How To Choose Great Online Tax Preparer Software

When people look for Online Tax Preparer software, they need to consider various factors. Choosing the right tax software option is vital to maximizing a tax refund after all. Therefore, individuals must focus and search for their best tax preparation solution. Each person is going to require something slightly different from their online tax prep service.

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Safety Concerns with Online Tax Preparer Software

TurboTax 2013 from last year provided ample safety measures. Unfortunately, not all preparation services take safety seriously enough. The last thing a person wants to do is lose their personal information. Others have become victims of identity theft and lost their returns. The best tax prep options implement strict safety protocols today.

Tax refund theft continues to grow at an alarming pace. More taxpayers find themselves victims each tax filing year. While tax prep companies try to combat this fraud, cases will slip through the cracks. By choosing the safest option, taxpayers can minimize their risk of becoming a victim.

How To Choose Great Online Tax Preparer Software
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These days, people tend to prize convenience and efficiency over other factors. It’s important to check out a tax service’s extra features. Turbo Tax 2013 was prized for its variety of useful features. Typically, such features aren’t core to the tax filing experience. They do, however, provide certain taxpayers with extra tools that can be used for various purposes.

In the end, consumers must consider price and a handful of other factors, too. TurboTax is often considered the best Online Tax Preparer Software available today. Anecdotal and usage figures seem to support the validity of this idea. Still, each taxpayer needs to find the tax preparation service that’s right for themselves.

The U.S. Corporate Tax Rate

Is the U.S. Corporate Tax Rate the Highest in the World?

There is a popular belief that the current corporate tax rate in the country is very high, and a reduction of the prevailing rate will stimulate investments which will have a wide range of positive effects on the economy. Those who support this theory are referring to the current rate which stands at 39.1% (the highest in the industrialized world). According to proponents, this income tax rate is putting U.S. corporations at a competitive disadvantage. But is there more to the story?

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The truth is that US companies pay the highest corporate tax rate, but the vast majority of them have perfected the art of not paying it. According to official government records, the amount of corporate tax collected by the government has reduced significantly over the years. The ratio of the corporate tax paid to the total pre-tax profit earned by US corporations is the lowest in history.

U.S. Corporate Tax Rate
U.S. Corporate Tax Rate (Photo credit: Wikipedia)

A recent report by the CTJ (Citizens for Tax Justice) had some shocking revelations. The organization analyzed the federal income taxes and pre-tax profits of 288 Fortune 500 corporations that recorded huge profits for the five years leading up to the year 2012. The following are some of the findings:

While the federal U.S. corporate tax rate stands at 35%, the 288 most profitable companies only paid a tax rate of 19.4% over the 5-year period. What is more shocking is that General Electric, Boeing, Verizon and did not pay any federal income tax over this period. 93 corporations (33.3% of those analyzed) paid a tax rate of less than 10% over this 5-year period.
Of the 288 Fortune 500 firms, 111 paid at most zero percent taxes for at least one year during this five year period. What’s interesting is that these corporations had a pre-tax profit of $227 billion, but paid no taxes. Whatever, the corporate tax rate in the country, the big companies usually find ways of paying less than they are required to.

Tax Deductible Items

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Tax deductions are a great way to save money on regular purchases within certain categories. The standard deduction alone saved some 85 million American’s a little over 0.5 trillion dollars in 2009. But the real way to claim deductions is by filing a Schedule A along with your 1040 long form. Categories of deductions available on the Schedule A include Medical, Taxes, Charity, Education, Mortgage and Causalities.

Deductions for Medical Expenses: Medical expenses are deductible on your tax return once you clear a certain level of your income in expenses, 7.5%. For this reason it is a good ideal to group major medical procedure in the same year to allow for them to be deductible. Items such as doctor’s bills, hospital visits, operations, prescriptions, premiums, and health care for dependents are deductible.

Taxes for State and Local: The state and the local government in your area collects income taxes, that’s the bad news. The good news is that the Federal government allows to deduct these tax expenses. Check the IRS website for a list of local and state taxes that you can deduct as not all taxes are deductible. TurboTax also is a good resource for what taxes you can deduct when preparing your tax return.

Charity Donations: Donations to charitable organizations, such as churches, are deductible without limit. When you provide transportation for a charitable event you can deduct the mileage. And when you purchase a ticket to a charitable event that is more expensive than the value of the service or entertainment provided, you can deduct the difference. Keep records of all your gifts.

Education Expenses: The federal government wants to support education and therefore gives tax deductions for expenses incurred while obtaining education degrees. The rules have changed recently with ARRA (the American Recovery and Reinvestment Act) but generally provides $2,500 per student in deductions for education.

The Advantages and Disadvantages of Tax Preparation Software

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The Advantages and Disadvantages of Tax Preparation Software

It is often said that the medium is the message. This reminds us of Franklin D Roosevelt and his famous ‘fireside chats’ with the country. In an era where the television set did not exist, the radio was a great device that enabled conversation with the Americans. Through the radio, he could send his assurance to the American citizens’ homes and become one of them. A radio chat was definitely more effective and much more intimate than other mediums, like say, a grandstanding speech. It is certain that the medium, in this case, was the message itself.

In the 21st century, we are faced with something that is as real and a mandatory part of our lives: tax preparation, or, rather, tax preparation software. It is unfortunate that this particular medium appears to be giving out mixed messages, even if vendors and software programmers would have us believe that tax preparation can be carried out fast and without errors, and that all it takes to produce a tax return which would be considered impeccable by the IRS is a single ‘click’.

