Saturday, February 13, 2016

This is how much it will cost you to do your own taxes

FROM WASHINGTONPOST.COM

By now you may have your W-2, 1099 forms and the other documents you’ll need to prepare your tax return. But the question remains: How are you going to file?
Despite efforts from tax software providers to make it easier for people to file on their own — including smartphone apps that make it possible to upload a W-2 form just by snapping a picture of it — most people still prefer to hire a pro. About 60 percent of taxpayers who filed electronically had their returns prepared by a professional last year, a number that has held fairly steady for several years, according to IRS data.
Outsourcing the process can seem like the best option for people who don’t have the time to wade through forms and crunch numbers, or who are intimidated by filing their taxes. Hiring a professional can also be worth the expense for taxpayers who need guidance with taxes after a major life change, say after having a child or buying a home. The average tax preparation fee from an accountant is $273 for a standard federal tax return with a schedule A for itemizing deductions (instead of taking the standard deduction) and a state tax return, according to the National Society of Accountants.
And then there’s the DIY way. Someone doing their own return online with software from one of the major tax preparation companies could pay up to $120, including the fees for one state return. Because tax companies package their services differently, prices can vary from one online tax preparer to the next.
We compared what it might cost to prepare a return with four of the largest companies offering online tax preparation services: Intuit’s TurboTaxH&R BlockJackson Hewitt and TaxAct.
Here’s a look at what you might pay for tax software, based on the complexity of your tax return. Prices are as of Jan. 29.

Basic federal return (1040)

Cost: Free, most of the time
Taxpayers with straightforward returns who have only to file a 1040 and who are claiming the standard deduction have a good chance of being able to file their federal returns online at no cost. The Free File program with the Internal Revenue Service offers free federal filing for taxpayers earning $62,000 or less. Financially savvy taxpayers who want to work the math out themselves without the help of software can do so and enter the results into the free fillable forms the IRS offers online.

All four of the major tax software providers also offer free options for people with simple tax needs. But those taxpayers who want an extra service, such as the ability to store returns online for several years or to import data from a previous tax year, may need to pay a fee. (However, many companies will import tax data from a competitor for free as a way to attract new customers.)
H&R Block: Lets customers import W-2 forms for free. The free version also lets taxpayers import returns from competitors such as TurboTax and TaxAct. People who want to import a 1099 or previous tax returns filed with H&R Block need to pay $24.99 for the basic version.
TurboTax: Lets customers import W-2 forms for free. Customers who want to import last year’s tax return from TurboTax need to pay $34.99 for the deluxe version.
Jackson Hewitt: Customers have to pay $19.95 for the basic edition if they’re filing for the earned income tax credit or the student loan interest deduction. Lets customers import W-2 forms for free.
TaxAct: Taxpayers can import W-2 forms for free, but returning customers looking to import TaxAct returns from last year will need to pay $9.99 for the basic version of online filing software.

State return

Cost: $0 to $37 per state on top of cost for basic software
Some taxpayers who are able to file their federal tax returns for free may also qualify for a free state tax return. These fees are generally charged per state on top of whatever package the company requires for the rest of the tax return, although some companies include the service for their more expensive packages.
H&R Block: Charges free-file customers $9.99 for each state return and all other customers $36.99 per state return.
TurboTax: Offers free state returns for people who qualify for free federal returns, but all other customers will pay $36.99 per state.
Jackson Hewitt: No charge for people using the free edition. All other users pay $36.95 for each state return.
TaxAct: No cost for people using the free version. Charges $14.99 for customers using the plus and premium software.

Schedule A for itemized deductions

Cost: $0 to $35
Taxpayers who want to take common deductions for medical expenses, charitable contributions and mortgage interest will need to itemize those deductions on the Schedule A tax form, instead of taking the standard deduction. But most of the companies require those taxpayers to upgrade and pay a little more for more comprehensive software offered in the “deluxe edition.”

H&R Block: Included in deluxe edition, $34.99
TurboTax: Included in deluxe edition, $34.99
Jackson Hewitt: Included in deluxe edition, $34.95
TaxAct: Included in the plus edition, $14.99

Schedule C for business and self-employment deductions 

Cost: $0 to $80
Online costs will generally be highest for taxpayers claiming business-related deductions.
H&R Block: Included in premium package, $49.99
TurboTax: Included in home and business package for online software, $79.99
Jackson Hewitt: Included in premium package, $49.95
TaxAct: Included in the premium package, $21.99

Schedule D for capital gains and losses

Cost: $0 to $55
Taxpayers who sold real estate, stocks, mutual funds or other investments may need to file this form.
H&R Block: Included in deluxe edition, $34.99
TurboTax: Included in premier package for online software, $54.99
Jackson Hewitt: Included in deluxe edition, $34.95
TaxAct: Included starting with plus software, which costs $14.99