Calculating the price of a tax preparation service can be daunting as there is no set price for the same. The tax professionals use a variety of methods and ways to set a price for their services. This makes it difficult to calculate and compare the costs of different tax preparation services. The price of the tax preparation service increases as the financial situation and tax return becomes more complex.
These tax preparation services often use different pricing methods for their services. Those who want to compare the prices of different tax preparation services can directly ask the companies the pricing method they use, or how the companies determine the prices. Companies generally tell the estimated price for tax preparation as well, however, it is generally difficult to get an estimate from any company unless the tax professional sees the tax issues of the client.
Some methods that the tax preparation service providers use are mentioned below.
A certified public accountant or a CPA advises that people should expect an average of around $273 for the current tax year. This amount generally includes the state and federal returns. The average fee usually drops to around $176 when the tax deductions are not itemized. This is because the itemizing of deductions is a time to consuming as well as a complicated process.
Those who don’t have a complicated tax situation can expect the tax preparation services to be less than normal. Those who have a very simple and basic tax situation can get their return files for free as well. However, this is subject to some income limits. The income limits can be learned from the IRS free file guide.
To calculate the cost of your tax preparation services, you can browse the internet and research about the inclusions in the tax preparation fee. Sometimes, there are extra charges for electronic filing, phone calls, or office visits included in the fee. Some firms charge an additional fee for the audit protection. To be more precise with the calculations, such details should be addressed.
Tax preparation services are in demand when people have to file their returns. The average cost of tax preparation service starts from about $275. The cost of tax preparation is not the lowest cost, which makes it important to get the most of your tax preparation services. However, there are ways to save money on tax preparation services and that can be done by identifying the tax-time priorities in advance. Using tax preparation software will help you understand taxes in detail.
Some software that helps you with tax preparation services are quite expensive, however, you will end up saving money on tax preparation in the long-run. The software is also cheaper than hiring a professional for the tax and investment income. Here are some software available for you to do your own tax preparation. There are some software that are also available for free.
TurboTax
This is one of the top personal tax preparation software. The software costs approximately $55, and you can buy it on Amazon as well. Some users and tax experts have given great reviews on TurboTax. Users can import many employer tax IDs, take pictures of the W-2s and 1099 forms instead of typing all the information. The software also has an ‘expense finder’ feature for the self-employed individuals. The software can bring up potentially tax-deductible expenditures directly from the user’s bank account to categorize them, add them and segregate them accordingly.
H&R Block
Everything users get from TurboTax software, can also benefit from H&R Block at a slightly lower rate. It can be a tough choice for the users to choose one among the two software. Though the features of H&R Block and TurboTax are similar, H&R Block is slightly more user-friendly and interactive. Users can ask questions in the software to get more precise solutions. This software has a free version called More Zero that users can try.
TaxAct Premium
This one is another great software for all the tax preparation services one would need. Users have preferred TaxAct Premium as it is inexpensive. The price users pay for TaxAct will be the same irrespective of the tax deadlines coming closer. This is not the case with TurboTax and H&R Block, where the prices increase as the tax deadline comes closer. Some features are missing in TaxAct as compared to the previous two software mentioned, however, users will not find any difficulty in completing their tax filing.
There are many more tax preparation software that helps individuals and companies with various services. TaxSlayer, Liberty Tax, Credit Karma, and Jackson Hewitt Premium are some of the software that you could choose from.
A W-2 tax form is a statement prepared by the employers for their employees. This form includes details about an employee’s total earnings, Medicare earnings, Social Security earnings, and federal and state taxes that are withheld by the employee.
Before you give the W-2 tax form to your employee, you should know about these important details of W-2 tax forms.
Different parts of the W-2 tax forms
W-2 tax forms contain numerous parts. Here is a brief overview of different parts of the W-2 tax form.
Where can I find W-2 tax forms?
One cannot copy the W-2 tax form from the Internet. As mentioned earlier, the Copy A of tax forms is printed on a special type of paper that can be scanned using a laser scanner, which cannot be found on any website. Only official forms must be used here. You can talk to your tax preparer and get your official W-2 tax forms.
What information is required to be completed in W-2 tax forms?
Information about your business This will include your business name, business address, employer ID number, and business State Tax ID number.
Information about your employees You need to mention the Social Security Number or other tax identification number of your employee, the name and address of your employee, and the like.
Information about employee income The information about total wages and withholdings of each employee for the last year has to be reported. Total Medicare wages, Social Security tips, total Social Security wages, total wages, and other compensation.
Apart from these, you also need to state information on retirement plans and special benefits. Box 12 and 13 of W-2 tax forms talk about retirement plans and employee benefits plans respectively.
