Although New Year's was only a week or so ago, many of us are already dreading filing our taxes by the April 15, 2021 deadline, which is just a few months away. If this is your first time filing your taxes, we may be able to answer some questions you have about your tax return.
Before diving deeper into the complex tax filing process, one of the most commonly asked questions is who has to file a tax return? You are responsible for filing a tax return when you have earned more than their standard deduction (which you may need to check, as it may update every year). It's important to file by April 15, 2021, unless an extension is granted by the IRS. Once the IRS has approved your tax return and you do not have to pay additional tax, you are expected to receive your tax refund within the next 21 days, which may be sooner if you choose to be paid via direct deposit. It may take longer to receive checks in the mail due to the backlog of USPS and COVID-19 this year.
To get started on filing your tax return, you will need your W2 from your employer(s), 1099 form(s), and/or any documents you need to report on your tax return, such as student loan payments, mortgage payments, or retirement funds. You should also organize any receipts for tax-deductible expenses and charitable organizations.
Once you have gathered all the documents, you can decide whether you want to file your tax with an accountant or do it yourself. Many people choose to file their tax themselves because the average cost of hiring an accountant can be as much as $300. Some accountants even use the same tax software you can easily purchase with a discount, so why not save some money by doing it yourself? Another reason why many people choose to file their own tax return is because they have no other sources of income besides their full-time job, which you may be able to file tax return online for free.
Difference between Tax Software vs. Online
Once you decide to file your own taxes, then you may wonder what is the difference between tax software vs. online. We may be able to help you decide which option may best fit your needs when you need to decide on an online tax filing service and a desktop tax software.
- An online tax filing service allows you to have quicker access to their program, and you can start for free. On the other hand, you will need to purchase the desktop version before you are allowed to download it onto your computer.
- With online tax software, you have the ability to work on your taxes from any location as long as you have an internet connection. Most of the tax filing brands also offer mobile applications, so you may not need to use a computer to gain access to your account. However, desktop applications must be used on the computer you downloaded on.
- Desktop tax software will check for updates when you log into the application, but some updates may interfere with your computer's settings, which require tech support for assistance. Online tax software programs are automatically updated on the maker's servers. This makes no extra work for you when you start to fill out your online tax return.
- If you do not have a reliable antivirus or firewall, your data could be hacked when using a desktop tax software program. The trusted online tax filing companies use encrypted files which prevent tax data from being hacked by even the most vicious cyber thieves.
- While you are working on an online tax software, data is periodically saved automatically. It is also safely backed up into at least two separate clouds. When you use a desktop tax software, your tax information is saved to your computer, which you must physically back up with a USB drive, back-up devices, or personal cloud accounts (Google Drive, iCloud, or Dropbox) in case your computer crashes.
How Much to File Taxes Online?
Most people want to know if they can file their tax for free and the simple answer is yes, but there are limitations. You must have a simple tax return (depends on your income and the state you live in). If not, you are expected to pay for online tax software or desktop tax software. Prices vary on the brand of tax software you purchase, the tax preparer's status, location (if you are required to pay state taxes or not), and how complex your tax return is. Complexities would include investments, property owners, students working part time, and more.
The top three online tax software companies are TurboTax, H&R Block, and TaxSlayer. With the ongoing COVID-19 pandemic, some of these tax preparation companies will not charge additional fees if you are planning to claim any child tax credits, earned income tax credits, and recovery rebate credits (for those who did not receive their $1,200 stimulus checks). You may pay extra for the 'expert tax advice' option for anyone who may be interested in working with a professional CPA directly. For the top three companies we mentioned, their online tax filing services range from free to $130 (for self-employed individuals). Their Deluxe editions range from $69 to $80, and premium options cost $79 to $110.
From now until April 15, 2021, there are numerous discounts and coupons that are provided by TurboTax, H&R Block, and TaxSlayer.
- H&R Block coupon: 25% off online tax filing
- TaxSlayer promo code: Free filing for federal and state tax returns
- TurboTax service code: Free Live Basic for simple tax return only (working with a tax expert for free)
You will most likely find coupon codes for first-time users, but check with PCWorld for the latest online tax software discounts from these top online tax filing services for both new and existing users.