Updated: Jul 16, 2020
It is July 15th, everyone’s most dreaded holiday, Tax Day! Tax Day falls on the same day each year, April 15th. However, the IRS has extended the 2020 deadline to June 15th, recognizing that many people will not have access to their tax professionals or will have difficulty filing their taxes during the coronavirus pandemic.
Large stacks of financial statements and bills fill desks and floors of offices, as they have every April for the past several years. Although some people file their own taxes, the majority rely on accounting/tax professionals or CPA’s to do the work instead. Tax season can get extremely stressful for those who don’t know what to do. Luckily, we have a few tips when getting ready to do your taxes:
Procrastination is the enemy of everything. When filing your taxes, it is important to start as early as possible in the generously given four months, January-April. Most people start the week before and usually miss documents which lead to penalties or aren’t able to finish in time, leading them to pay late fees to the IRS.
Know what taxes to pay
Individuals must file federal, state, and, in some cases, local tax returns; however, not every person has to pay the same taxes. Income tax is undoubtedly the most important part that the IRS looks for. Even in the large grouping of income tax, the rules can vastly differ. For example, self-employed individuals have to fill out very different forms from those employed by third-parties. Another major component of tax preparation to consider is deductions. Deductions are any expenditures that the IRS can claim taxes for. These include medical and educational expenses, home ownership, charitable donations and more. H&R Block has provided a basic checklist for people to use when filing taxes. Make sure to check the link out! https://www.hrblock.com/tax-prep-checklist/what-do-i-need-to-file-taxes/
Remember to record benefits for next year
With the pandemic forcing significant changes to our lifestyles, the government instituted the CARES Act. This $2.2 trillion stimulus package is aimed to help businesses directly as well as offer relief for American households. Since this bill is more inclusive than exclusive, the IRS will determine eligibility by also looking at taxpayer records of 2019. There is additional benefit to those who lost their jobs due to coronavirus or are self-employed. Check this link to see if you’re eligible for any extra funding from the government. https://govstatus.egov.com/ui-benefits/CARES
When filing taxes next year in 2021, don’t forget the benefits you have received and make sure to record them to be tax-exempt from certain areas. The stimulus bill was made to help the American people and it is our responsibility to use this help for our benefits.
Know what products are offered to help with doing your own taxes
The most popular tax softwares used are TurboTax and H&R Block. Here is a little breakdown of how these two programs compare against each other:
Since H&R Block has a more brick-and-mortar presence, it is definitely better if you want in-person support. TurboTax on the other hand only offers their online software. Both of these programs essentially ask questions about your income status, home ownership, family status, etc. and then calculate the taxes you owe. These softwares are very easy to use but TurboTax is generally the more user-friendly of the two on mobile or desktop. TurboTax also has encouraging phrases like “You got this!” dispersed through the process as they recognize that filing taxes can be extremely stressful, offering a much-needed mental boost.
When it comes to pricing, both TurboTax and H&R Block are on the pricier end but their services are definitely worth it. H&R Block is less expensive and covers more forms and schedules with its free option but both programs’s free options are very limited. Filing taxes for free sounds amazing but the average filer usually needs to upgrade as the free options don’t have enough forms. TurboTax’s lower options offer more than H&R’s, but H&R’s prices on average are still lower.
Overall, TurboTax is usually better than H&R as it offers more in the same tier than H&R, but when only comparing free services of both companies, H&R Block’s free service has more to offer. There are other companies that offer online services as well so be sure to check those other softwares out and compare their benefits and prices to find what works best for you!
Tax Day can be pretty stressful for most people but it doesn’t have to be if you follow these basic rules. Comment down below what programs you use and your experience with them so others can better understand what these companies have to offer. Good luck!