What if there are errors made on a W-2 form?
It is recommended to check for common mistakes in tax forms before you send them off to your employees. However, if you have submitted incorrect forms to Social Security Administration, then you must fill and complete W-2c forms. Ensure that you do not miss out on the final deadline for submitting the revised information along with the W-3 transmittal form, which needs to be resubmitted.
The amount of taxes withheld from the paycheck for a financial year is used to file federal and state taxes. This amount is shown in W-2 forms.
The Internal Revenue Service (IRS) needs employers to mention the salary, wage details, and other information of their employees on the W-2 tax forms. This tax form also mentions information about all the federal, state, and any other taxes that are withheld from your paycheck. All the details in your W-2 form are extremely important when your preparing for filing the returns. This is crucial for the employee. To make sure that you do not miss out on the filing of this tax form, the IRS ensures that they send the form to the employer not later than January 31st, following the close of the financial year that is on December 31st.
Only an employee can receive the W-2 tax form. In case you are self-employed or an independent contractor, you would get the statements of earnings on Form 1099 and not receive the W-2 form.
The W-2 form is bifurcated into different boxes that shows numerous items that are related to your income. The first box is for the annual salary payments and wage along with the information regarding the federal tax that is being withheld in the second box.
It is to be noted here that just a part of your income is subject to the Social Security tax. The third box of the form reports the amount that is less than your total income for the financial year. The other parts of W-2 tax forms include Social Security tax, Medicare taxes that are pending, and other information with respect to the employees’ state income tax that is being withheld.
The identifying information segment of the W-2 tax forms is a vital section that can be noted by the IRS in cases where your reported income and information on W-2 tax forms do not match. Moreover, the accuracy of the reported income is checked by matching the payments stated with the corporate tax return policy of your employer. Also, the IRS receives a copy of the W-2 tax forms and are aware how much tax you owe. So, in case your name and Social Security number on your tax forms is inaccurate, make sure to immediately report the same and ask your employer to correct it.
Remember when you are filing your tax returns, a copy of W-2 tax forms must always be attached. In case you are e-filing your returns then the information of your W-2 is sent with the tax return; however, if you are filing the return by mail, you will need to place a hard copy of the W-2 tax form with your return.
Today, a huge population of taxpayers files their tax returns online for convenience and efficiency. The right tax software can be great and make the process easier. However, it is not always easy to make a choice between the plethora of tax software out there. There are several intimidating questions that you may be posed with such as which is the best software and what is the difference between the choices? Getting a clear answer to the questions can be a brain-drain. To simplify decision making, here are some strategies that will help you get the best tax software to fulfill your needs.
Once you have mastered the art of using the chosen tax software to the best of its abilities, the tax-planning process will only grow into becoming easier in due time.
While we all are worried about filing the tax returns with the best possible audits, most of us are also taking a closer look at the tax benefits and deductions. Tax deductions are important for taxpayers as these amounts can be directly deducted from the gross income. Right from getting the best investments to saving the receipts of health insurance premiums, smallest of these expenses can save you a lot more during your tax filing. Let us take a look at some of the tax deductions or benefits that you did not know that existed.
Health insurance premiums
Medical expenses can cost you a fortune and therefore, there are provisions that help in saving tax with the health insurance premiums. The taxpayer needs to itemize the medical expenses and mention the same during the tax auditing. In order to benefit from the health insurance premiums, the deductible medical expenses should be more than 7.5% of the gross income. If in case the taxpayer is self-employed and has paid for his or her medical expenses themselves, then the complete premium paid can be considered for claiming the tax benefit. The amount so deducted is considered from the gross income and not as an exclusion under itemization.
Sales taxes
Sales tax can also be deducted from the federal income tax. This provision can be a big money saver in the states that do not have arrangements for their own income tax. If you are claiming your tax benefit under the sales tax, then the item needs to be mentioned under claim deduction. One can refer to the official website of IRS to know more about the savings on big purchases and tax benefits under the sales tax.
Charitable gifts
These gifts make for a great money saving option under the federal income tax. It is useful to save the receipts and itemize them once the tax audit takes place. For instance, if you are baking cakes and using the funds to pay for a charitable organization, the cost of ingredients can be used as tax deductions.
Investments
Investments are one of the core benefits of tax refunds. Some of the tax deductions under investments include individual retirement agreements, capital losses, the sale of a home, etc.
Other tax benefits are:
So, if you are looking for more information on tax benefits and deductions, visit the official website of IRS for a detailed list.
