There are certain advantages and disadvantages to using tax preparation software. The main disadvantage of using tax preparation software is that it is designed only to include the most general questions that affect a majority of people. This software will not be customized to an individual with specific tax concerns. Due to this limitation, online tax preparation may not be beneficial to those with complicated tax returns.
Tax preparation software may miss many credits and deductions that a person is entitled to. Although users will be asked personal questions, the software is generally designed to cater to the average person. However, many advocates of tax preparation software find it beneficial even for complicated business tax returns. Online tax preparation is usually considered best for those who file straightforward tax returns. After filing, the software will inform the user of any problems that occurred.
The most popular tax preparation software are Tax Act, Tax Cut, and Turbo Tax. Tax Act is recommended especially for those filing simple tax returns, or for those who have children in college. This program offers help with preparing financial aid forms for college and developing a financial aid worksheet. Probably the most popular tax preparation software program is Turbo Tax. This program can be used for federal and state income tax preparation, and offers an easy to use, step-by-step system for tax preparation.
As the IRS updates tax return procedure, Turbo Tax will develop new versions of their software. Some tax payers who meet certain criteria (such as making an income less than $52,000 per year) may be eligible for free tax preparation. Turbo Tax has participated in this program by developing software that can be used for free by these individuals. There are also international versions of this program. Tax preparation software requires that users purchase the program, which can vary in price.
There are certain online tax preparation programs that can be used for free, as opposed to purchasing software. Freefile, for example, is in accordance with the IRS, and can be used help fill out forms and checks the accuracy of the information entered.