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How People Prepare Their Taxes

By Edited May 23, 2014 0 0

Individuals employed in the workforce are required by the government to pay income tax on the money they make each year. The government provides a few months for a person to complete their tax return from the previous year before the tax deadline of April 15. There are several different avenues for people to use when preparing their tax returns, making it possible for them to choose an avenue that makes them feel comfortable and is easy and convenient.

Software programs that assist people in preparing their taxes are extremely popular since they allow customers to file their taxes online with both the federal and state government. These programs ask individuals questions about the money they made last year. Once the program has all of the information it needs based on your finances, it automatically calculates the data and presents the amount owed to both the federal or state government. This makes filing your taxes simply and easy.

Using tax software is beneficial since most homes have at least one computer on which the software can be loaded. This makes it easy for an individual to file and prepare their taxes from the comfort of their home. Allowing the software program to do all the work prevents many errors from occurring on tax returns since the computer correctly adds, subtracts and does other functions as well. In fact the error rate for online taxes is only three percent while 17 percent of paper forms contain an error.

When the government first started collecting taxes, they were figured using paper and a person's brain to add, subtract, multiply and divide. This option still exists, though the invention of the calculator in the 1960s makes this easier since it figures and completes mathematical equations. Older generations of Americans generally use this method to prepare their taxes. Most were filing taxes using this method for many years prior to when e-filing became available in the 1980s. They continue to use this method since it's familiar to them. Many lack the experience and expertise of using a computer thus they believe they may be more inept to make a mistake. In addition others have security concerns about providing their personal information and data over the internet.

The third and final way to prepare your taxes is to hire and use the services of an accountant or tax professional. Some of these professionals work independently while others choose to work for large tax companies. They gather all the financial information an individual has for one year and figures out how much they owe in taxes based on their income and any deductions they qualify for.

Some people choose to use a tax accountant since they are more knowledgeable about changes to tax legislation and are less likely to make mistakes. Others have investments, gifts or other financial situations that make it hard for them to prepare their taxes on their own, thus they need the assistance and expertise a tax professional provides.



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