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Author: Ahad Waseem
Ahad is a business, blockchain, and cybersecurity writer who often takes on art, politics, and economics too. As a linguistic engineer who writes to solve problems, he’s written for various tech and business publications. When he’s not writing, he’s probably on horseback, caring for his houseplants, or training Bonsai trees.
Feeling anxious about tax season? You’re definitely not alone. But don’t worry, because the perfect tax preparation software can make this overwhelming time a lot easier. In this blog post, we’ll help you navigate the complexities and introduce you to the top options for tax software.
Whether you’re a first-time filer or seeking to maximize deductions, we have your back. Join us as we discover user-friendly solutions that simplify filing taxes and ensure that you receive every dollar you’re entitled to. Prepare yourself to turn tax season from being a chore into a triumph with the ideal sidekick, reliable tax preparation software.
7 Best Tax Preparation Software
TurboTax – Best Tax Software Preparation Overall
TurboTax has consistently ranked as one of the top tax preparation software options for several years. Its main advantage over competitors is its ability to simplify and make the tax filing process more accessible, greatly increasing your chances of receiving a refund.
TurboTax provides clear and easy-to-understand explanations for both simple and complex tax topics, adopting a conversational tone that ensures comprehension. It offers extensive help throughout the completion of IRS Form 1040, with multiple layers of support available.
TurboTax stands out from other tax software programs due to its superior user experience. It prioritizes user-friendly features and functionality to ensure a seamless journey through the entire filing process.
Pros:
Cons:
- Costly
- Some assistance responses originate from community members rather than Intuit staff
Pricing
>> File Your Taxes Online With TurboTax >>
TaxSlayer – Best Affordable Software
Over five decades ago, TaxSlayer was initially created as a tool specifically catering to accountants and professional tax preparers. However, it has since evolved into an online platform for DIY tax preparation, starting in the 1990s.
To assist users with Form 1040-related matters, TaxSlayer offers step-by-step guides and an easily searchable database of help files that have been updated for the current tax year. Throughout the platform, you’ll find valuable guidance to aid you along the way.
Compared to its competitors at the Classic level (excluding Cash App Taxes and FreeTaxUSA, which are free), TaxSlayer boasts a lower price point. It specializes in supporting individuals and small businesses with intricate financial profiles by facilitating both their preparation and filing processes.
If your return requires Schedule C or if you need help maximizing your refunds by identifying eligible deductions and credits, TaxSlayer is tailored to your needs.
Pros:
- Budget-friendly
- Quick
- Sleek interface with user-friendly navigation
- Compatible with all major IRS forms and schedules
- Strong data import capabilities
Cons:
- Limited context-sensitive help on Q&A pages
- Help content quality requires improvement
Pricing
Currently, TaxSlayer is providing its Self-Employed package at a remarkably affordable price of $47, with an additional $32 for state filing.
What’s even more impressive is that this price includes access to a tax professional who specializes in self-employment, along with help for audits and priority-level support via email and phone.
The greatest advantage of using TaxSlayer is unquestionably its affordability. While it may not have all the fancy features offered by some of its competitors, it provides everything necessary to complete your small business tax return at a fraction of the cost. TaxSlayer is compatible with both iOS and Android devices.
>> File Your Taxes Online With TaxSlayer >>
H&R Block – Best for Variety of Support Options
H&R Block has earned a strong reputation for its in-person tax preparation services, and its DIY tax prep software lives up to that standard. The user-friendly interfaces, extensive coverage of various topics, and helpful context-sensitive assistance make H&R Block’s products and services stand out. One of the company’s strengths is its ability to explain complex tax issues in a way that’s easy for anyone to understand.
H&R Block offers various tax preparation websites catering to different needs. From their free version for simple returns to their top-tier sites designed specifically for handling Schedule C (for self-employment), they have something for almost everyone.
Their exceptional help resources are always tailored to the specific situation, which benefits both inexperienced taxpayers and long-time filers looking to determine if they owe money or will receive a refund.
