Your Guide to Tax Preparation Services
Ever since there was the serf and the king there were taxes. When the United States originated there was no income tax. Taxes came from the sale and tax of goods. However, in 1862 Congress enacted the first income tax in order to help pay for the Civil War. Taxes were based on the income of a person. Those making more money paid a higher rate. In 1866 the IRS collected $310 million.
Income taxes were not permanent, however, until 1913. The 16th amendment of the Constitution gave congress the ability to tax individuals and corporations. With this people have paid taxes ever since.
What Are Tax Preparation Services?
With the fluctuating percentages that people must pay and the paperwork involved tax preparation services were born. You can file your own taxes, but depending on your type of business, revenue streams, deductions and other factors you may opt to work with an accountant. Many people have personal accountants. However, since tax season generally lasts from January through April 15th, tax preparation services have come about for the rest of us who don't have accountants on staff.
How Do Tax Preparation Services Work?
You can choose to walk into an office or open up your laptop. If you're familiar with tax laws and have only one job then you may not have a lot of questions. If you're not as familiar with the tax code, have multiple jobs, multiple deductions, many dependents and work in many states then you will want to work with someone who knows the tax codes inside and out. The question is, does that someone have to be a person or can it be a software program?
How Do Online Tax Preparation Services Work?
With an online tax preparation service you will most likely be greeted with a series of questions about who you are and how much money you made last year. The questions will take you through all the paperwork that pertains to your situation. These programs can be time consuming, but are often free. You encounter service charges when you chat with customer service.
How Do Chain Tax Preparation Services Work?
When you want to work with a person you can head to one of the many pop-up tax preparation stores. Here you can make an appointment or walk in to meet with a tax preparer. The preparer will work with you to go over all of your paperwork and make sure that you are filing all the right forms. You can sometimes walk out with a check for your refund, minus fees, that day.
What Should I Look For in a Good Tax Preparation Service?
When you are deciding who to work with you want to look at their company. As your taxes are kept on file with the IRS for seven years, and you can be audited at any time within those 7 years, will the company that you worked with be there for you? Some of the other things that you want to look for include:
- Is your file encrypted if it is sent over the internet
- Do you get a printable copy of your tax returns
- How long does the filing take
- Does the tax preparation cover federal and state taxes
- How long does it take to get a return
- Is there a red-flag monitor
- Is there insurance if you are audited
- When can you contact customer service
What Are The Tax Preparation Laws?
When you are trying to determine which service you should choose and you have questions you can reference the IRS online. The website for the IRS will go over all of the different forms that you can think of. They will help you pay bills and file your taxes. You can read up about all the latest news that relates to you as a tax payer. The more that you know, the better prepared you will be.
How Much Does Tax Preparation Cost?
Some online tax preparation services are free, while some charge certain fees. What you want to look for that could give one company an edge over another would be:
- Can you eFile
- Is there a tax refund loan
- Do you need to purchase software
Why Would I Need a Tax Preparation Service?
Taxes can be confusing. You do not want to get anything wrong on these as a missed deduction can cause you to miss out on hundreds of dollars. You also do not want to run up against the chance that you will be audited. You work hard during the year, pay your taxes and keep your nose to the grindstone, don't let a misplaced charitable deduction cause an audit six years down the road.