Tax preparation
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Tax preparation is the act of preparing the filing of income tax returns. Because United States income tax laws are considered to be complicated, many people and corporations seek outside assistance with taxes (59.2% of individual tax returns in 2007 were filed by paid preparers[1]).
Tax preparation may be done by the filer, with the help of a licensed professional such as an attorney, certified public accountant or enrolled agent, with the help of a tax preparation business, or with the help of tax preparation software and online services. Some states have licensing requirements for anyone who prepares tax returns for a fee and some for fee-based preparation of state tax returns only.
Oddly, the Internal Revenue Service does not have any requirement for licensing of tax preparers. However, IRS circular 230 prescribes regulations governing the practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, Enrolled Retirement Plan Agents, and Appraisers whose practice may involve representing taxpayer in front of the IRS.
The Free File Alliance provides free electronic tax filing services for individuals with less than $52,000 adjusted gross income.
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[edit] Controversy
The cost of preparing and filing all business and personal tax returns is estimated to be $250-$300 billion each year. According to a 2005 report from the U.S. Government Accountability Office, the efficiency cost of the tax system—the output that is lost over and above the tax itself—is between $240 billion and $600 billion every year. That means Americans spent for preparation roughly 20% of the amount collected in taxes.[2][3] In addition, tax preparation businesses have been plagued with controversies such as over Refund anticipation loans or the lobbying of Intuit (developer of tax preparation software TurboTax), which had IRS promise not to set up its own Web portal for electronic tax filing[4].
[edit] Software
Some popular tax preparation software [5] includes:
[edit] See also
[edit] Notes
- ^ IRS - Tax Stats at a Glance
- ^ Tax Policy: Summary of Estimates of the Costs of the Federal Tax System by the U.S. Government Accountability Office
- ^ The Times is still wrong on taxation by Bruce Bartlett
- ^ NPR - IRS Urges E-Filing — But by Vendors Only, Please
- ^ Top Picks - Tax Preparation Software Reviews
