Free Online Tax Filing vs. Professional Tax Services: Which is Best for You?

As the W2 tax forms arrive to employees around the country, millions of American prepare to file their income taxes – many hoping to maximize their tax refund. The question is, however: Is it better to free tax filing online sites and software, or have you taxes done by a professional?

According to Jordan Niefeld, CPA who works for Gerstle Rosen & Goldenberg, P.A, there is always a moment when someone will ask themselves “Can I do this project by myself or do I need to hire a professional?” No more so than when it’s tax time.

There are some advantages and pitfalls of using tax software, or free online tax filing web sites, versus a qualified CPA or tax preparer. In this article we will explore the pros and cons of free tax filing vs. using a tax professional.

Can you really save as much money as claimed with free online or tax software?

Advantages of online tax sites and tax software include many things like price, speed, and simplicity. Typically, those with simple tax filing needs, filing an IRS 1040EZ form, and with incomes around $50K or less, can file taxes online for free. For others, the average tax software on the market today is approximately $30-$100.

This is an affordable option for individuals with straightforward W-2’s and not much financial activity throughout the fiscal year. With the software / online tax filing option, you will also get the benefit of having done your taxes quickly and with a degree of simplicity.

Once you have accumulated all the applicable financial information necessary, the software should be able to walk you right through your preparation of your 1040. For taxpayers who have limited deductions and credits, there is no reason why preparing one’s own tax return shouldn’t take more than 1 hour.

For individuals with more complex tax situations Niefeld says that there is nothing like having a professional guide you to the most tax advantageous outcomes. Usually, CPAs will have the latest and highest quality of tax preparation software on the market. In his office, Niefeld uses Ultra Tax – software that can handle all types of returns any business or individual may need.

Additionally, working with a CPA who understands the IRS tax code will always give the taxpayer a human professional that will be able to provide insight on all tax related issues year round. “Being able to ensure our clients are well taken care of with any complicated questions gives that taxpayer peace of mind that they are willing to pay for.”

To summarize his feelings on whether it is better to use a tax professional or to file taxes online with tax software, Neifeld said, “There is no absolute answer as to all the tax savings and pitfalls of using basic tax software vs a qualified and experienced CPA.

“Ultimately, I believe those taxpayers with a single employer and who file a standard deduction might find the savings in the tax software to be just what they need. A more complex taxpayer or business with more earnings will generally come to a CPA with the extensive knowledge and client care to keep the taxpayers tax liability as low as legally possible.”