The Best Tax Software
Our budget pick, TaxAct Tax Software, is a great alternative. However, it’s less intuitive and is geared toward those who already have a good working knowledge of filing taxes. Although it’s less expensive, this pick offers solid security and is a smarter solution for those who want to upgrade from using paper forms. More so than saving what we estimate to be $15-$60, correctly filing your forms are of the highest importance and the TaxAct Tax Software does just that. It has a less complicated interface, but you’re likely to encounter a few interruptions associated with software add-ons. Many of its basic features, like the ability to access your documents for the next seven years, are free. This feature in particular with competitor services is offered as an expensive add-on.
Who is this for
If after going over your documents and inputting information you’re still doubtful that you’re getting things right, it’s best to seek help from a professional tax preparer. A certified public accountant (CPA), an enrolled agent (EA), or a tax attorney are all points of reference for assistance if you’re not confident enough to file on your own this time around.
There are many different tax forms and categories for which income can be attributed. If you’ve earned income last year, you’re expected to, and in most every case, required to report it.
Online tax software is useful for people who have earned income that can be summarized on a 1040EZ return form. In most cases, this group can utilize our picks for free.
These software options are also ideal for someone who has to report multiple streams of income, has dependents, retirement accounts, and expenses related to education. In this case, we estimate filing to cost between $50-$100.
For those who freelance, are self-employed, and who own assets that generate a sizable income, you’ll have to report tax information on a Schedule C form which accommodates small LLCs, partnerships and sole proprietorships. Many of the tax software services that we considered included a Schedule C option for around $100-$200. These costs can be much cheaper when using online tax software. However, if documents and company information for these types of reports are complicated, it may be best to hire a tax professional. If you’re unsure or inexperienced, a professional can make the filing process much easier. Some professionals specialize in maximizing tax refunds which is also helpful if you think you’ll have trouble doing so using TurboTax or TaxAct.
Ultimately, the simpler the tax forms (PDF) that you’re filing, the simpler the overall process.
We’re more than confident that our picks are useful and effective guides for filing without professional help.
Our pick: TurboTax
TurboTax offers simplified explainers for tax terms, support resources, and optional add-on features that ensure those with ground-level knowledge can understand and easily move through the filing process. The objective is to file your tax forms the right way and this software is a dedicated service for doing so. Its interface is inviting, topics are organized, and the walkthrough is done so in a conversational manner. When compared to other services we tested, the conversational aspect of our pick made data entry a more comfortable task.
While add-on features are available, they do come at an extra cost. Interruptions specific to upsells and add-on features weren’t ideal to experience with TurboTax, but they’re quick and easy to include if you do decide you want them. Features like accessing returns after filing and automatic data importation otherwise come free with other tax software and apps. Though again, TurboTax still offers a free filing option for those using simple forms.
We also liked TurboTax best during testing because it has a built in list of nonprofits, payroll processors, banks and charity partners that allow W-2 importation. This makes gathering information from your employer(s) a bit easier. If you don’t find your employer on the partner list, TurboTax can pull information from a PDF. The software’s Help button gives a detailed overlay of the page you’re viewing. Even its Absolute Zero free version for simple filing provides users with the option to push a Contact Us button to speak with a TurboTax expert. For further guidance, you can submit questions to its tax specialist community for feedback.
How we picked and tested
Examining five of the top online tax software services, we filed fake documents each with varied incomes and different financials to be reported. We revisited fictional profiles that we created in 2014 and built upon them, adjusting information to add complexity. We paid close attention to pop-ups for upsells, additional offered support, and the flexibility of the software’s guidance after we added to the profile backstory. We completed two or three returns—depending on features required for testing the forms—on each service. At the baseline, every service uses the same tables, return calculations and forms from the IRS. Our criteria for choosing the best tax software was one with: necessary and effective guidance, clear language, forms that support varied financial situations, an inviting interface, dedicated support, ease of data entry, and reasonable pricing for basic services and add-on feature upsells.
When opting-in for features, it’s important to remember that you don’t want to deduct software fees from your refund. You may end up incurring charges of around $35 and should instead pay the full service amount with a debit or credit card. Don’t pay for document storage as you’ll be sent a final copy of your return. You also want to store and properly dispose of sensitive tax information. Our paper shredders guide includes the best picks for helping with this.
When filing a simple return, avoid upsells that offer importation of taxes from the previous year. This feature, which is around $35, isn’t really worth it and inputting a few numbers on your own is better than the additional fee. When you have no or few deductions, you can also bypass the option to pay for audit services. You always want to avoid getting your refund in the form of a giftcard or a lesser-known perk. Go the safe route and get your refund deposited directly into your checking account, or get it mailed.
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