Well, no problem because an online tax software program will allow you to prepare your taxes in several different ways to see which one benefits you the most. You can run the numbers as many times as you like before the actual IRS filing is done. And when it comes time to filing your taxes, well, that’s no problem either. With a few more clicks of the mouse you’ll be able to submit your tax return to the IRS electronically. When you file your taxes electronically you can be assured that your information will be accurate. No longer does a human have to to manually read your tax forms. If you are due a refund then you can usually get it within 10 to 16 days from the day of your efiling. You can even have your refund deposited directly into your bank account. If you owe the IRS money then you can have the amount automatically deducted from your bank account. And you can even set it up to deduct from your bank on the last day of the the tax filing season.

So painted below in words is a hypothetical scenario of what would transpire as you head down the glorious path of preparing your Tax Return.

Scenario 1 : HAND-FILLED, SELF-FILED TAX RETURN

1. You go to the post office and pick up the paper booklet with the tax form. Now if you are smart you would have gotten every tax form you know – but you did’nt, so you had to make 2 trips to get all the forms you need.
2. Next… You have to go through the meticulous process of having to fill one box at a time, make sure your entries are okay, make sure you at least copied down everything from your W2 into your . Because each calculation is connected to the next, each box ties to the next. At the end of this painstaking process you arrive at the final number – your refund or the tax you owe.
3. Next step – Find the right address to mail to. Do you know where to mail your tax return. Well its there, its probably in the instructions to the form. Again scan every word until you get the address. Oh Well Eureka!! You just found it.. congratulations. Now put that in an envelope.
4. Walk to the post-office make it before midnight on April 15th and make sure you catch the last snail mail train. Because if it leaves, you are in trouble.. BIG trouble!
5. Well you made it. You rub your hands with joy and pat yourself on the back. Your Tax RETURN IS FINALLY DONE !! Well you just hit the starter to the engine. You just set in motion for the next series of events that will ultimately get you that coveted refund check! Assuming no postal delays – your tax return will get to the IRS in about 2 business days.
6. Next your little piece of work, your tax return, will enter a queue until its routed to the correct department. lets give his a day for making this arduous journey.
7. Next, It gets picked up to be scanned using sophisticated machines called optical scanners which converts your handwritten tax return into a readable computer file.
8. Hiccup 1: If you hand filled your return with pen and paper, if the scanner cannot recognize your handwriting – then the scanning process will reject – and then it would get put into another queue to be manually processed by a human – lets give 4 to 5 days for this to happen.
9. Someone will actually read your tax return and then type the contents manually into a computer. At this point your tax return is now a what is called a raw data file.
10. Now the raw data file will get run through an editing program which will verify the basic details – like did you put in a valid SSN, did you punch in too many zeros in your income eg. you wrote $50000 instead of $5000 in a box on the form.
11. If everything is okay, Your return which is now computer file will then get put into a database along with millions of other tax payers. Your tax return will join thousands of others who e-filed their tax return at this point.
12. From this point on – the process should work like greased lightning. Next a series of computer programs will be run on the database to validate the tax returns. It will compare the data on your file against what your employers filed. So if you incorrectly entered $15200 on your income but the employer sent in $20,000 the process will pull out your tax return for ‘special’ processing.
13. Also your tax return gets pulled up in a random audit checks. The most brilliant minds in the IRS ought to be designing these computer programs to determine which tax return needs to be pulled up for auditing. Perhaps the holy grail of IRS secrets !
14. If you pass step 9, and you have a refund, you will be routed to a program that prints your refund check – give another 1-2 days for this process to complete.
15. If you elected direct deposit, a pay request will be sent to deposit the money into your bank account (1 day)
16. If you did not elect direct deposit, your refund check will go for printing (1 day). Then your refund will go to the mailing department to be sent to you (1-2days). After about (2-3 days) of spending time in the USPS, the check should get to you – again via snail mail, the same way you mailed out your tax return.

Another cost savings of outsourcing is avoiding penalties and fees from the IRS and state if a tax filing or payment is submitted late or incorrectly. In the event that an error does occur most payroll service companies will pay the penalties and interest that are accrued.

Payroll companies stay up to date on the newest tax tables and tax laws. Tax laws are constantly changing and payroll companies stay on top of the new changes to keep the business out of trouble. Payroll companies offer services like direct deposit and pay as you go workers compensation insurance that some employers can’t get by themselves. Some payroll service companies can also help with the set up and administration of employee benefits.

