Paying To File Taxes

Should you be paying to file your taxes? After all, there are options out there that allow you to file for free. Why would you pay to file when you can use those options? It really just depends on your finances and your filing preferences. There are pros and cons to both free and paid tax filing options.

Free Tax Filing Options

The easiest way to avoid paying to file taxes is to use the IRS Free File website. You’ll discover that there are two options there for free filing, depending upon your income. If you earned less than $72,000 in 2020 then you can use a free online tax filing tool that works in partnership with the IRS.

This allows for free guided tax preparation. The tool does all of the math for you. And in some cases your state taxes will be free to file as well.

If you earned more than $72,000, though, then you can’t use this free online tax filing tool. However, that doesn’t mean you’re stuck paying to file taxes. Instead, it simply means that you’ll hav to do the work manually. You always have the option, at any income level, to use the available IRS tax forms, do the math yourself, and submit them to the IRS without paying any fee.

Other Free Tax Software Solutions

The IRS Free File option isn’t the only free online software option for filing taxes. You can find a variety of others, as long as you only need to do simple tax filing. If you have one steady job and not a lot of deductions or other unusual situations, then it could be worth it to check these out. Credit Karma, HR Block and Turbo Tax all have free tax filing options for people with very simple taxes.

Why Paying to File Taxes Online May Make Sense

If you earned less than $72,000 then you have full access to the tools that make it easy to file taxes online for free. However, taxes are complicated. If your only free option is to use those forms and do the numbers yourself, then you may find that it’s worth paying to file taxes. You can use similar tools, as well as ones that are even more advanced, to simplify preparing and filing your taxes online.

If you’ve always paid for a certain service, then you might simply find it more convenient to do so. For example, I personally use TurboTax to file my taxes. (This isn’t a sponsored post; it just happens to be the tool I use.) This year, I made less than $72,000. Therefore, I could have used the free filing option. However, TurboTax already has all of my previous years’ information stored in their system. So, for convenience sake, I went ahead and used their online software again.

Should I have done that? The frugal answer is no. It probably wouldn’t have been that much more inconvenient to file with the free online tool. But I wanted to save the time and do what I know. For me, taxes are a stressor, and getting them done in the way most familiar to me was worth it. However, if I wanted to save the maximum amount of money, then I would have used the free tool.

When Your Taxes Are Complicated

It isn’t just that Turbo Tax had my information stored. It’s that my information is complicated. As aforementioned, Turbo Tax actually does have a free version. However, I can’t use that one because my taxes aren’t simple. I’m an independent contract freelance writer. I had over a dozen different businesses that paid me in 2020, including some that are just royalty payments. Plus I received a variety of grants and other assistance. This isn’t simple. And when taxes aren’t simple, sometimes paying to file taxes makes a lot more sense than spending hours and hours just trying to figure out the right forms to use to file, let alone filling those forms out correctly.

Hiring Someone to Do Taxes

In addition to online filing options, you also have the option to have someone else do your taxes. Who you hire depends on the complexity of your tax situation. You might go to a service like HR Block that does basic taxes for you. Alternatively, you might have a professional tax attorney or accountant who assists you in filing your taxes.

Is it worth it – paying to file taxes by having someone else complete them for you? If your taxes are complicated then it very well might be. After all, you don’t want to get audited. (Or if that happens, then you want that professional behind you to navigate that process.) You want to do your taxes correctly while also getting as much of a refund as possible. Therefore, if your taxes are complicated, then you might find it worth it to hire a professional to do them.

Examples of more complicated tax situations where you might want to hire a professional:

  • Self-employment especially if you run a business with additional employees and/or contractors
  • A lot of your money is tied up in different types of investments, especially if cryptocurrency is involved
  • You sold a large item like a house or expensive vehicle so you have capital gains/ losses
  • You have a lot of different deductions, potential credits, etc.
  • A complicated family situation makes your taxes complicated

So, is it worth paying to file taxes? It really just depends on how complicated your taxes are and how comfortable you are doing them. If you have complicated taxes, it could cost you more in the end if you do them wrong yourself than it would if you just hired someone or used advanced tax filing software instead.

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