Under the term of tax preparation one understands the process of tax return preparation by a person other than a filer and usually for some compensation. There are many ways to prepare one’s taxes and some people prefer to do it themselves (especially if a tax return is simple and contains one page) or apply for professional help – licensed attorneys and public accountants and etc. Many taxpayers find it easier and more convenient to employ tax preparation software or resort to various online services.
In some states there are no special requirements for those who prepare tax returns either for free or for fee, in others there are licensing requirements. The Free File Alliance is one of the most popular tax preparation software that offers free of charge tax preparation for all the individuals with income not exceeding $58,000. It is also possible for people with larger incomes to do their taxes with Free File Fillable Forms but they are just forms and not provide any assistance with calculations and so on. Both and aforementioned forms and software can be accessed through the IRS official page at www.irs.gov/freefile.
Among the most popular tax preparation software are:
- H&R Block at Home
It is one of the most highly in demand software tax preparation products and about 25 million taxpayers chose to opt for it in 2012. Besides, in accordance with the recent data, half of the e-filed returns are filed with TurboTax.
It offers tax preparation packages for federal and state tax return preparation for 43 states (where state tax is imposed) and also does federal tax returns for the rest 7 states with no state income tax. Thus, Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming file only federal returns.
It is important to understand that in order to prepare state tax return (for those who need one) it is necessary to prepare the federal one first – as the data is transferred from it. It is not possible to do it otherwise with TurboTax or any other tax preparation software.
Texas has no income tax and therefore Texas residents file only federal income tax returns and skip the section that refers to the state.
Tax returns show how much a person owes to the state in taxes and it also can show that throughout the year this amount was overpaid – this means that a person is eligible for a tax refund. This is also one of the reasons why people tend to apply for tax preparation online companies and software assistance – the latter make everything possible for the refund to be positive.
As soon as tax return is accepted by ISR, it is possible to track the refund. Tax refunds are usually repaid at the end of the fiscal year.