Frugality is often beneficial, but there are certain situations when a good deal ends up costing a lot more than expected in the long run. This can be the case when using a low cost, do-it-yourself tax software program. These programs are not always bad, some tax filers find these systems helpful and may benefit. However, others could set themselves up for additional problems in the future.
So how do you know which category you fit into? Should you use the tax software or find another method of tax preparation services? Ask yourself these three questions to help find the answer:
- Is the software secure? Whenever we put personal information into any form of software we must make sure that the information is secure. Concerns about hackers gathering the sensitive information and using it for tax fraud are legitimate.
- Will my filing lead to questions? The Internal Revenue Service (IRS) is more likely to question certain tax returns. This includes the tax returns of those who earn more than $200,000, business owners and those who own or have an interest in foreign assets.
- Can I answer questions from the IRS? If you are concerned your filing could lead to questions from the IRS, this software may not be the best option. Software companies are rarely tax professionals and often include language within the software that reduces any risk of liability. As a result, if the IRS asks some questions you may need to look elsewhere to help find answers to the agency’s questions.
Anyone that answered yes to any of these questions should seriously consider a different form of assistance when putting together tax paperwork.