Pros:
- Constantly available context-sensitive help
- Comprehensive, easily understandable explanations of tax concepts
- Exceptional user interface
- Tax professionals provide free answers to tax queries
- Excellent mobile applications
Cons:
- Some sections require excessive clicking for navigation
- Federal Accuracy Review could focus more consistently on error correction
Pricing
- Free Online: $0. Includes support for W-2 income, unemployment income, interest and dividend income, retirement distributions, student loan interest deduction, tuition and fees deduction, child tax credit, and Earned Income Tax Credit (EITC). This version doesn’t support itemized deductions, which is standard among free tax-preparation software providers. Notably, H&R Block’s free version includes student deductions, a feature not offered by others.
- Deluxe Online: $55. Provides everything included in the free version, with additional features such as the mortgage interest deduction and health savings accounts. Users have the option to itemize deductions.
- Premium Online: $85. Includes all features available in the Deluxe version, with added support for rental property income and freelance/contractor income under $5,000. Users can import mileage and other expenses from common tracking apps.
- Self-Employed Online: $115. H&R Block’s top-tier online package, suitable for self-employed individuals, including small business owners, partners, and contractors earning over $5,000.
>> File Your Taxes Online With H&R Block >>
TaxAct – Best for Accuracy Guarantee
TaxAct, a popular do-it-yourself personal tax preparation solution with decades of experience, stands out for its simplicity. Its user-friendly interface and navigation system guide you through the intricate IRS tax code, while its thorough final review is among the best available.
By delving deep into your financial situation and asking relevant questions, TaxAct ensures that you don’t miss out on any deductions or credits that you’re entitled to.
While TaxAct can handle complex tax returns, it’s particularly well-suited for taxpayers with simpler financial scenarios. It excels at assisting W-2 employees who wish to itemize their deductions to maximize their refund.
Unlike TurboTax and H&R Block, which offer more specialized support, TaxAct provides all the assistance without unnecessary frills. It offers a comprehensive walkthrough for Schedule C.
Pros:
- Solid user experience
- Outstanding mobile accessibility
- Convenient context-sensitive help
- Accessible professional tax assistance at an affordable rate
- Exceptional final review process
Cons:
- Certain help links direct to IRS documents
- Search results occasionally lack precision
- Costly state filing fees
Pricing
- TaxAct Self Employed (with on-demand expert assistance): $64.99 for federal returns, and $44.99 for each state return.
- TaxAct Business Online: Federal returns range from $124.99 to $159.99, with $49.99 for each state return.
>> File Your Taxes Online With TaxAct >>
Jackson Hewitt offers an online tax preparation service that allows users to do their taxes themselves. However, the company is primarily known for its in-person tax preparation services, which are available at over 5,500 locations. Approximately 3,000 of these locations can be found within Walmart stores.
The online tax service provided by Jackson Hewitt is reliable and comprehensive. It covers various tax topics and uses the company’s financial expertise. At just $25, the price of this service is quite reasonable, considering it includes federal and state returns.
If you encounter any difficulties while completing your return on your own, Jackson Hewitt has a team of professionals ready to step in and assist you.
We recommend Jackson Hewitt to individuals who have previously used their product and had a positive experience or those who prefer doing business with well-known brands. If you’re looking for a straightforward tax preparation experience with support available when needed to maximize your refund potential, Jackson Hewitt is worth considering.
However, it’s worth noting that their online help tools could be more robust in order to better support users who require more guidance throughout the process.
Pros:
- Affordable cost
- Unlimited state returns are encompassed within the price
- Options to file online, at a nearby branch, or at participating Walmart locations
Cons:
- Unable to import forms
- Online platform lacks the user-friendliness found in competitors’ offerings
- Limited support for online tax filing
- Inability to file online with a tax professional, unlike other services
Pricing
Jackson Hewitt provides a comprehensive tax package that caters to all tax scenarios at a more affordable price compared to the least expensive packages offered by TurboTax and H&R Block, even without any discounts applied.
However, Jackson Hewitt doesn’t offer a free package for even the simplest tax situations. According to the IRS, approximately 70% of Americans are eligible for free online tax preparation services. Therefore, if you qualify for this option, it would be wise not to incur any unnecessary expenses.
