Software for Tax Deduction

Assessment time could be a real hectic time for all taxpayers, whether they are employees or businessmen. One of the important aspects is knowing where and how to show all the deductibles. Ignorance could make a taxpayer miss out on some hefty deductible from the income tax. This is where tax deduction software could make the task a whole lot easier.

There are many such tax deduction software packages available in the market today. Most of them are website based, while a few of them could be loaded as independent programs on the hard disk itself.

Let us see some of the most popular tax deduction software packages in vogue currently.

1. Complex Tax Returns – Tax deductibles can become very complicated if the taxpayer has invested in several concerns such as a business, rental properties, partnership deals and stocks. In this case, the best software packages are those that can handle multiple entries, such as TurboTax Premier and Complete Tax. These are predominantly website based tax programs, but TurboTax has a PC installable version also. TurboTax specializes in deduction for rental incomes while Complete Tax could boast its capacity in importing capital gains entries directly from Gainskeeper. The degree of convenience and timesaving this provides for the taxpayer is not necessary to describe.

2. Simple Tax Returns – These are suitable for people who are getting interests from banks or dividends from mutual funds and W2s from the job. In such cases, Tax Act is a very good software package which calculates the returns. One great feature is the reporting this program provides about any possible penalties. This is not a free package, though. The website based version costs $7.95 to e-file a federal return and an equal amount for filing a state return. Similar to Tax Act is the Snap Tax. Features of this package include the automatic filling of the Form 1040-EZ in less than a quarter of an hour and e-filing the returns in about a half hour.

3. Special Tax Scenarios – It is not possible to have one single software package that could cater to all possible taxation situations prevalent in a taxpaying economy. Turbo Tax Premier is the best in a diverse range of situations, but even that would need a lot of input from the taxpayer him/herself. The ideal solution for unique tax situations is to seek help from a tax professional.

Mention should also be made of the free tax software which the IRS itself has built in collaboration with various reputable software companies. Such software packages are available only to people meeting some eligibility criteria. Included in the list of free tax software packages available are:- Complete Tax – This provides a web-based free interface. Free File – It is named so because it prepares and e-files the state returns for no extra charges. Tax Act Online – This is considered to be the fastest among all tax deduction programs. Tax Engine – This is freely available tax deduction software. It has the least eligibility criteria for its access. However, one would have to pay a fee of $10 to prepare a state return. One feature on this is the option of using an interview style or a form style of inputting data. H&R Block Free File – This can be used if the adjusted gross income is less than $34,000. This only helps people with simple tax returns. The costs of preparing state returns are about double to triple of Tax Engine.

The general requirement for using Online Taxes is if the taxpayer has an income of less than $150,000.

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