-- Low income: The IRS sponsors Volunteer Income Tax Assistance programs, where trained community volunteers -- often retired accountants or students -- prepare returns for lower-income filers. To qualify, you must earn $42,000 or less.
-- Seniors: If you are 60 or over, there's a program, largely staffed by AARP volunteers, called Tax Counseling for the Elderly.
-- Military: The Armed Forces Tax Council oversees a worldwide tax-help program for members of the military and their families.
If you fit into any of these categories, call (800) 906-9887 to find a local site. If you are a senior, you can call AARP at (888) 227-7669.
SOFTWARE SOLUTIONS
If you want to file both federal and state returns electronically, it will cost $50 to $60 to buy a decent software program. TurboTax (www.turbotax.intuit.com) and H&R Block's Tax Cut (www.taxcut.com) both prompt users with interviews that automatically fill out the appropriate forms. If you want to look at the forms, that's possible too.
And, because I'm not the only one who gets confused by what they're asking or how to handle a particular issue, both offer some sort of support, either online or over the phone. Tax Cut includes one free phone call; Turbo Tax has an online "community" that offers Web-based support. If you need more help, it'll allow you to spend more phone time with a professional, but for an additional fee.
Those with complex tax situations -- such as small-business owners -- might want to upgrade to the more expensive software, which runs $80 to $100 because it has more detailed information on the most commonly asked questions for business owners, such as information on writing off car expenses and dealing with depreciation.
PREPARED BY A PRO
If you don't qualify for the free services, but you want or need more help than software can provide, it may be best to seek help from a pro. There are essentially three choices:
If you go to a storefront preparer (H&R Block or Liberty Tax, for example), you are likely to pay $100 to $250, depending on the number of forms your return requires.
If you go to an enrolled agent -- tax specialists who have earned a special blessing from the IRS -- you're likely to pay $200 to $500. Hire a certified public accountant, which is the next step up, and you're talking $400 to $1,500, depending on the firm, the complexity of your return and your level of organization.
When is it worth spending the extra money? The answer is a personal one. For me, there were multiple tipping points: I have freelance and royalty income and must prepare a Schedule C (Form 1040), Profit or Loss from Business. I am among the millions of filers who consistently flirt with the truly awful alternative minimum tax, which I fail to fully understand even after 20 years of writing about federal income taxes. And, most important, I wanted advice.
As good as the software programs may be, they can't tell you the best way to trigger capital losses (come on, we all have them by now) to reduce the tax consequences of future gains (I'm an optimist). Nor can the software explain the tax implications of home offices or how changing tax rules might affect the amount you have to pay if you sold your residence. Upper-middle-income families with children in college might also want advice about what it takes to qualify for one or more of the lucrative education tax breaks.
And then there's the lazy factor. Hiring out saves me time, so I justify the expense just like I justify spending money on a gardener. I'm pretty sure that I'll earn more spending the hours doing my job than I'd save by doing theirs.