the time, it was a helpful solution. The next year, they wanted to try a premium service to see if they could get more out of their potential tax refund. Though they would end up paying out of pocket to have a tax professional file their tax return for them, they wound up receiving an $8,000 tax refund. That’s one of the most significant benefits of using a premium service that allows individuals to have a tax professional file their tax return for them. Though they had to pay, let’s consider that as an investment. Their tax professional knew every technique to reduce their overall tax liability and provide a more substantial tax refund.
How can Taxfyle help?
When it comes to filing your taxes, you shouldn’t take any unnecessary risks. At the moment, the IRS is bolstering its enforcement and ensuring that red flags don’t go unchecked. It’s why using a tax professional to file your tax return is more important than ever. With Taxfyle, you won’t have to search hard to find someone who can file your taxes.
We connect you with a licensed CPA or EA who can take the work of filing taxes out of your hand. They’ll ask you for the right documents and discuss your options to reduce your tax liability and increase your potential refund. It’s like having an affordable accountant in your pocket. This year, make filing taxes simpler. File with Taxfyle.