who have owned a tax preparation business for a very long time. At one time I even worked for them helping to prepare returns, and to assist with other year round accounts. This is the first year that I have prepared my own taxes in over 20 years.
At first I thought about doing them by hand, but I also knew that there were some issues where I wasn’t quite clear on, especially when it came to life changes, such as a divorce or how to handle education credits, as I and my youngest daughter are both in college. I did some research and discovered, to my surprise that one can get simple federal returns done by a variety of privately owned companies for free. They do tend to charge for state returns, and those fees seem to vary. One can file directly with the SC dept of Revenue’s website if they choose. http://www.sctax.org/Electronic+Services/FastFile/freefile_free.htm There are certain guidelines that must be met to qualify to file that way, but it lines up with Federal guidelines for federal filing standards. The IRS has the capability of filing simple returns at their website as well, or provide a list of private companies that can do your federal and state returns for you http://www.irs.gov/efile/article/0,,id=118986,00.html?portle=6 .The fees at private sites range from free for simple federal returns and go up depending on your tax needs. The IRS site has a list of companies one can choose from.
I opted to use a private service because I was under the impression that I would need to itemize, thus putting me right out of those “free tax returns” bracket. I ended up not needing to itemize this year, but I was thankful for all the steps the online software put me through to ensure that my information was correct. It took me an hour to submit all my financial information and get things filed. I didn’t yell, curse or pull out any hairs during that hour which did surprise me a bit. Within a week, I saw that my Federal refund had been deposited into my bank account. I am waiting for the state still, but I suspect it will show up next week. The whole process, while not free, cost me a whopping $18. Several days later I did Megan’s return. She owed a small amount, but the filing fee was only for her state return was less then for filing my return. Paying for her small tax bill and our two returns cost me just over $50.
While my tax returns were fairly simple this year, I was not aware of some tax credits that I was qualified for if I had done them the old fashioned way. To me filing online with a private service was well worth the money spent. I also got my refund back a lot faster then if I had filed the mail in method.
While I know that tax services to help a lot of people do returns, especially if they aren’t quite as knowledgeable as I am about them, or if they have complicated returns. For those more in depth returns, I highly recommend getting a professional. Issues such as rental properties, investments,and different types of businesses can be a bit daunting and a tax professional can be a great help. With all the software options out there, more people can do their taxes themselves which can save quite a bit on preparation fees. It is understandable wanting someone to double check things, especially for those returns with more details to be concerned about. Paying a large fee for professional help is not necessarily needed for simpler returns, even if one itemizes like I will next year. There are less expensive ways, as we have already seen.
I still wonder why people spend such large fees for simple returns. The main reason, I suspect, is that people are under the assumption that they get their refund money back faster by getting refund anticipation loans. The reality is, that if one is due a refund and they pay electronically, they’ll be getting money in as little as a week if they direct deposit, two to four if they have the refund mailed to them. If they do the refund anticipation loan, they get money up front, but after the interest and fees from the filing and the loan are satisfied. I just don’t understand why people think it is better to pay over $150 for a process that they can do themselves for nothing using great secure, online services. Those free services are often provided by the same companies that have no qualms about charging you a lot, if you want to get money right now.
I realize that many will be waiting until the last minute to file, while those who are getting refunds want to temporarily increase the size of their bank accounts right now. Filing taxes is one of those life events that no one really enjoys but must be done anyway. We can grouse about how much we have to pay every year, and gripe about the small size of our refunds, (unless we get a larger one) but we really do get quite a bit of bang for our buck with those taxes, despite some poor decisions made by those we tend to elect to delegate those funds. Our taxes help keep our infrastructures working as expected, our educational system educating as we desire, our safety issues such as police and fire protection running smoothly, our arts outlets continuing to give us outlets for beauty and creativity, our natural spaces kept beautiful and accessible and much more that we often never even consider. We should consider it a privilege to contribute in our small ways to maintaining all that keeps our communities the wonderful places that they are. Even when we get large refunds many of us put funds right back into local and state tax revenue bases in the form of sales taxes for purchases. Those taxes help fund schools, libraries, recycling facilities, and fire stations among others. While we gripe about the process of paying taxes and filing returns, let us also be just a bit grateful that those taxes, some of which we may get back in the form of refunds, has helped all of us have a far better quality of life then we often realize or appreciate.