For just $25, Jackson Hewitt’s all-inclusive bundle covers one federal return and an unlimited number of state returns. This package is suitable for homeowners, parents, freelancers, investors, and basically anyone with diverse financial circumstances. Competitors like H&R Block and TurboTax tend to charge higher fees as your situation becomes more complex. They also impose an extra fee per state return filed.
While other options may be pricier and limited in scope, Jackson Hewitt offers a cost-effective solution that accommodates various tax needs without compromising quality or service excellence.
>> File Your Taxes Online With Jackson Hewitt >>
FreeTaxUSA – Best Free Tax Software
FreeTaxUSA stands out as a top-notch federal tax preparation website that’s completely free (although state returns do come with a cost of $14.99). What sets it apart is its sleek and professional user interface, as well as its easy-to-navigate system.
Surprisingly, for a free product, FreeTaxUSA goes above and beyond with its help system and accompanying tools. The website now offers the option to connect with a tax professional for an extra fee of $39.99, further enhancing the overall experience.
When compared to other self-employed versions of tax prep websites from competitors, which often come at steep prices that can eat into any potential refund, FreeTaxUSA proves to be an excellent choice for gig workers who have minimal income and expenses to report but need to file Schedule C.
Moreover, those on a budget will find this platform beneficial even for more complex returns due to its user-friendly interface, comprehensive coverage of tax topics, and helpful guidance options.
Pros:
- Federal e-filing is free, with inexpensive state filing options
- Comprehensive support for all major forms and schedules
- Abundance of help options available
- Exceptional mobile website functionality
- Professional tax support is affordable
Cons:
- Limited capability to import most 1099s
- Help pages tend to overshadow Q&A pages
Pricing
The inclusion of tiers in FreeTaxUSA’s plans becomes redundant since they offer free federal returns. All their plans utilize the same software. Once you begin the tax preparation process, there’s no further mention of these tiers.
FreeTaxUSA only charges for their paid products which include:
>> File Your Taxes Online With FreeTaxUSA >>
Cash App Taxes, formerly known as Credit Karma Tax, is the sole service we reviewed that doesn’t charge any fees for comprehensive federal and state tax preparation and filing. It supports almost all major and minor tax forms and schedules.
The website is efficient, boasting an outstanding interface and navigation system, while its mobile apps are exceptional. It provides nearly all the necessary tools to handle complex returns, except for a robust on-site support system or access to professional assistance.
If your goal is to file your taxes at no cost, Cash App Taxes should be your top choice. It’s particularly suitable for individuals with only W-2 income and a few deductions and credits.
Although it’s capable of handling more complex situations, such as self-employment reporting, it lacks the step-by-step guidance found in other tax applications when it comes to areas like investment sales. As a result, it may not be the most optimal option if you have many forms and schedules involved in your return process.
As mentioned earlier, Cash App Taxes supports most IRS forms and various tax scenarios but not every single one of them. For instance, if you need to file taxes in multiple states or report foreign-earned income then this service won’t meet those requirements.
Pros:
- Cost-free
- Swift loading of pages
- Accommodates major IRS forms and schedules
- User-friendly interface and navigation
- Outstanding mobile applications
Cons:
- Support lacks comprehensive depth
- Inability to import interest or investment data
- Absence of certain forms and coverage for specific situations
- No provision of expert tax assistance
- Necessitates a Cash App account for usage
Pricing
Cash App Taxes is completely free and doesn’t provide paid levels or additional services.
So what’s the catch? There isn’t one except for supporting Square’s aim of encouraging customers, both new and existing, to use more of its offerings. Cash App Taxes is an excellent choice for individuals who desire genuinely cost-free tax filing.
>> File Your Taxes Online With Cash App Taxes >>
How We Rate Tax Software
In our assessment of tax software, we thoroughly compare various products based on specific criteria. Our evaluation process involves using the software to file personal tax returns, examining the terms and offers provided by each product, communicating with software representatives to address any inquiries or concerns, comparing the different features offered, and analyzing how effective the software is in handling typical tax situations.
When evaluating these tax preparation programs, we consider factors such as their features and functionality, user experience, interface design, website performance, quality of help, and support services offered.
Best Tax Preparation Software – Buyer’s Guide
What Is Tax Software, and How Does It Work?
