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Filing your tax return through mobile tax apps is possible, but be wise about which one you use.
As of early May 2019, roughly 90% of federal tax returns were e-filed in 2019, according to the IRS. And DIY taxpayers prepared 44% of all e-filed returns. Some self-filers used desktop tax software while others used mobile tax apps.
While filing your tax return through tax apps can be effective, different apps have different features, so it’s important to find the one that works best for your needs.
- What are tax apps?
- Why is it important to understand how tax apps work?
- 10 things to look for in a tax app
- How could using a tax app affect my taxes?
Tax apps are mobile apps that allow you to create and e-file your tax return, rather than paying a tax professional to do it for you. If your tax situation is relatively simple, tax apps can make the filing process fast and convenient. In some cases, you may be able to get help along the way.
Several tax apps are available, but not all have the same features. And some may charge fees for certain features, like filing your state tax return. So it’s important to know what to look for in an app and how to avoid unnecessary costs.
Filing a tax return is rarely someone’s idea of a good time, and the faster you can get it over with, the sooner you can get on with other things you’d rather be doing.
With tax apps, you don’t have to sit in front of a computer at home or meet with a tax preparer to get your return done. You can fill out your return and file it wherever you are, as long as you have a smartphone or tablet and an internet connection.
But it’s not necessarily wise to go with the first tax app you come across, as you might miss out on certain features and savings you might get from a different one. So it’s important to take some time to research different tax apps and compare their features and fees to find the best fit for your needs.How much does it cost to do my taxes?
With several tax apps to choose from, here are 10 things to consider as you shop around and compare them.
1. Ease of use
Doing something as complex as creating and filing a tax return on your phone can be daunting for some, so it’s important for a tax app to make the process easy to navigate. Go through a little bit of the process to determine if it’s truly mobile-friendly or if it feels difficult to use.
And, of course, make sure the app is available for your phone, whether it’s an Apple iOS, Android or other operating system.
2. Access to support
Even if you don’t think you’ll need help with filing, access to support can be a lifesaver if you’re deep in the process and have a question. Look for different ways to access support, like live chat, messaging and on-screen guidance. Be aware that some apps may charge for live support.
The right app doesn’t necessarily need to have all these features to be valuable, but they can help improve the experience and save time.
3. Ability to import last year’s return
As you file the current year’s tax return, you’ll need to provide information from last year’s return. For example, the IRS will ask for your previous adjusted gross income to verify your identity.
If your tax app can import last year’s return, it can save you from having to look up individual pieces of information from last year’s return — something that may not be easy to do if you’re always on the go.
4. W-2 uploading
Your W-2 form contains a lot of essential information, and hand-keying it from the form into your online tax-preparation app can be a pain. Some tax apps allow you to snap a photo of your W-2 with your phone, and the app will transfer information from the form into the tax app for you. But be sure to look it over to make sure everything was loaded accurately.
This feature won’t necessarily save you a ton of time, but it’s convenient and can relieve some of the anxiety you might have of accidentally entering the wrong data.
What’s the difference between a W-2 and a W-4?
Employers complete W-2s to tell the IRS how much compensation they paid you and how much tax they withheld on your behalf in a tax year. A W-4 is the form you complete (usually when starting a new job) that tells your employer how much federal income tax to withhold from your paycheck.
Filing a tax return is no joke, and doing it wrong could cost you in the form of penalties and a lower refund. A tax app that offers guarantees for accurate calculations and a maximum refund could give you peace of mind. Take note that each app may offer different levels of coverage under its guarantees, so find out what kind of limitations there are.
6. Form support
If your tax return requires more than just a W-2, you’ll want to make sure the tax app supports all the tax forms you need to claim certain tax deductions and tax credits before you begin the process. Otherwise, you may have to stop midway through filing and start over again with a different app if you want to file for free. Or, you may find that you’ll have to upgrade from a free version to a paid version of the app in order to access and file all the forms you need.
Your tax return includes some of the most sensitive personal information you have, so sophisticated security practices should be nonnegotiable. For starters, check to see if the service is an Authorized IRS e-file Provider. If it is, that means it complies with the security and privacy standards set by the IRS.
Also, check to see if the app uses safety measures like 128-bit or higher encryption, two-factor authentication and other safeguards to help protect your data.
8. Level of complexity
If your tax return is simple, most tax apps can do the job for you. But if you need more, like the ability to itemize your deductions, include 1099 and other forms of income or file a business tax return, you’ll want to make sure the app you choose can handle it, and that the cost for doing so won’t be too high.
9. Additional benefits
As you consider the most important features for you, also look for other benefits different tax apps provide. For example, Credit Karma Tax® offers free Audit Defense.
The Audit Defense program can provide a tax-preparation professional to help you in case the IRS or your state’s taxing authority audits your return.
10. Transparency on cost
The last thing you want is to go through the process of preparing your federal income tax return or state return on a tax app’s free edition only to find out at the end of the process that you’ll have to pay to file. In some cases, a service may promote that it offers free filing for simple tax returns but actively diverts users to its paid services instead. Other tax apps may allow you to prepare and file your simple federal return for free but charge you to do your state return.
Cost transparency is crucial to a good tax-preparation experience. If you’re having a hard time finding out how much filing is going to cost you after just a little time on the app, or your return qualifies for a fee-free filing and you feel pressured to switch to a paid product, it may not be worth the trouble.
Mobile tax apps can make the process of filing your tax return simpler and more convenient. As with any tax preparation service, however, it’s important to make sure the information you submit is accurate and complete. Accuracy not only helps prevent potential trouble from the IRS but can also help you maximize the value of your tax refund.
Many people will find they can use a tax app to prepare and file their federal income tax returns using their mobile devices. But not all apps have the same features, functions and costs. Whether you’re an iPhone or Android user, take your time as you research and compare the different tax apps available, and pick the one that provides the best fit based on your tax situation and preferences.
Christina Taylor is senior manager of tax operations for Credit Karma Tax®. She has more than a dozen years of experience in tax, accounting and business operations. Christina founded her own accounting consultancy and managed it for more than six years. She codeveloped an online DIY tax-preparation product, serving as chief operating officer for seven years. She is an Enrolled Agent and the current treasurer of the National Association of Computerized Tax Processors and holds a bachelor’s degree in business administration/accounting from Baker College and an MBA from Meredith College. You can find her on LinkedIn.