Nobody likes filing their taxes, but it must be done, and there is software out there that makes the job a little bit easier for you and me. Each service has its own quirks and finding the right one that caters to you can be a task.
This article looks to make that task a little easier, giving you 5 of the best tax filing software services and highlighting their pros and cons, from prices to professional support, there is something here for everyone.
Why you need to do your taxes?
There are a host of benefits attached to doing your tax returns, it is important that you fill them in year on year to account for any extra taxes paid or changes in income or your income situation. You could even be owed money by the IRS, sometimes you can be taxed too much and not claiming any tax back before the end of the tax year is giving the government your money for nothing.
You could also be eligible for credits and you will find yourself better protected if the IRS decide to audit you. It also allows you to contribute to a Roth IRA or a pension because in the case of a Roth IRA it will show that you have the income to qualify for it, and because the Roth is tax-free, you can save yourself money in the long run. And let us not forget about the peace of mind you get when your taxes are filed, it is a weight lifted off your shoulders! (for a year anyway).
Why getting tax filing software can be a smart move
For many of the reasons outlined above, getting your taxes filed is a process that is important and should be done as quickly as possible. Downloading or paying for software can be expensive, but it makes the job easier.
Including the outlined reasons as to why you need to file your taxes, the smart move is to utilise the professional support that you get from these services because it will further enhance your chance of getting deductions, credits or payments that you may have not known you were entitled to.
So, you may pay for the services, but it could end up making you more money with its advice. Furthermore, saving time is parallel to saving money, so if you can find a good time/cost balance, you’re winning.
What to look for in a tax filing software
Support: Many people will utilise tax filing software because they do not know how to go about filing their taxes or because they want to make it easier on themselves, so having a tool that offers expert support or guidance while you are using it is important. It shows both competence and a focus on customer care. Ideally, it should not come at an extra cost, but often it can. If it does benefit the user, then an added cost for good support can be okay.
Ease of use: Most people fear the idea of doing their tax returns because it seems like such a complex task. Ideally, a good software will have an easy to navigate interface that makes life as easy and simple as possible for the user. A complicated or vague menu will only add to the stress that you may be feeling while doing your taxes. Simplicity is key!
Value: Unfortunately, in most cases, you will have to pay to use tax filing software, but there is a reason they cost money. They make sure that you pay or get what you owe or are owed from the IRS and do so conveniently. Now, you do not want to be overcharged for software, but buying a good service can save you time, which in turn saves you money. Finding the right balance is key.
1. H&R Block
H&R Block sits atop of this list because for my money it is the best tax filing software on the market. There are a variety of strong and unique features that make it stand out. For one, it is easy to use, navigate and understand each tax sheet with comprehensive support for each one.
It lets you save on the spot and return when more convenient to you, which is great if you would rather do your returns over time or if you are busy. It offers not just support, but H&R have offices with professional representatives in all 50 states. As well as that, if you need even more personal assistance, for $70 you can schedule a screen-share with one of these professionals.
Like many of the services on this list, it offers a variety of packages, ranging from free to premium and self-employed. Each package offers something different and unique. I find the self-employed package to be a little expensive but the ways in which they help and advice regarding what those who are self-employed can claim, it makes it worth the money. A final premium feature that I rate highly is the integration with the stock market. You can import up to 500 stock market transactions which is comprehensive for anyone with money tied up in investments.
With a history of quality tax filing spanning 25+ years, TurboTax is a tool that packs quite a punch! (It is probably the most expensive of the services, but the reason you pay more is because you get more). It gives clear and concise guides and Q&A’s as you fill in your tax forms so if you do not understand some things, it will give all the necessary details.
Any tax deduction or credit you can think of has clear information on it as well which makes it easy to see what you are or are not entitled to. Another caveat I enjoy is its integration with cryptocurrency. As of now, it is the only tax filing service that links with Coinbase, so you can import your crypto investments over and they will be accounted for. It also works well with stock market investing applications. Just be sure to check that your investing platform of choice integrates!
One thing to be aware of with TurboTax is its consistent upselling of add-ons or personal audits. You do not want to pay $40-45 to fill out your federal or state filing forms and end up paying $100+ because you have been upsold on add-ons. Upselling is okay in moderation, but at times it feels like if you click on something, you will need to pay to access it. In general, TurboTax is a strong service, it is professional and easy to use. It is expensive however, so be sure that it fits your needs before committing to it.
3. Tax Slayer
Tax Slayer is like TurboTax’s slightly less talented brother, but in many ways that is a good thing. For one, it is cheaper, charging between $17-20 for federal returns and $32 per state return. It supports all major IRS forms (which it should), and importantly, has an easy to navigate user interface with a seamless mobile application to help you file on the go if you need to.
Its toolbar on the left is quite easy to navigate and each form you would need to fill out has its own section with solid information on each one. It takes the pain out of doing it all yourself and trying to understand every detail. Its interrogatory pages do not contain as much information as TurboTax or H&R, but at the price you pay, there must be some trade-offs.
My favourite feature attached to TaxSlayer is the uses that It has for both small business owners and those with side incomes. The classic package gives access to all the forms you will need to fill out, and considering the lower price you pay per return, it is a solid deal. Similarly, if you are self-employed, it offers a wealth of information on what you can claim along with how and why you can claim it. If you purchase the pro version, you get access to a good support line with professional and technical support.
Although it is not the most detailed software and its classic package offers more limited assistance than the others on the list so far, TaxSlayer is a good tool to utilise if you want slightly cheaper returns with good information and support.
4. Credit Karma Tax
For many people, Credit Karma Tax is probably the service that is most accessible. Not because it has any fancy bells and whistles, but because it lets you file your taxes for free. This is useful for people with smaller incomes or students that may not be able to afford an expensive service. In fact, it offers a variety of tax deductions for students which is a big plus. It is quick and easy to use and has a simple navigation menu that supports most IRS forms.
However, how far can free really take you? Well for one, its support services are not particularly strong, which means you will likely be using CKT because you cannot afford/do not want to pay for a service or because you know exactly what you are doing. I would say that most people are somewhere in the middle and I think that in general, there are other services available that balance support and cost a little better.
However, you can fill in your Schedule C for free which means that in 2020, a year of uncertainty where many Americans may have lost employment or seen a change in their employment status and joined the gig economy or taken on a side job, you are covered with this feature.
5. Tax Hawk
The final software on the list is the well-priced Tax Hawk. While it may not offer as many of the features as the others on the list, there are features offered in Tax Hawk that I think are useful. For one, it does include good integrated support for landlords. It has a built- in calculator which is easy to utilise and its pro package deals with the Schedule D, E and F forms comprehensively.
It offers free federal filing and has a flat rate of $12.95 per state and with its new pro support feature, you can pay $25 and get upgraded to live chat, text or video support. In terms of value, TaxHawk is probably the most balanced. While it is not as comprehensive as Turbo Tax or H&R Block, it offers more than Credit Karma Tax by way of information and support, meeting you somewhere in the middle.