If it is that simple, why does it give off mixed messages? Tax preparation software has always been criticized on the grounds of having a “one-size-fits-all” approach. The critics of tax preparation software, especially businessmen, are doubtful as to the possibility of squeezing in an overwhelming number of codes and regulations into an interview lasting half an hour. Waving aside the tall claims made by software programmers, the critics of tax software opine that tax software is capable of incorporating only the most general set of credits and deductions, consequently making the taxpayer the loser. The critics maintain firmly that the sins of omission and the unasked questions work in favor of the IRS and in extreme disfavor of the taxpayer using the tax software.

Let us take a moment to ponder over this situation. A séance is being held by a medium. The medium is striving to establish connection between you and the other side, when the other side is equally willing to connect with you. The medium is most likely to ask leading questions; she would read between the lines and make general comments which would apply to almost anybody; however, those taking part in the séance would interpret the comments as unique ones applying exclusively to themselves and their lives. An ally of the medium would vouch for the idea that the séance is sure to bring in some wonderful news from the other side, thus boosting the credibility of the séance and the medium.

The way critics look upon the working of the tax software is much the same as the way a charlatan operates in a séance. These programs are designed with all kinds of businesses in mind, though the same tax deductions questions are asked for all of them, with some amount of modifications, in each case.

Being asked to specify the nature of your business before the commencement of the interview process might make you feel you are unique. However, although the software vendors would have you believe that purchase of their top-notch programs would give you access to all credits and deductions, this is hardly the truth.

The critics firmly maintain that if you believe what the software vendors want you to, you would only believe that you are getting good news with respect to credits and deductions. However, similar to the charlatan medium and its self-fulfilling prophecy, you would obtain what you seek. You need to think differently and hire the services of a professional who is qualified to understand things clearly and prevent you from overpaying your taxes. So a critic of tax preparation software would invariably react to the software as follows: ‘Let me contact my accountant’.

Several critics of tax software believe that all software related to tax preparation is better avoided. They believe that if you depend on the tax software, you end up losing thousands of dollars. However, on the other hand, an active investor, the owner of a business and possessing a considerable portfolio of stocks, might not agree. A number of very efficient programs, internet and computer based, are available, which are capable of handling multiple entries with ease. You wouldn’t need to hire the services of an accountant to file your returns, except in the cases of exceptional situations, for example, unique tax circumstances. These investors consider the tax preparation software to be good, rather, something that has the best intentions but has some way to go before it can quite be there.

If you are one of those taxpayers who file straightforward tax returns, and probably receive dividends from W-2s from your workplace and mutual funds, you could resort to tax preparation software in order to calculate your returns fast and in an error free way. The software would calculate your returns and you would be notified of problems, if any. Capable tax software would help you e-file a federal and state return for as little a cost as less than $16. You can unhesitatingly tick the box beside a unique individual who is outside of any unique tax circumstances.

However, things need not necessarily be so smooth and nice, if the tax preparation software you are using does not provide user friendly, detailed guidance for the beginner or inexperienced taxpayer. The guidance that the tax software provides should ideally be free of jargons, and the right kind of program would come with the necessary tools and capabilities, helping the user to complete the tax return filing process accurately. Ideal tax software would have user friendly drop-down menus, coupled with a fast and easily accessible online service. The best of the tax software should be equipped with a combination of user friendly customer service and beneficial tax tips and advice.

It is unfortunate that it might prove to be a self-defeating exercise to use the free of cost unsuitable tax preparation software available in the market, as some of them are meant for people who file comparatively simpler tax returns of gross incomes of $34,000 or less. Some are slow and not so easy to use, while some again, are, including both interview-style and forms based inputs. When a user purchases tax software, it usually comes in the same package with technical support of the vendor, the vital element missing in the free software. Those who use free software are usually not very comfortable with the computer and are thus more likely to be faced with a lot of errors and problematic situations during its use. Their opinion about this medium is that its intentions are good but it has lost the plot.

So, tax preparation software has both advantages and disadvantages, giving off mixed messages. If we overlook the disadvantages, most of us would admit that it is speedy, accurate and almost error-free to file your tax returns through tax preparation software. However, the diehard critics of tax preparation software would never accept it as a medium to communicate with the IRS.

How to Find Your Tax Assistance?

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How to Find Your Tax Assistance?

It could be a nerve-racking experience to organize your taxes. That’s why many people prefer to have some assistance in their tax preparations.

During your tax filing, you can always find an expert who can help you with that job. Look for somebody who has got very good knowledge of tax preparations. You can find various types of assistance regarding this from people with different specializations.

Tax preparer

Tax preparers have good expertise in tax filing. These people are trained professionals for tax preparations and filing returns.

Enrolled agents

The enrolled agents can even present an assessment of your taxes apart from preparing them. They are more advanced than tax preparers. However, different agents will have different levels of skill set and work ability.

Certified public accountants

Above and Beyond preparing your taxes, a certified public accountant (CPA) can help you in reducing your tax payments. Their service charges are much higher. They sometimes charge on hourly basis and you may even have to pay USD 200 to USD 300 per hour. However, most of them are worth paying that charge. You can get to know all necessary details about taxes from the CPAs. They provide ways for you to save money on taxes legally.

While deciding which type of assistance to choose, you should first look at your financial situation. In the case that you have a small annual income, then it’s better not to hire a professional with a bigger service charge. So you can choose the one that fits your budget.

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Do you Understand the Tax Changes in the Recovery & Reinvestment Act?

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Discover the #1 Way to Reduce Your Taxes

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