Feeling Taxed, Obligated To File...

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On the heels of the Martin Luther King Jr. holiday, millions of early-bird taxpayers will e-file their tax returns today: Tuesday, January 17, 2012. For many, this process is seamless and predictable, but for those caught in the tax time shuffle, choosing a filing option is confusing and "taxing". Among these choices are paper forms, IRS Free File, IRS Free File Fillable Forms, do-it-yourself tax software or professional tax preparation services. But which choice is right for you?

The following are basic overviews for each filing option available to taxpayers:

The Way of the Dinosaur

If (in your opinion) your tax situation is uncomplicated and if you don't find arithmetic and pencils intimidating, using paper forms to prepare your tax returns will suffice. This option is 100% free; however, completing paper forms by hand is typically discouraged for those filing more than a 1040EZ form. In all cases, the taxpayer should have a basic understanding of the tax law as it pertains to his or her situation.

Important Limitations:



  • No e-file option


  • No failsafe measures for computation errors


  • No quick turnaround for receipt of refunds (allow six weeks)


  • Time, if preparing more complicated forms, schedules or worksheets



Refer to Publication 17 or relevant publications and forms for help.



IRS Free File


This option allows for more sophisticated tax situations, but will require the user to be comfortable navigating software and engaging in data entry. The software includes failsafe measures for math computation errors and invalid entries and conducts a basic interview through a series of questions and prompts. Returns are e-filed, and most taxpayers receive their refunds in as little as 10-21 calendar days (see IRS Refund Cycle.).

Important Limitations:


  • Taxpayers with an AGI of more than $57,000 are excluded (AGI is computed on line 4 of Form 1040EZ, line 21 of Form 1040A and line 37 of Form 1040 for 2011 AGI)




  • Software vendors can impose additional eligibility criteria


  • Forms selection may be limited (see commonly filed forms)


  • State e-filing may not be available (additional charges may apply)


  • Access to help is not free


  • Input determines output (i.e., answers to complex questions are based on the users understanding of tax law)


See the list of participating, Free File vendors here.


IRS Free File Fillable Forms


In summary, Free Fillable Forms is the electronic equivalent to paper forms, but it is not a software program. Taxpayers must have a valid email address and access to a computer with the latest version of Adobe Flash Player installed. Unlike Free File, the Fillable Forms option does not have taxpayer AGI restrictions. If you are comfortable doing your own taxes and have a basic understanding of the tax law as it pertains to your situation, IRS Free Fillable Forms may be another alternative.

Important Limitations:


  • Basic mathematical calculations


  • Basic field checking


  • No state e-filing capability


  • No foreign addresses allowed


  • Reprinting of returns is unavailable after the extended filing deadline: 10/20/12

Refer to Publication 17 or relevant publications and forms for help.


Do-it-Yourself Tax Software

Purchased tax software is suitable for taxpayers who have more complex tax situations but still wish to manage and oversee the preparation of their
returns. Both federal and state returns are e-filed, and taxpayers receive their refunds in as little as 10-21 calendar days (see Where"s My Refund?).

Important Limitations:


  • Access to help is subscription based (e.g., basic, premium, etc.)


  • Input determines output (i.e., answers to complex questions are based on the users understanding of tax law)



Professional Tax Preparation Services

Lastly, this option is suitable for those with complex tax situations or those who simply have better things to do during tax time. Depending on the service provider or size of firm, price points may be prohibitive. In all cases, however, taxpayers should look to an authorized, IRS e-file provider
when paying for professional tax preparation or related services. To locate or verify the e-file status of a provider in your area, click here.



Important Reminders:


  • All paid preparers must have a Preparer Tax Identification Number (PTIN). If not renewed, these numbers expired on December 31, 2011. To learn more about the different categories of paid preparers click here.


    • All paid preparers who, for compensation, prepare 11 or more tax returns after January 1, 2012, must e-file those returns. Citizen Thrift isan Authorized, IRS e-file provider for your area.




    • The deadline to file your federal income tax return(s) for the calendar year of 2011 is Tuesday, April 17, 2012 (deadlines are extended when April 15th falls on a weekend or federal holiday).




    • In all cases, file your tax return or request for extension (Form 4868) timely.

      If you have questions about your tax situation, don't wait till the last minute!

About the Author:

Citizen THRIFT is a virtual, tax preparation services company, and division of ClerkWise Office Solutions, that caters to the needs of individuals and sole proprietorships. Customers enjoy a comprehensive suite of tax preparation and consulting services and the ability to access tax help all year.



Article Originally Published On: http://www.articlesnatch.com


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