W-9s and 1040s and Schedule C’s … oh my! It’s easy to feel overwhelmed at tax time. But like many Americans, you can now turn to the Web to simplify the tax filing process.
Tammy Stachowiak of Lyndhurst, Ohio, for example, has e-filed ever since hearing about it in 2008. It not only provides almost-instant gratification (Stachowiak receives her return within two weeks), but also helps with prep work. “When we used the old-fashioned way of filing by mail, there was always some form we needed — whether for school reimbursement or my real-estate business — that we would either have to retrieve from the IRS website or get faxed to us,” says Stachowiak. “With e-filing, I don’t have to try and track down forms I need.”
What resources might work for you and your family? Here’s our short guide to help you get started.
1. Choose the Right Tax-filing Cloud Service
You can prep, file and store your tax documents in the cloud. But which program should you choose to streamline your tax filing process? Compare these popular choices:
• Free File
Cost: Free for federal and state if you made $58,000 or less
Benefit: Free File is a federal e-filing program developed by the IRS and the Free File Alliance (a group of private-sector tax software companies) for eligible taxpayers. Check the IRS’s Free File page here, which lists companies that offer free tax-prep services.
Cost: Free federal; $9.95 deluxe federal; $17.95 deluxe federal and state
Benefit: TaxACT offers a maximum refund pledge, guaranteeing its results and offering product refunds to those who find better tax refunds elsewhere. The deluxe edition walks you through “life changes” that may have changed your tax write-offs, and lets you transfer key information from your prior year’s tax return (e.g., your IRS PIN and stock information).
Cost: Free federal; $29.95 federal and state
Benefit: Those with more complicated tax returns that include anything from homeownership to substantial medical expenses can turn to TurboTax Deluxe on the Web. The site also offers tax prep and filing plans for those with investments, rental companies as well as businesses.
• H&R Block
Cost: Free federal; $19.95 federal and state
Benefit: The main difference between H&R Block and TurboTax is the cost, and according to some reviewers like CNET, it offers a bit more tax guidance. It also offers tax prep plans for homeowners, investors and the self-employed.
Cost: $14.99 federal and state
Benefit: This app offered by TurboTax lets you go mobile with tax filing. If you have a simple return (e.g., 1040EZ), you’ll be able to take pictures of your W-2 forms and transfer the data into your tax return, as well as ensure accuracy before filing.
2. Store Your Tax Filing Paperwork Online
With so many tax forms to keep track of, it’s easy to feel scattered or to misplace necessary items just when you need them most. Use Evernote , a free Web service and mobile app, to consolidate all your tax forms, receipts and other paperwork you’ll need to do your taxes. (Since Evernote is in the cloud, you’ll be able to access your forms from anywhere.) Forms can be added via camera phone, scanner or snail mail, and they can be stored in a central folder tagged “Taxes” for easy future reference.
3. Mind Your Privacy
As online tax filing becomes increasingly popular, it’s more important than ever to keep security concerns in mind. Before using any online tax-filing services, ask yourself the following:
- Is the site secure? If the page URL starts with “https:” when you go to enter your personal information, you can rest assured that your SSN or other personal data is secure. Also look for the “TRUSTe” and “authorized IRS e-file provider” seal on the site.
- Does the site have a green bar? The IRS now requires all sites accepting individual tax returns to display a green Web address bar with a padlock icon. This green bar should feature the legal name of the company.
- Are you protected from malware? Hackers use malware to try to steal information. To ward off such attempts, install an up-to-date security program or subscribe to a Web-based service.
“I’ve dealt with numerous identify theft issues when shopping online over the years, but I still have absolutely no concerns about filing my taxes online,” says Amy Lamare, a Los Angeles-based freelance writer who e-files online each year. “I trust they won’t turn around and sell my information, and it’s saved me so much money!”
By keeping these protections and precautions in mind, you too can move forward with e-filing, knowing you’re protected.