There are clear advantages when it comes to using IRS tax filing programs for your personal tax filing requirements. The programs that you may weigh as potential options ahead of the next tax season include:
- IRS Direct File
- IRS Free File
Whether you are looking for free online services, greater accuracy, or quicker refunds from the Internal Revenue Service, it is important to consider more than simply the cost of a program. A tax filing system should not overextend your budget, but you might find that you need a system that is affordable and also possesses more complex capabilities.
Advanced Micro Solutions’ 1099-etc E-Filer software is the most affordable solution on the market and is highly customizable for software users who need a scalable solution.
IRS Direct File and IRS Free File provide eligible taxpayers with distinct benefits. For users who do not qualify for the programs, there is an affordable solution available with broad geo-location capabilities.
What are the Benefits of Using IRS Tax Filing Programs?
Knowing how different IRS programs for tax filing operate will give you a clearer idea if you are eligible for them and/or if they are the right choice for you.
IRS Direct File
The web-based service lets taxpayers file their federal tax returns for free and directly with the Internal Revenue Service. Key features within the program include:
- No costs or hidden fees
- Step-by-step guidance to make filing easier
- Accessing the service on multiple device types (computer, smartphone, tablet)
- Live, real-time chat support in English and Spanish
- Easy importing of personal information and W-2 data from an IRS account
- Seamless integration with a separate state-supported tool to help with state tax filing
Choosing IRS tax filing programs like IRS Direct File is only feasible for users with simple tax situations in eligible states. Users who benefit most from the program are ones with:
- Certain deductions and credits
- W-2 wage income
- Social Security income
IRS Free File
The long-running IRS Free File program is a joint effort between the Internal Revenue Service and the leading tax software companies. The program benefits its users by:
- Handling a wide range of tax situations across all 50 states, plus the District of Columbia
- Offering free state tax preparation with some free file partners (eligibility varies)
- Offering free, guided tax preparation software to individuals/families with lower incomes
- Safeguarding all taxpayer information with partner companies
- Providing Free File Fillable Forms for taxpayers who want to prepare their own returns
IRS tax filing programs can be a great solution for certain eligible taxpayers who are just getting started with reporting their own income. Make sure that you keep in mind the paid software tools that might serve you better in the long term.
Potential Drawbacks of Free Tax Filing Tools
Free tax software is useful when users have a simple tax return. The software might not have the longevity that you need if your tax situation will change. Certain limitations can include:
- Not supporting complex tax situations
- Hidden fees and upsells
- Privacy and security risks
- Limited support or guidance
Limited Features
Most free versions of IRS tax filing programs will restrict who is eligible for them based on their Adjusted Gross Income. If yours does not fall below a specific threshold, you may need to pay for any program that you use. Most free versions of programs can only handle straightforward returns anyway. Users might benefit from a program if they only:
- Use IRS Form 1040
- Take the standard deduction
Not having access to complex forms might not matter now, but your situation could change. Think about your plans for the future and if they include situations like:
- Owning rental properties
- Having investment or cryptocurrency income
- Itemizing your deductions
Ancillary Fees
Certain IRS tax filing programs may be free, but you might find yourself needing further support that costs you more than if you found an affordable tax filing system. Premium features with any free software might mean that the basic system does not provide services like:
- Audit protection
- Customer support
- Expert troubleshooting
Save your time and your money by getting tax filing software with no questions about whether it supports your federal, state, and any local requirements. One of the most inconvenient things is when you spend a lot of time entering information just to learn that you must pay to file anyway.
Privacy and Security
Data breaches are possible whether you use IRS tax filing programs or another filing software vendor. Make sure that you keep your software up-to-date so your program can defend itself from any external attacks. It is also worthwhile to consider who has access to your device at home where you file your taxes.
Lack of Support
Using a free software program might mean that you have limited to no assistance if there is any issue while you file your taxes. Many of the programs offer little personalized advice or help for users like a paid electronic filing program provides. Make sure that you are ready in advance for the scope of help or lack thereof that IRS tax filing programs will offer.
Why Should Individuals Pay for E-Filing Software?
The features and benefits of purchasing e-filing software are extensive for individual tax filers.
Paid tax filing software handles more complex situations.
Handling a tax situation that goes beyond filing standard W-2 income means getting software that can offer you the right features. Speak to your provider if it is unclear whether or not their software can handle:
- Self-employment (Schedule C)
- Rental properties
- Investment income
- Other complex tax situations
Always consider how your software needs might change. If getting a certain system now will only save you money in the short term but cost you more to switch later, using IRS tax filing programs might work against your long-term financial interests.
More comprehensive software simplifies the tax filing process.
Getting paid software for your tax filing requirements will make it easier to import any data directly from:
- Banks
- Payroll providers
- Previous tax returns
Less time spent worrying about whether you have input the manual data correctly is more time spent focused on other tasks, tax-related or otherwise. Making fewer manual entry errors is the main goal with investing in comprehensive tax filing software.
Users make fewer errors with software than by manually reporting.
Performing automatic calculations and conducting real-time error checks might only extend so far with certain IRS tax filing programs. Catching common mistakes before you file is possible with software that you can trust, because it will be designed to reduce the risks of:
- Penalties or fines
- Delayed refunds
- Audits caused by an incorrect entry or a miscalculation
There is a less than 1% error rate for e-filed returns compared to 21% for paper returns.
A trustworthy, scalable system will securely store your past tax returns.
Storing digital copies of your tax records will make it easier to access whatever you need in the future for audits or your own reference. Get a system with payer backup and restore features to protect yourself and spend less time digging through filing cabinets where files might get lost.
Should I Hire An Accountant?
Choosing between IRS tax filing programs, paid e-filing programs, and hiring an accountant will come down to a mix between your personal preference and what best meets your needs. There will be signs when it is time to hire an accountant.
Questions to ask yourself that may help you with the decision-making process are:
- Do I have multiple sources of income (W-2s, 1099s)?
- Have I experienced a major life event (marriage, divorce, having a child)?
- Do my potential itemized deductions come close to or exceed the standard deduction?
- Am I confident that I can file an accurate return or do I feel overwhelmed?
- Do I have complex investments or own rental properties?
- Have I had tax issues or faced penalties in the past?
IRS tax filing programs or affordable electronic filing software might be a perfect fit for some people, but software is not a one-size-fits-all solution. Choose the best option that gives you financial protection and a real chance at growth.
Getting Started with AMS Software
We are a small business ourselves, and we understand the importance of responsiveness for first-time software users who have questions about a program. Our team of live experts are available to answer your inquiries and have a deep knowledge of the base program and its modules.
Our six modules include:
- E-File
- AMS Payroll
- Software Generated Forms
- Forms Filer Plus
- Affordable Care Act Filer
- 1042-S Filer
Download our free 1099-etc Demo software today. The demo is a nearly fully-functional version of the 1099-etc software with a few exceptions, including disabling certain e-filing features. One alternative to using IRS tax filing programs is choosing between our two E-Filer solutions.
E-File Direct
- Flat fee
- Unlimited number of form filings
- Users can verify, view, and print files
E-File Services
- Volume pricing (fee per form)
- Forms are e-filed through a third-party vendor
- Different service levels available