It’s almost that time of year – tax season! While the official due date for filing your taxes isn’t until April 15th, it doesn’t hurt to get a head start. But there is always the question, do your own taxes or hire a pro? Here’s a simple breakdown of all of your options so you can decide what you feel comfortable doing this tax season.
Expert Tip: The new tax bill recently passed in the house and senate will not affect your tax returns until your 2019 filing.
SingleTo start, use this free tool from the IRS, What’s My Filing Status? This 5-minute assessment will tell you what filing status you should use when filing your taxes. Here are the current filing statuses available:
If you like doing things the old-fashioned way, paper forms are still an option. This is only recommended for people who understand how to file their own taxes and cannot use any other service option on this list. Keep in mind that your return can take 6-8 weeks to process this way.
The IRS provides a detailed list for where to send each type of paper form for PA residents here.
Most people choose to file electronically –and for good reason. It’s often much simpler and faster to e-file rather than manually filling out every form. Refunds come within 3 weeks, or even faster if you elect to direct deposit the refund. You also have more choices within the e-file options.
The IRS offers a unique e-file program through their website called Free File. You can use it to file your federal taxes for free, as well as some state returns. The catch? You’re only eligible to use the software if your income is below $64,000/year. If you make more than that amount, you only have access to Free File’s fillable forms. You must know how to do your taxes yourself because the forms only offer basic guidance. Also, state tax returns are not available with a fillable form.
Recommended for: Individuals or households who make less than $64,000/year.
Tax return software can be incredibly intuitive and cheap. The software guides you through filing, and can save your information to make the process quicker each year. A few of the most popular commercial software include:
Many programs advertise that it’s free to file. But even if you need a higher-end version of the software, it’s usually cheaper than an accountant. One downside is that if you have a question while filing, you’ll have to try and get help through a customer service line and/or web chat.
Recommended for: Individuals or households who want an economical and easy-to-use option that doesn’t require leaving the house.
Using a tax professional is definitely the priciest option on the list. However, it could be worth it if you have a complicated return (like a small business owner). The average cost of professional tax preparation is currently $273 for state and federal returns with itemized deductions.
The providers could be well-known storefronts like H&R Block, or a local accountant. The added benefit to seeing an expert in-person could be worth the upcharge. Professionals can find tax loopholes and deductions for your family that you wouldn’t even know about.
The IRS has a search feature on their website to find authorized providers in your geographic area. Use the tool here.
Recommended for: Individuals or households with more complicated tax returns, or those who want extra guidance in-person from an expert.
Some parents may not be aware that there are significant tax benefits and deductions associated with starting a family. Here are some of the benefits.
Get the full list of family deductions from the IRS here.
What do we always recommend you do with additional money found in your budget – save it! Place that money directly into a savings account where you can grow it over time. Think long-term goals here. Your child’s education, a new house, retirement, etc. Get more information about savings accounts at the credit union here.