Online tax software is a valuable tool that assists individuals in completing their tax returns. These platforms typically require a fee and provide step-by-step guidance to ensure all necessary tax forms are filled out accurately according to your specific filing status and circumstances.
There are two types of tax software systems available: interview-based filing and form-based filing. Interview-based filing involves answering various financial questions, which are then used to populate the appropriate tax forms. This approach is ideal for beginners or those who prefer guidance throughout the process. Popular tax software programs like TurboTax, TaxSlayer, and H&R Block use this interview-style interface.
Form-based filing can be more complex for individuals unfamiliar with specific tax forms. Some programs allow users to switch between an interview format and manually fill out the required forms as needed, providing flexibility for verifying figures or making adjustments during the preparation process.
Who Should Use Tax Software?
Andrew Griffith, a certified public accountant and associate professor of accounting at Iona University, explains that using tax software can streamline the filing process and provide guidance while reducing the likelihood of errors.
Griffith also mentions that Americans have the alternative option of filing their taxes through mail. However, this approach carries unnecessary risks such as delays in processing or delivering tax returns.
“The main advantage of electronically filing taxes is the ability to minimize data entry errors within the tax authorities’ systems,” states Griffith.
While online tax software can expedite the process and facilitate faster refunds, analyze each software’s pros and cons before making a choice.
For individuals with straightforward tax returns (W-2 forms, basic credits without itemizing deductions), using tax software is convenient and beneficial. It’s especially useful if you’re confident in navigating the filing process independently and already know which deductions or credits you intend to claim.
Before purchasing tax software, it’s important to check if you meet the requirements for free filing options. If your tax return is straightforward, you might be eligible to file for free using online software. Certain tax software providers like FreeTaxUSA or TaxSlayer offer free filing options for simple returns.
If your adjusted gross income is below $79,000 in 2023, you may qualify for free tax filing through the IRS Free File program. Seniors, individuals with limited English proficiency, and those with disabilities may also be eligible for free filing services through programs such as Volunteer Income Tax Assistance or Tax Counseling for the Elderly.
When Tax Preparation Software Is Worth It?
Tax preparation software typically operates as a survey, gathering details about your income and expenses. It then compiles this information into a digital tax return that can be electronically submitted to the IRS.
Using tax software can simplify filing taxes and save you money, especially when compared to hiring a CPA or tax professional. However, experts advise that it’s most beneficial for individuals with straightforward tax situations.
According to Rob Burnette, CEO and professional tax preparer at Outlook Financial Center: “If your return is uncomplicated with only wages from Form W-2 and you take the standard deduction, using tax prep software is usually an excellent option.”
What’s the Best Tax Software for Cryptocurrency Transactions?
If you’re wondering whether you should report any Bitcoin or cryptocurrency-related activity, here’s the deal: If you’ve engaged in activities like using, selling, exchanging, receiving as payment, or mining cryptocurrency during the previous tax year, it’s necessary to report all of those activities. This applies regardless of whether you receive a Form 1099 or not.
Out of all the sites we tested, TurboTax offers excellent support for reporting cryptocurrency transactions. In fact, they even have a comprehensive guide specifically for handling cryptocurrency and taxes. So if you need assistance with this matter, TurboTax is your best bet.
Can I Do My Taxes From My Phone?
Filing taxes has become a common practice on our personal computers, but it’s not the only option available. In fact, all the tax services we evaluated this year provide the convenience of filing taxes directly from your mobile phone.
In the past, mobile filing was limited to simple 1040EZ forms. However, that’s no longer the case. The top tax services now offer comprehensive features that allow you to handle even complex returns without requiring a traditional computer setup.
So how do these tax services adapt to smaller devices? Well, they have developed dedicated Android and iPhone applications for seamless integration. TurboTax, H&R Block, TaxSlayer, and Cash App Taxes are among those offering user-friendly apps. There are also mobile versions of their websites available from FreeTaxUSA, Jackson Hewitt, and TaxAct.
With these options at your fingertips, you can confidently take care of your taxes anytime and anywhere using just your smartphone or tablet. No longer bound by the need for a desktop or laptop computer, file with ease on the go!
