Online tax preparation software companies are in the business of walking the taxpayers through all the stages of a tax return and completing the process on their own. In a nutshell, the process focuses on providing information to a series of questions; the answers populate the tax return and all the auxiliary forms needed to adequately report your income and expenses.
TurboTax and H&R Block, the two biggest companies offering the service for 2020, will ask a series of questions that will help determine a type of tax brackets you fall into (Single, Married, Head of Household), the type and level of deduction, and credits to apply. It is done through a series of simple questions about your life:
- Marital status
- Military status
- Retired or active worker
- Homeowner or renter
For many questions, it comes down to clicking and selecting all the options that apply to you. Questioning then continues to your income that requires the actual input.
You can enter your income information by taking a picture of your W2. The software auto populates all the required fields; your job is only to confirm that the amounts are still accurate.
Filing can be done electronically and it’s highly recommended. One reason for it is the speed of processing of your tax return. If you expect to receive a refund, it is the fastest way to get it done. TurboTax will also facilitate any transaction fees. Your refund can be applied to cover all or portion of what you owe for the service. The reminder can be deposited in your bank account. Another reason for filing electronically that gets overlooked sometimes is that you get a conformation email within 24 hours whether or not your tax return was accepted. This provides a peace of mind that it is being processed. And in case it gets rejected, you can make any required corrections and resubmit without wasting too much time.
When and where to do your taxes
Online tax preparation companies allow you to prepare the tax returns in piece meals. Whether you have 10 minutes or 2 hrs, you decide how much time to dedicate it and if you’re not finished, you can continue later where you left off. The entire process is synchronized across different devices – phone, tablet, computer – so you decide how to go about completing the task.