The IRS expects more than 155 million returns to be filed this year. And one of them will probably be yours.
About four out of five tax returns will be prepared using tax software and filed electronically. Choosing e-file and direct deposit remains the fastest and safest way to file an income tax return and receive a refund, according to the IRS.
Most people will get a refund. Are you one?
The IRS reported nearly 112 million refunds were issued last year, with an average refund of $2,895. The only way to find out your piece of the refund pie is to crunch your tax numbers.
Easier said than done. But no sense in putting it off any longer. Here are some tools to help ease the cost and confusion of tax time.
1. Do it yourself, for free
The IRS’s free-file program should be the first stop for anyone with an adjusted gross income of $66,000 or less, which is around 70% of all taxpayers, according to the IRS.
These taxpayers are eligible to access name-brand tax-prep software — like TurboTax, H&R Block, TaxSlayer, TaxAct — to file a free federal return. Many offer free state returns as well.
Each company has its own age limits — some are for all ages, while others cap the offer somewhere between ages 50 and 70. After qualifying for the income eligibility at the IRS site, you’ll be redirected to the tax software site where you can prepare your return, e-file and pay your taxes online.
2. Phone a (CPA) friend
You’ve successfully filed your own taxes using tax-prep software and are confident about your tax game. Then along comes a year that you move or change jobs or get married or have a child — and your tax picture gets more complicated.
When you’re pulling your hair out trying to itemize your deductions for the first time, wouldn’t it be great to have an expert to call?
“TurboTax Live is for people who are used to doing it themselves, but who may have a life event that they don’t feel 100% confident in handling on their own,” says Maureen Stafford, a product manager for TurboTax Live.
For a flat-fee of $179, you’ll get unlimited calls (phone calls, chats or video calls) to a tax professional, the opportunity for that professional to review your return and, if you opt for it, the opportunity for the professional to take over the return and sign and file it for the client (supplemental documents would need to be uploaded.)
TurboTax Live allows you to one-way video chat with a tax pro (you can see them, but they can’t see you in your pajamas with laundry piled up). The tax professional will virtually look over your shoulder by co-browsing on your screen to help you where you are. Certain non-pertinent details are masked from their view, like your Social Security number.
One drawback: If you’re crunching the numbers at midnight and hit a snag, you’ll need to wait till morning to make your call. Agents are available from 5 am to 9 pm local time, with hours expanding as needed closer to the deadline.
3. Find a CPA online
This is the first tax season for Henry.tax, an online service that connects you with a CPA who does your taxes for you. It’s aimed at higher-income tax payers who may not be interested in going the DIY route.
“We asked people if they had an income threshold at which they wouldn’t want to do it themselves anymore,” says Michael Chen, CEO and founder of Henry.tax. “Most people do. For some people it was $75,000, for others it was $150,000. But everyone wants to get out of it at some point.”
After answering a few questions online at Henry.tax — Own or rent? Student loans? Tuition payments? Own a business? — Henry.tax determines the complexity of the return and quotes you a price.
The base charge of $250 includes two W-2s, one state return and six 1099s. If you have two state returns, own a business or have a more complicated tax picture, then the price will go up. Half the payment is due at the outset, the other half is due when the taxes are completed, which is usually within a matter of days.
Most people are very comfortable with banking online, but some may be a little more reluctant to put tax information online.
“Security of personal information is a big issue for us given what is happening in the space,” says Chen, adding that there are security professionals on staff devoted to keeping Henry’s data safe. “Tax returns will be stored in our secure server. We want people to use it every year and store their returns with us, and they will only do that if they feel their information is safe.”