A tax software is a computer-based software that is developed to help taxpayers, companies, and individuals to prepare and file tax returns. The software simplifies the process of filing taxes by helping the user conveniently get through the tax forms and issues. It also automatically calculates the tax obligation of the taxpayer, thereby streamlining all the steps involved. A tax software is a great option to consider, for taxpayers who have their tax-time priorities in advance. If you are looking to get a tax software, here are four popular tax software programs that can fulfill your requirements.
TurboTax
TurboTax is one of the most popular and widely used tax software for personal tax preparation. Developed by Intuit, this is also one of the tax software programs that will require you to shell out top-dollar, albeit it gives you worth for your bucks. The tax software caters to the need of every category and is lauded for its user experience. Just like being engaged by a tax professional, the TurboTax software will provide guidance and deliver questions with appropriate answers. One of the notable features include the ‘Smartlook’ feature that allows you speak face-to-face with a tax expert. If you are looking for all the features, you must opt for the deluxe version.
Credit Karma
Credit Karma is a relatively new tax software program on the bandwagon. This tax software comes in a free version and can do a lot more than one can expect. To begin with, it is capable of handling most complex tax situations. With a good and functional interface, you may find it a little different from streamlined programs out there. Credit Karma offers tax preparation for free while monitoring programs will be charged for at a monthly premium.
H&R Block
It is yet another tax software that can carry out just about any function. As you prepare for your tax returns, H&R Block will efficiently assist you through the process. Moreover, if you ever find yourself stuck between the line, the Help window will let you seek additional answers. One of the best advantages of this software is that a taxpayer can sit down with a professional for free, after purchasing the software. The company offers free and paid versions, consider your needs and pick wisely.
TaxSlayer
This is another affordable tax preparation service that appeals to users for its ‘Quick File’ option. Initially designed to aid tax professional, the tax software now caters to needs of individuals looking to file personal returns. TaxSlayer allows convenient support of all major IRS forms and schedules; thus, the user does not have to deal with the hassle. If you ever hit a brick wall during the tax filing process, seek help through email and phone help.
While some years back filing tax returns was a daunting task that would involve burying oneself into giant stacks of paper, today all thanks to the advent of the internet era, things have changed for the good.
Today, you can file your taxes online if you have all the necessary documents. All you got to do is to go to the Internal Revenue Service(IRS) website, the agency that officially collects the nation’s tax, and then fill the tax form.
In this article, you will learn why you should ditch the old manual tax filing system and embrace the new system of e-filing taxes:
You already know that filing of taxes has many benefits. You get a refund on your tax if you later claim the returns. E-filing taxes has made the process of filing of taxes easy and smooth.
As a taxpayer, you may come across tax deductions and tax credits as a part of tax benefit. These terms might be alien to you, but one needs to understand these well to get benefits and deductions. The tax deductions lessen the taxable income and the final value is computed on the marginal tax rate of the individual. The marginal tax rate increases with the rise in the income of the taxpayer. Tax credits, on the other hand, reduce the taxes directly. Therefore, these credits do not rely on the rates of the taxes. However, the value of the credit depends on the taxpayer’s tax liability.
Nonrefundable tax credits
If you are wondering if the tax benefits can bring down the tax to zero, then there are nonrefundable tax credits to help you out. Most tax credits are nonrefundable. So, the income filers who fall under the low-income bracket do not fully benefit from the nonrefundable tax credits.
There are other tax credits that can be partially or fully refundable. If the tax liability value surpasses of an individual, then the surplus amount is paid back to the income tax filer.
Tax benefits of education
Taxpayers can avail benefits of education through tax credits for higher education.
Who is eligible for an education credit claim?
There are various criteria that let you avail the claim under education credit, but one must meet the following requirements to benefit from the same. Take a look!
Here are some of the tax deductions under education.
Tax benefits of homeownership
One of the advantages of homeownership is that the credited rental income does not qualify under the taxable income bracket. But, the property holders would exclude the property tax payments and mortgage interest with other expenses from the income that is taxable. Also, the homeowners may deduct the capital gains from the sale of the home but up to a defined limit only. However, all of these tax benefits are a boon to those who are under the high-income tax brackets and not others. Therefore, the tax benefits and deductions under homeownership include:
In many cases, small business owners do not know that there are a few deductions they are eligible for, and they miss out on tax-efficient ways of retirement savings and business management. Although the amount of tax that a small business has to pay depends on the ownership and type of business, it is possible to reduce the amount of small business taxes. Here are a few ways for small businesses to pay less tax.
These are just a few ways to save on small business taxes. By taking advantages of opportunities and tax breaks, small businesses can easily lower their overall taxes.