What Method Should You Use to Prepare Your Tax Return?
Plus, which one is best for your financial situation, according to experts.
A common saying popular among tax experts is, "Don't delay, file your taxes today," which emphasizes the importance of not waiting until the last minute to pay your taxes. Instead, get ahead, file now, and you'll be that much closer to receiving your refund. However, with a variety of methods available to pay your taxes, which one is the best method?
According to Colleen McCreary, chief people officer at Credit Karma, there are a number of ways you can pay, including direct pay with your bank account, credit or debit card, or cash. However, there isn't a one-size-fits-all method—it's whatever suits you best. McCreary says that taxpayers should take into account the pros and cons of each payment method and any potential fees.
The most traditional option, you can file an individual income tax return manually by completing the Form 1040, according to instructions provided by the Internal Revenue Service (IRS). This form shows income, deductions, and credits, as well as any taxes owed to the IRS. Mail the form to the IRS, along with any payment you owe post-marked by this year's deadline of May 17, 2021.
Tax Software Program
If you have a simple return, you can file using a tax software program or online service like TurboTax or H&R Block. These services walk you through a series of questions about your income and potential deductions, fill out a 1040 form based on your responses, and file it electronically for you.
Lastly, you can rely on the expertise of an accountant or tax professional who will work with you to maximize your refund and fill out a return on your behalf. This is the best method for a complex return or if you have multiple sources of income; for the previous two, you may miss details such as a credit or deduction that you are eligible for.
When it's time to paid in refund, one free recommended tax payment method is IRS Direct Pay. "IRS Direct Pay is one option for a secure, free, quick, and easy way to pay your taxes," says McCreary. "IRS Direct Pay lets you pay your tax bills or make estimated tax payments directly from your checking or savings accounts without any fees." This popular method can be done free online (or by phone with the IRS2GO app). Another reason why this is a popular payment option is that payers can schedule their payments the same day knowing it's processed promptly and securely.