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Understanding Tax Filing Options: Which One is Right for You?

Understanding Tax Filing Options: Which One is Right for You?

February 22, 2024

Nowadays, when it comes to filing your taxes, there are numerous options. You can file with a tax professional like a CPA, or a tax preparation agency, for example, H&R Block or Jackson Hewitt; in some towns, there are volunteer tax preparers at convenient locations like the local library, or you can do it yourself online (e-file). If you decide to e-file, there are several options available. Some of these include:

  • IRS Free File
  • TurboTax
  • TaxSlayer
  • Cash App Taxes
  • Direct File pilot

Filing taxes comes down to how comfortable you are with the process. If you are not sure if doing it yourself or enlisting the help of a tax preparer is right option, consider the pros and cons of both e-filing and using a tax preparer to help you weigh your decision.

 

E-filing your taxes – Pros:

  • On your schedule

You can file your taxes on your schedule. You don’t have to wait for an opening to make an appointment with a tax preparer.

  • Quicker process

E-filing is a faster process than paper filing. The IRS typically processes e-filed returns within one or two days. Mailing a paper return takes longer.

  • Faster refunds

You tend to receive your refund faster, typically around three weeks after e-filing.

  • Accuracy

When you e-file, the tax software you choose calculates the numbers for you. This leaves less room for error, and your tax return has to be accurate. If an error occurs, it is easier to correct when you e-file.

  • Safe storage

When you e-file, your tax return is stored with the tax software you select so you can access it whenever you need.

  • Cheaper

Using tax software may be the cheaper option. In many cases you are able to file your taxes at no cost.

 

E-filing your taxes – Cons:

  • Potential data loss

Despite advancements in technology, there is still potential for a glitch and data to get lost.

  • Adding additional information

Adding additional information may be difficult as the space is limited, and the instructions for some forms require you to include more information.

  • Attaching statements

Attaching statements may be difficult if the program doesn’t permit a specific statement. In that case, the pages need to be printed, filled out, and mailed in.

 

Filing with a tax professional – Pros:

  • Saves time

Filing your own taxes can be time-consuming. Using a tax professional can give you that time back.

  • Identifying deductions and credits

Software is efficient; however, it doesn’t always locate every deduction and credit that could benefit you. Taxpayers with complex returns may consider a tax professional.

  • Avoid unnecessary mistakes

A tax professional has the knowledge and experience to hopefully help you avoid unnecessary mistakes that can easily occur when dealing with the complexities of filing tax returns.

Filing with a tax professional – Cons:

  • Cost

The fee for using a tax professional could be a factor in your decision between choosing to use software or a person.

  • Unqualified tax preparers

Not all tax preparers are good at what they do. Ensure your tax preparer is registered with the IRS and has prior experience preparing tax returns. Do your own research. It may help to read reviews of their prior work to determine if they are a right fit for you.

  • Tax software

Tax software makes filing a simple return pretty painless as you can now upload your tax documents. The software analyzes it and uses the information to fill in the spaces and do the calculations. It might also be less expensive, making using a tax preparer somewhat of a disadvantage.

 

Consult a financial professional

Filing a tax return can be complex and you may not be sure which tax preparation service to pursue. Hopefully the pros and cons listed above can help you with your decision. It may also help to meet with your financial professional to determine how your decision may impact your financial goals.

 

 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

Sources:

E-file options | Internal Revenue Service (irs.gov)

efile with Commercial Software | Internal Revenue Service (irs.gov)

The Pros and Cons of Hiring a Professional Tax Preparer - Good Financial Cents®

Tax Preparer vs. Tax Software: How To Choose (investopedia.com)

 

This article was prepared by LPL Marketing Solutions

 

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