Outsourcing payroll offers some safety to employers. You never have to worry about your payroll service company calling in sick on a payroll day. They are always available to process your payroll. You also don’t have to worry about paying the fines for something being done incorrectly like you do if an in house employee makes a mistake.

Many business owners realize the benefits of outsourcing the payroll service function. It helps reduce costs and also saves a lot of time and aggravation. Any business owner that doesn’t outsource payroll should serious consider the benefits of using a good service.

Once you have made the decision to use a payroll service company you should ask certain questions before deciding what payroll service company to use.

What is this going to cost me? Many payroll companies charge on a per payroll basis. Many factors go into what you pay each payroll. For instance the number of checks the payroll service generates for you. How many direct deposits you have and also any additional services the payroll company is doing for you play a factor in your pricing. You are going to want to make sure the payroll company doesn’t charge you for hidden fees that you are unaware of which happens a lot.

What is my payroll package going to look like when I get it? Usually a payroll service company can give you sample reports of what you will get with your payroll each pay period. You will want to ask to see sample reports from the payroll company before you make your decision on what payroll company you are going to use.

What is the average turnover of your payroll representatives? It gets very annoying to have new payroll representatives handling your account every couple of months. It leaves the door open for mistakes when you have new people handling your accounts all the time. You want your payroll service to understand your business.

This can get confusing, so let’s start off with the basics. The step up basis is simply the value of some asset at a date in time from which a gain is calculated. Let’s say I buy a share of Microsoft in 1990 [I wish!] and I sell it today. I would pay rather large capital gains taxes on the gain in value of that share of stock between 1990 and 2010.

The passing of an asset from a deceased person to their heirs triggers a bit of a different calculation. Let’s assume the same situation as above. Instead of selling the stock in 2010, I die after being attacked by a bear [might as well make it exciting] in 2002. At that point, my stock is transferred to my daughter per my written will. This transfer constitutes a taxable event. Historically, she would pay tax on the gain from the date of my death till she sold the item. The use of my date of death allows her to “step up” the value of the stock instead of pay taxes on all the gains since 1990.

The Bush tax cuts were designed to reduce a number of taxes, but they went a step farther with the estate tax. They were designed to phase it out. In fact, there is no estate tax in 2010. That is nice and all, but the problem is the step up basis for capital gains above is now gone for the year. Instead of paying capital gains on the increase in value from the date of my death, she will have to pay them on the gains from 1990. That is a huge difference and constitutes a massive amount of money going out of my family and to the government. What did the government do for this money? Nothing, I just died!

Is there anything one can do about this mess with the step up basis? Unfortunately, there is not. It is simply another example of the government creating a mess with the best of intentions.

There is the ham, turkey, and gift basket rule that provides for the giving of non-cash holiday gifts. In essence, the IRS allows, flowers, gift baskets, turkeys, hams, and any gift of low fair market value to be given without a tax consequence to the employees. The IRS does not set a specific monetary limit to low market value. The “de minimis” fringe benefit also allows employers to deduct the cost of occasional parties and event tickets without a tax liability to the employees attending. This also goes for picnics, birthdays and the like. The Internal Revenue Service also allows for sporting event and theater tickets to be handed out without counting as an employee’s income. The stipulation on gifts of cash is that they must be reported as part of the employees’ income along with any gifts easily exchanged for cash like stock, bonds, Treasury note, etc. Such gifts would require the employer to pay additional payroll taxes and the employee to treat these gifts as income.

There are many payroll software options for businesses of all sizes. Each software package comes with different features. The one key similarity is that using payroll software will remove the need for accountants or other staff to calculate manually the cost of taxes, benefits, etc. These software packages are set up by state and have the ability to automatically withhold specific amounts and percentages from each employee. Additionally, the software can generate a pay stub, indicating the amount the employee is being paid and the amounts that are being withheld.

Once you have calculated the withholdings, there are reporting functions associated with the processing of payroll. You must report how much tax was withheld from each employee and give a total amount for the company. You must remit the taxes to the taxing authority at the appropriate time. You must use the money allocated for benefits premiums to fund employee benefits. You must file reports on a quarterly basis in most places, although sometimes the local authorities want them monthly. You would get many of the same benefits by hiring a payroll company or accountant as you would with payroll software. However, the software is much less expensive and truly enables you to oversee every step of the payroll process. When you need to manage your payroll and keep expenses low, then you can use payroll software to manage your payroll. You will have immediate access to the payroll information that you need, when you need it. And you will spend much less money in the process.