To be specific, I use TurboTax. It’s not perfect by any means, but it covers the topics I need for our tax situation which is more complicated than the typical one. That's due to our various revenue streams.
It gets the job done for a fraction of what it would cost me to go to an accountant, although the company is definitely trying to edge up the price in small increments that they seem to think we don't notice. So far, though, I've been satisfied enough with it to swallow those price increases.
But I've always been curious to see how much it costs to go to one of the tax services, such as H&R Block. I've always assumed it must be very cheap since so many of my friends – some of whom are struggling wage earners and have very simple returns – use them.
So I decided to do a little research into it.
And I was shocked at what I found.
Yes, it’s very cheap to use the tax services – free even –IF you rely on the income from an employer who pays you a salary and IF you earn no income from other sources, such as from dividends or interest, self-employment, side gigs, and if you have no debt or loans to repay.
That would seem to eliminate a large percentage of the population in this gig/independent contractor economy we have right now.
So the end result is that most people who go to these services don't get it for free at all, but end up paying far more than they bargained for.
That's because, to my surprise, most of the tax services base their fee structure on the number of forms you use.
And that means that in our current jobs economy, which relies heavily on temporary work, independent contractors, and self-employed freelancers over actual employment, they are charging $100-$400 for a typical return that includes the common Form 1099 and Schedule C income, or has student interest payments to report.
In my humble opinion, that’s an unconscionable amount to charge for essentially plugging some numbers into a software package.
And yes, that’s exactly what these tax preparers do. They simply take the numbers you give them and enter them into a software program that does all the calculations for them.
Other Legitimate Options Besides the Expensive Tax Services
Typing in numbers and figures is something you can easily do yourself if you can get your hands on a tax software package that is available on the market for a fraction of that cost. Here’s a link that reviews some of them that range in price from about $20-$79.
That’s certainly a substantial savings right there.
There are actually free software options available. The IRS offers its own free versions for taxpayers who meet certain criteria. And they post others on their website that may be of use to other taxpayers.
You can find them on the IRS website here.
By the way, I do advise using ONLY the IRS website to find them since some of the software manufacturers have been known to steer site visitors to the software they sell instead.
Here’s a story that provides a word of warning in that regard.
On the IRS website it’s a straightforward matter of answering a few simple questions to find a free option for your specific needs. I filled in the information as if I was a fictional single person making $60K per year in New York State. Here are screenshots of the questionnaire I filled out and the free sites that came up:
The Hardest Part of Doing Taxes is Not What You Think It Is
Believe me when I say that the hardest part of doing them is getting yourself organized and gathering together any paperwork you might need.
And that’s an unavoidable task that you have to do for yourself anyway, no matter how you do your taxes, since no tax preparer I know can or will do it for you.
It takes me a few hours to collect and categorize everything into the simple envelope system I use for my tax paperwork. That includes all the income and expense reports, receipts, check stubs, credit card bills, W-2’s and 1099’s that I have filed or entered into our business accounting software over the year.
But once I’ve accomplished that, it doesn’t take nearly as long to fill out the actual return, even with our tax situation, which is made complicated by the fact that we own our own business, have rental properties, and also income from many different sources.
You can really trust me on this. There’s no reason to be intimidated by the process; any software program will walk you through the forms and fill out any worksheets you need based on the information and numbers you enter to answer to a series of questions. It’s really that easy.
Still Not Convinced? Here's Another Truly Free Option for You
But just in case you’re still unconvinced and want the comfort of speaking to an expert when you fill out your forms, you might qualify for a free in-person tax prep option.
If your income is below $64,0000;
You are disabled;
Or have limited command of English
Check out some of the free tax prep options on the IRS website here.
So there you have it - several options for getting your taxes done this year for less than you may have realized.
I strongly urge you to do yourself a favor and try to do your own taxes this year.
Have faith in yourself and imagine how good it will feel to keep that $300 – or more -- in your own pocket. You deserve to keep your hard-earned dollars.