Monday, January 29, 2007

Software: Tax Time Cometh - Electronic Tax Filing

Once you're over the age of 18 and you have an income no matter how big or small, we all face the fact that April 15th is on its way here. This is generally a time for dread or cheer depending on whether you get a refund or owe the tax man.

About 15 to 20 years ago, the only option for filing your taxes was filling out the paper forms, or having an accountant or tax preparer do it for you. Then came the first tax software, which was little more then an electronic version of the paper tax forms. It wasn't too much help, but at least you didn't have to fill-out the forms by hand.

Today, you can still have someone do your taxes, but the tax software is superior then it use to be. The software now has an 'interview' feature that steps you through the whole process, and makes sure that you get the maximum deductions. We also have e-File which is a godsend for the IRS because they don't have to manually input all that data from the paper forms, and it also reduces human error.

Below is a list of the most popular tax preparation software available:
The latest generation of this software is also available online as a web application The advantage of this is that you don't have download or install any software, everything is done from within your browser.

Selecting the Right Software
If you don't know which one of these packages that you want to use, below are my suggestions for selecting the best one that will meet your needs.
  • Read software reviews from sites such as CNET, or PC Magazine.
  • If you use Quicken for managing your finances, then you might want to consider using TurboTax because the programs will work well together.
  • If you did your taxes last year with one of these programs, then you should consider using the same brand again if you want to import your old data so you don't have to re-enter it.
If you have questions about your taxes both of these programs offer help for an additional fee. If you're willing to look the information up yourself, you can use the Internal Revenue Service (IRS) web site for free. This site has all the official information and forms that you will need.

The Free File Program
If your Adjusted Gross Income (AGI) was $52,000 or less in 2006, then you can file your federal tax returns for free (note: this doesn't include your state taxes). See the following web page for more information.

Below is an excerpt from the IRS site about the program, "The Free File program is a free federal tax preparation and electronic filing program for eligible taxpayers developed through a partnership between the Internal Revenue Service (IRS) and the Free File Alliance LLC, a group of private sector tax software companies."

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