Anyone who pays taxes knows they’re complicated. And with the ever-widening tax brackets, numerous deductions, and other nuances, it can be challenging to figure out how much money you’ll owe and then how to pay it.
That’s why so many people turn to tax software programs like TurboTax or Tax Cut to make things easier. But with so many choices available, it can be a challenge to know which tax software for tax professionals is right for your needs.
Here are some helpful tips for choosing the right professional tax software for your personal or business needs.
What is a Tax Software?
Tax software is a program that helps you prepare and file taxes on your annual income. They usually have a variety of different options to choose from, including online options, software for tablets, and mobile apps. There are many different types of tax software, including tax programs, software for individuals, and software for small businesses.
How Does Tax Software Work?
A tax software program will help you file your income tax return based on your income taxes that were filed last year. This will give you an idea of what your taxes are likely to be for this year.
Your tax software program will help you understand your annual income and deductions, as well as any applicable tax credits, and will let you know if you have to file a return or if you can choose to pay a lower rate. Your tax software will also let you know if you have to file an income tax return at all, and which federal income tax bracket you fall under.
These details will allow you to plan and determine if you need to file a return at all, as well as if you’re required to file a return in certain circumstances.
Tips for Choosing the Right Professional Tax Software
Take Into Account Your Company’s Needs
Most people who use tax software have businesses to help with their taxes. But there are plenty of situations where personal use taxes are needed, too. If you need to file your state’s individual income tax return, you may need to use a different tax software than someone who runs a business.
In some cases, the company that makes your tax software may not be right for your business needs. In those cases, it’s important to think about your company’s specific needs before choosing tax preparers software.
Know Basic Taxation
Before you choose tax software for tax preparers, it’s a good idea to know basic taxation. This will help you identify common problems and understand which taxes may apply to your business or personal income. For example, many business owners are surprised to learn that income earned from a rental property is subject to income tax even though the property is located in the same state as the business.
The same goes for business expenses like travel and entertainment expenses. To get an accurate sense of how your business is taxed, you should speak with an accountant or tax attorney. An accountant can prepare a detailed tax analysis to help you decide which filing status is right for you and your business.
Likewise, if you have questions about your tax return, speak with your tax attorney. These professionals can help you understand your particular situation better and recommend the right course of action.
Learn About Your Options
You may want to look into the different editions of your tax software to see which one best meets your company’s needs. That’s because each comes with different features and tax implications. When choosing tax software, it’s also a good idea to examine how easy it is to use.
Easy-to-use means two things: It has to be easy to set up and use, and it has to be user-friendly. Some features, like the ability to create pass-through entities for small businesses, are nice for individuals, but may not be necessary for a business.
Research Tax Software Features
After deciding on specific tax software, it’s important to know its specific features. Topping that list is the ability to quickly and easily create a personalized tax return. That’s particularly useful if you’re going through a tax filing process with a tax professional.
You may also want to look into the software’s ease of use. This refers to how easy it is to navigate through the app, as well as how straightforward the information is to find and select from. A good place to start is by looking at how other people use the software.
That will help you see if there’s anything specific you need to look for, or if the ease of use is something you can live with.
Don’t Just Turn to the First Tax Software You See
The first tax software you investigate may have good ratings on review websites like Google, but that doesn’t mean it’s the best choice for your needs. There may be better tax software out there with better customer service, or that has a special deal you can’t miss.
While it’s always a good idea to start with the most popular tax software, it’s also a good idea to take a close look at the others as well.
Take a Look at the Company’s Reputation
If you’re thinking about using a particular company’s software, it’s important to know how they’re rated. The Better Business Bureau is the main source for this, but other rating agencies are also worth looking into.
You may want to look into companies’ reputations for two reasons: first, to see if they’re trustworthy, and second, to see if there have been any complaints about their tax software. A bad reputation may lead to bad customer service, a lack of support for account issues, and the inability to get a tax filing done quickly.
While it’s always a good idea to speak with a customer service representative whenever you have a question, if you don’t feel comfortable doing so, it may be a sign that the company has a bad reputation.
Find a Coupon Code or Offer
Some companies provide special offers when you file your taxes through their software. To be safe, check the fine print to make sure the offer doesn’t apply to another set of circumstances. You may also want to check if there is a special offer for new customers.
New customers are usually offered a free trial and then have the ability to cancel at any time for no penalty. It’s a good idea to read the fine print of any deal you decide to take, because some companies may require a small purchase to get the special deal.
Ask Help From Tax Experts
When you’re trying to choose the right tax software for your situation, you should ask for help from tax experts. This is especially helpful if you’re not very familiar with tax law or don’t have an accountant or tax attorney on staff.
The best tax experts are certified by both the IRS and the American Institute of Certified Public Accountants (AICPA). To find a tax expert near you, check out International Tax Help. These organizations provide free tax assistance to people living outside the United States. You can also search the Internet for “tax help” and “how to get help.”
Consider Your Budget
Once you’ve chosen the right tax software, it’s important to consider your budget. This will help you determine how much you’re willing to spend on the program and what you’re willing to sacrifice in return.
Keep in mind that even though many tax software programs provide advanced budgets, you should aim for simplicity. This will help you focus on the taxes you’re responsible for paying rather than having to figure out which expenses are budgeted but not covered.
For example, a simple tax software program with an advanced budget might cost $100, but if you end up spending $80 on it and realize you could have spent that money on groceries or school supplies, that tax software program doesn’t come close to satisfying your budgeting needs.
Benefits of Tax Software
Increased Compliance and Simplicity
One of the biggest benefits of tax software is increased compliance and simplicity. With tax software, such as those offered by Ultimate Tax, you won’t have to manually enter and calculate every tax deduction and line item. This will save you time, as well as headaches, and will help you increase your chances of getting a higher tax refund.
Paying Less Tax
Another benefit of tax software is paying less tax. With tax software, you won’t have to spend as much time researching your tax deductions and Form 1040A, 1040EZ, or 1040A. This will help you save time and money, and will save you from missing out on important tax breaks.
Better Financial Planning
Tax software can also help you better understand where your money is going. For example, if you have a high income, you may be able to take advantage of the K-1 Capital Gains Rule to defer taxes on some of your earnings.
With tax software, you can look up which income tax break you qualify for, and then see how much to Deduct and from which income source you can take advantage of the K-1 Capital Gains Rule.
Choosing the right tax software can seem like an impossible task, but with these tips, you’ll be well on your way to making the right choice.
When it comes to choosing the right tax software for your needs, it’s important to take your company’s specific needs into account, as well as the software’s features. That way, you’ll be well-suited for all types of business tax situations, no matter what type of business you run.
After you’ve chosen the right tax software for your situation, the next step is to make sure it does the job. This is because different tax software programs have different features and functions, and you need to make sure your chosen software can effectively tackle all your tax issues.