What to Look for in an E-File Vendor

With so many companies offering online tax preparation and the ability to efile your 1040A or 1040 EZ tax return, figuring out which one is the most trustworthy can be difficult. There are five things that you should check into before giving any company your tax information.

The Importance of CPAs

Make sure that the company you are trusting to prepare your tax returns has certified tax experts on staff who oversee the online tax preparation program. Using a company that is owned or managed by licensed Certified Public Accountants (CPAs) ensures that that the online tax preparation software will include all relevant tax law information and correctly apply the tax laws to your tax return.

Security

Your tax return contains all of your most important information and should be heavily guarded. If the information from your tax return, like your birth date, social security number, income, and bank account numbers, fall into the wrong hands your identity could easily be stolen. Before trusting an online tax preparation service with your very personal information make sure they have a secure website and that they encrypt all information before it is sent over the web. The website should also guarantee that your federal and state tax information will be protected during efiling.

Guaranteed Accuracy

A mistake on your 1040A or 1040EZ tax return can cost you big money. Always double check the information you enter while preparing your taxes, because the software won’t catch the mistake if you enter in your income incorrectly. But, if the software makes a mistake calculating your tax liability after you entered all the correct information, you shouldn’t be held responsible.

Make sure the service you use to electronically prepare and efile your federal and state tax returns will provide the IRS with supporting documents in the event you are audited. Also be sure that the service will pay all IRS levied penalties and any legal fees you incur as a result of the software’s error.

Print Out Your Tax Return

As we’ve said, your tax return contains extremely sensitive and valuable information. Even if you efile your taxes, always be sure to print out a copy of your tax returns and keep it in a safe place. Besides the fact that having the previous year’s tax return handy makes filling out your current 1040A or 1040EZ easier, the IRS can ask for proof of your filed taxes up to 6 years after the fact.

Cost

Finally, don’t forget to check out what the company will charge you to prepare and efile your federal and state tax returns. Most services charge one amount for preparing and efiling your federal tax return and another fee for preparing and efiling your state tax return. There are also additional charges for having your tax refund provided to you immediately. Every service sets up their fees differently, so make sure you understand what you’re paying for how, much you’re being charged and how the company will collect the money from you.