Each year everyone has to make the decision of who is going to prepare their income tax return. If you own a business you probably need to select a professional to prepare the business return or Schedule C on your 1040 Individual Return. If your income is primarily supported by W-2 forms and other forms submitted by the payer, for example Social Security and Retirement Income Payors, then possibly you want to use a tax preparer or do it yourself using a program like Turbotax.

H & R Block and the tax services with all the people waving at you on the street are a very expensive way to get a rather simple tax return prepared. The base rate is quite high for a simple individual return. The expensive part of their services is when they offer to give you your refund within 24 hours and you sign over the refund coming back from IRS. If you compute the interest rate on an annual basis it can be several hundred percent. For example a military person with just W-2 income selects the plan to get his money within 24 hours. The cost might be as much as $150, basically the tax service is loaning you the money until the refund comes which they take in payment for the loan. Let’s say this person has a $750 tax refund coming back and the charge was $150 for that service, the tax refund usually comes within a month. $150 for one months interest on $750 be $1800 on an annualized basis. Divide $1800/750 would result in an interest rate of 240%. This type of service also wants to sell you audit protection service for $50 and above and if they file the forms electronically you may have to pay additional for that service. Audit protection says they will represent you in tax court to support the return they have filed. Any principal and interest due after an IRS audit is the responsibility of the taxpayer. If the tax service makes an error resulting in more taxes being due and penalty and interest. The tax service usually agrees to pay the interest but not the penalty.

Considering the case I presented above, if your tax return is pretty straight forward and supported by documents from your employer, retirement plan or Social Security, then consider doing it yourself with the help of Turbotax. There are several versions of Turbotax depending on the income to be reported. If a person just has supported income , interest, dividends and capital gains, then Turbotax Deluxe will work for you. If you have business income requiring a Schedule C with the form 1040 you will need the Turbotax Business version. The Turbotax Deluxe verson costs about $60 and you have the choice of purchasing the disk at Officemax, Walmart, Costco, and outlets carrying Turbotax. If you need the Turbotax Business, it will cost about $20 more. Also you are given the choice on line by Intuit that is the provider of Turbotax to download the various Turbotax products. There are also Turbotax versions for Partnerships and Business.

If you purchase Turbotax, load it onto your computer, also select add current updates when it appears on the screen. After you have entered the personal information, it asks if you want them to guide you through the return or do you want to do it on your own. If you are new to Turbotax and even if you are familiar with this system select Guide Me Through The Tranactions. When you come to the end of the return Turbotax will do an error check and show you any areas where information is missing or does not make sense, after you have corrected those errors , it will say no errors found. Turbotax also offers an audit representation service in the event you are audited for a fee, I do not select that but you can. Then Turbotax shows a graph showing what the percentage chances are you will be audited, it shows the range from low to high. If the audit chance is low you should be ok. If it is high you need to keep all the backup handy in the event of an audit.