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5 tips to follow before starting your taxes online

Consumer Reports News: February 23, 2012 01:08 PM

There are dozens of Web-based programs that help you electronically prepare, store, and file your tax return.

Since most don't charge you until you file, you can test several to see which delivers the greatest tax savings.

Consider these points before you try one out:

  1. Check what the site supports: Most sites provide Form 1040 and Schedule A for itemized deductions, but they might not handle more-specialized forms, schedules, and topics. For example, says that it does not cover foreign income, royalties, depreciation, farm income, adoption expenses, and conversion of traditional IRAs to Roth IRAs, among other subjects.
  2. Make sure the site can handle your state taxes: At Yes I Can! E-File, for example, low-income filers pay just $4.99 to prepare and file a federal and state return, but the site only supports state tax returns for California, Michigan, Montana, New York, and Pennsylvania (and New York state tax forms can’t be e-filed).
  3. Check online complaint sites: You can search sites such as Ripoff Report and Pissed Consumer. Or plug the company’s name into a general search engine such as Bing, Google, or Yahoo for more information.
  4. Check the site's price list: Many sites charge to send you a printed copy of your return. Some charge for filing an extension. And prices for online tax prep can go up closer to filing deadlines.
  5. Avoid pop-ups: Some tax-prep sites assault you with solicitations to upgrade to pricier services. But if you qualify for the IRS Free File program, you're guaranteed a pop-up-free ride. This year, your household must have an adjusted gross income of $57,000 or less to use one of the 15 participating online tax-prep providers. You must enter through IRS Free File to use them.

For more on preparing your taxes online see the full article, at our Consumer Reports' Money section, which has additional tax-time information. Plus, we recently reported on the top tax scams and how you can avoid them.

Don't be tempted by tax refund anticipation loans or checks
8 ways to make tax season more tolerable

Maggie Shader


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