Getting Ready To Do Your Taxes? 3 Factors To Consider
by Letitia Moreno
If you need to do your taxes, or if you are running a small side business doing taxes for other individuals, you are going to want to have the right tax software to support your tax preparation efforts. When it comes to choosing the tax software, you need to consider your needs.
Factor #1: State Returns
When you purchase tax software, generally, the main focus of the software is on the federal tax return process. If you will be filing state taxes, and you want the process of filing state taxes to be easy, you may want to consider purchasing software that will allow you to file your state return as well.
With some software, the ability to file your state tax returns will be built right into the software. With other software systems, the state tax filing software will be behind a paywall, so you'll have to pay extra if you want to file your state taxes with the software.
Keep in mind that some states provide free filing software; however, you will have to input all your information again.
Factor #2: Tax Deductions
If you plan on taking the standard deduction, just about any tax software will do. If you plan, however, on taking an itemized deduction, you are going to want to purchase tax software that will make it easy for you to itemize your deduction. Look for software that includes a basic interview process that will help you determine what needs to be itemized. Software that uses an interview process to ask questions may help you remember things you may have overlooked that you can itemize.
Factor #3: Employment Status
You also need to consider your employment status when choosing tax software. If you are filing taxes as a self-employed individual, you want to invest in software that includes the Schedule C paperwork that you are going to need to fill out for your returns.
Factor #4: Investment Status
If you have a lot of investments, you are going to want to use software that includes features that will make it easier for you to calculate your capital gains. A capital gains feature can save you from having to do a lot of hours of manual calculations.
When it comes to choosing the right tax software, you need to consider what your tax needs are. If you will be filing a basic return, some free software may do the job for you. If you need to make itemized deductions, are self-employed, have a lot of investments, or any other factor that makes your taxes a little more complex, you are going to want to pay for more advanced tax software.
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When it comes to keeping your business afloat, there aren't many things more important than looking after your finances. If you aren't careful, financial problems can get out of hand quickly, which can affect your ability to stay in business at all. I run a small business out of my home, and I can tell you that careful attention to your books can make a world of difference. Check out this website for more information about financial considerations, spending, and monitoring your bottom line. I'm not a professional accountant or anything, but by making a few moves in the right direction, you can solidify your business and avoid financial disaster.