Feb 20, 2018

Figuring Out the Best Way to Prepare and File Your Taxes

It's that dreaded time of year again - tax season! There's nothing fun about it. Even getting a refund has its downside, namely that you overpaid the government and didn't earn interest on the money you're getting via refund.

So let me try to make things a little easier by helping you figure out the best way to file your taxes. As with most things in life, this isn't a one size fits all kind of thing. Instead, you'll need to take your own particular circumstances into account as you keep reading.

Figuring Out the Best Way to File Your Taxes | Chief Family Officer

EZ File from the IRS

If your income is under $66,000 and your tax return is pretty straightforward, you should definitely consider using one of 12 programs to file your tax return for FREE through the IRS's Free File Alliance. Here is a list of what you need to get started. It's basically the obvious documents, like your W2 and 1099 forms. Depending on your income level and where you live, you might even be able to complete and file your state tax return for free as well.

DIY Tax Software

Don't be put off by the DIY part of using tax software. Programs like TurboTax, TaxAct and H&R Block are designed to walk you through each step of filling out your tax returns. Even better, the cost for each program is based on how complicated your taxes are, so you don't pay for what you don't need.

When you use tax software, you answer questions that the program asks you, so you'll need to be able to provide the answers. Because of this, you do need to be somewhat detail-oriented and patient, and have the necessary documents at your fingertips. It's helpful (but not necessary) to have a basic understanding of how income taxes work, i.e., a general idea of what's taxable, what deductions are, etc. Usually there is a way to get specific questions answered, whether it be through online chat or a forum. The different software companies have different guarantees, but often they guarantee you're getting the maximum refund and include audit support in the event you are audited.

These programs tend to be very cost-effective, ranging from free for basic returns to approximately $150 for business tax software. Personally, I switched last year from using a CPA (discussed below) to TurboTax (recommended by WireCutter). For a few hours of my time, I saved about $800!

Tax Prep Companies

I don't really know what to call companies like H&R Block and Jackson Hewitt, but they're places where you can bring your documents and they'll help prepare your tax returns for a fee.

I don't know how trustworthy these services are, but I think they can be useful if your taxes aren’t too complicated but you lack the confidence to use the self-directed software programs discussed above. Perhaps the biggest concern is the competence of the person assigned to help you. Ask about their background and make sure they didn't just go through a surface-level training program provided by their company. You're paying for their services, so you have the right to ensure that the person assisting you has at least some background in accounting and tax prep. Also about what guarantees they provide regarding accuracy and refunds.

These services come with various guarantees and seem to be competitively priced. They also frequently offer advances on your refund so you get the money faster than you would from the IRS, but be careful of these. Make sure you know what fees, if any, they charge for these advances, and what the consequences are if the IRS reduces your refund amount.


A CPA is a Certified Public Accountant, which means he or she has a certain level of training in accounting and had to pass a rather difficult test to get certified. Of course, this doesn't mean every CPA does a great job. The best way to find a good CPA is to ask for recommendations from friends and family, and be sure to find out the CPA's qualifications. Find out how long they've been preparing taxes, how many of their clients have been audited, how they handle audits, etc. Also, be sure to find out the CPA's rates, which can vary dramatically. One friend paid her CPA a couple hundred dollars, while I was paying ours almost a thousand. Of course, she didn't trust her accountant enough to recommend him, while I had complete faith that our return was prepared properly.

If you don't have the confidence or time to prepare your own taxes, especially if they are on the complicated side, hiring a CPA can be a worthwhile expense. And if the cost exceeds a minimum threshold, you can even deduct the amount you paid the CPA next year.


VITA stands for Volunteer Income Tax Assistance and is a program where IRS-certified volunteers provide free assistance to those with lower incomes and/or who need help understanding English. I'm fond of this program because I was a VITA volunteer when I was in law school, and got to help many people who didn't know how to fill out their 1040.

TCE stands for Tax Counseling for the Elderly and is a program that provides free assistance to those over the age of 60.

VITA and TCE centers are frequently located in community and neighborhood centers. I recall volunteering at a church once. Find a center here.

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