Online Tax Prep or an Accountant: Which is Best for You?
NEW YORK ( MainStreet) With tax day just around the corner, millions of Americans are gathering their documents and deciding whether to use an online tax filing service or certified public accountant. There's no definitive rule on which method of tax filing is best but our experts can weigh in on which option is best for you.
If you file online ...
Filing your taxes online is usually pretty cheap, says Kay Bell, tax expert for Bankrate.com.
"In this day and age we are always looking for bargains, and Tax Slayer , TurboTax and Tax Act are all three very affordable, and they do a great job walking you through the process," she says.
If your filing is fairly straightforward if you are a single person with few investments a simple online filing may be right for you. Young people, for example, may have only their income from one job and student loan interest to deduct a very simple return.
"Those straightforward returns are the bread and butter of online tax services. If you're comfortable using a computer and doing your taxes without any help from a professional, then it's a good option," she says.
If you're thinking of filing online, ask yourself if your personal situation has changed a lot from the previous year. If you haven't gotten married, had a child, bought a house or cashed in investments, an online service can be perfect for you.
Folks filing online can expect to spend around $50 for a federal filing. They also have the benefit of checking out IRS.gov for answers, says Trae Bodge, senior editor for coupon site RetailMeNot.
"There is information on which forms you should use, links to track your refund, links to see what deductions you might qualify for and, if you can't pay what you owe right away, links to make payment plan arrangements. There is also support available and instructional videos via Twitter, Tumblr or YouTube," Bodge explains.
If you don't have a professional looking over your shoulder, you could miss something. A tax professional will know when and where you might have made a mistake, and they will go in and fix it, Bell says.
"There's always a danger that you have missed something, that you might have screwed something up. You may think that your return is basic, but if you got married or bought a home, then suddenly you have a joint filing for the first time and mortgage interest to think about," she says.
Most online filings offer a simple "down and dirty" checklist for what you need to file, Bell says. Sometimes, this may not be enough. For example, if you had a child and your medical expenses were more than 10% of your total income, you can deduct those expenses. Tax software probably won't catch that, but a tax professional would.