>> File Your Taxes Online With TurboTax >>
How Can I Keep My Tax Data Secure?
When you transmit confidential data through an external network, be cautious. This applies especially to tax-related information and even more so if you’re filing from a public place like a coffee shop or the airport. In fact, it’s advisable not to do so at all.
Thankfully, safeguarding your online activity is easy with the use of a VPN (Virtual Private Network). The most reliable VPNs establish a protected connection that encrypts your data. This ensures that anyone who tries to intercept it will only see unintelligible content.
How to Choose Tax Software
If you’re unsure about your requirements or the cost involved, it may be beneficial to analyze different online tax filing providers and the services they offer. Here are a few aspects to explore in detail:
- User Experience: Tax software that simulates an interview-style process, inquiring about your income and any life events relevant to deductions, offers more guidance compared to a basic fill-in-the-blank approach. The capability to import forms like W-2s is preferable to manual input of numbers.
- Support Options: Most tax software platforms provide searchable FAQ sections or knowledge bases, with some offering video tutorials or user forums to assist with queries. While audits are rare for most taxpayers, if you perceive a risk and wish to purchase protection, it’s crucial to comprehend what your chosen software offers.
- Tax Professionals for Assisted Help: A notable feature in recent times has been the provision of one-on-one assistance from human tax professionals, accessible live on your screen. Depending on the provider, these professionals can offer tax advice or review your entire tax return before filing (although such assistance may involve an additional fee).
- Availability of Tax Forms: After identifying a provider that excels in the aforementioned areas, the next step is to select a package covering all necessary tax forms and schedules. Individuals with straightforward tax situations may only require a package encompassing the basic 1040 form.
Conversely, individuals with multiple sources of income, itemized deductions, or business, investment, or rental income typically require access to additional schedules and forms, necessitating the purchase of a higher-tiered package.
Best Tax Preparation Software – FAQs
What Is a ‘Simple’ Tax Return?
Filing a single W-2 form from an employer is classified as a straightforward tax return. In this case, you won’t need to itemize deductions, report investment income or rental property, disclose freelance earnings, or claim business expenses such as a home office.
Intuit and H&R Block are examples of companies that outline the additional intricacies associated with their more advanced products. It’s advisable to consult their lists before making a purchase if you need more clarification. In many instances, you can begin filing for free and then upgrade your service level if necessary.
When Should I Pay Extra to Get Live Assistance From Online Tax Software?
The advantage of efficiently designed tax software lies in its ability to eliminate the need for additional payment for professional assistance. All the necessary information should be easily accessible with just a click or two.
If you frequently desire direct interaction with a human tax expert, or if your tax circumstances are intricate, it might be more beneficial to choose tax software that offers expert support or consider hiring your own CPA.
How Much Does It Cost to Hire a CPA? Is It Worth It?
While software programs can be valuable for complex tax returns, it’s often best to seek the expertise of a human professional. According to the 2020-21 Fees Practices Survey from the National Society of Accountants, working with a CPA for your tax filing can cost between $200 and $500.
The final price will depend on factors such as the complexity of your return (including schedules and extra forms) and your geographical location. Additional schedules, like those for rental income or investment gains, may incur an additional cost of approximately $100.
If you have self-employment income, itemized deductions, or investments, paying extra for a CPA is likely worth it. It provides peace of mind knowing that an expert will handle all aspects of your forms. Keep in mind that investing more in fees could result in a better return on your taxes overall, making it a wise financial decision upfront.
Best Tax Preparation Software – The Bottom Line
Using online services for tax preparation and filing can be a convenient and efficient way to handle your taxes, saving you both time and frustration compared to traditional paper filing. These services have advanced significantly in recent years, making them even more user-friendly.
They may even help you discover deductions that you might not have thought of before, potentially increasing your tax refund. If you’ve had difficulties with web-based tax solutions in the past, it’s worth giving them another chance this year as they continue to improve.
>> File Your Taxes Online With TurboTax >>
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Article paid for by: PlayTogga, partners@playtogga.com
The news and editorial staff of the Bay Area News Group had no role in this post’s preparation.
