The global economic meltdown that begun in December 2007 has seen people all over the world try to save money using manner of methods. Household budgets have been reduced and people have cut back on spending. According to the US Bureau of Economic Analysis (BEA) real spending has dropped significantly since the economic recession begun.

One of the areas where numerous US consumers have tried to cut back on spending is in the preparation of tax returns. Consumers are also trying to save on income tax by maximizing their deductions. Traditionally, most people engage the services of an accountant to prepare their tax returns. Thus, every year, typically from January to March, accountants are in high demand as people rush to beat the April 15 deadline set by the IRS. Accountants do not come cheap with the average cost being $75 to $100 an hour in most states. It is therefore no wonder that many people now prefer to do it themselves and save this money. It actually makes sense when you think about it, especially where your potential tax bill is less than the accountant's fee. Conceivably, you can make a tax saving by firing your accountant because his fee is a cost, a cost to prepare to your income tax return.

There is however one problem. While it is possible to do your own tax returns, you must be prepared to navigate the complex maze of tax laws and rules. An innocent error on your part and you may end up paying the government more than you owe or worse, the IRS could haul you in for tax evasion. You may end losing more than the amount you were attempting to save in the first place.

So, how does one do their own tax return and still derive the immense tax savings that accrue from hiring a tax accountant? Well, there are only two options. You can teach yourself everything you need to learn about doing your own tax returns. You need to begin early though; do not wait until March because you will find yourself doing things in a rush and increase the likelihood of making errors. Start learning early, at least six months before the tax return deadline. There are numerous online resources you can use to teach yourself how to do your own returns. These include the IRS's own Free File program which allows you prepare and e-file your federal taxes online. It is fast, free and relatively easy.

The second option is to use an online tax preparation service. Online tax preparation services provide you with access to a computer program that calculates and e-files your income tax returns. All you need to do is to input the data requested by the program and at the click of a mouse, your tax return is generated. In fact the IRS's Free File program alluded to earlier is an example of an online tax preparation program. However, since it is government funded and run, you are not very likely to get useful tips on income tax savings. Commercial online tax preparation services provide much more friendly information to ensure that you maximize your deductions and where possible get a tax refund. These services are cheap in comparison to hiring an accountant, costing $50 on average, and with immense benefits. The growth of online tax preparation services since early 2008 has ensured that consumers have numerous options. A search on Google for "Online Tax Preparation Service" returns close to 70 million results. Thus, save on your income tax by investing in an online tax preparation service today.

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