The best tax software should make your life easier, especially when managing tax can ordinarily be a headache. This is especially as apart from filing federal taxes with the IRS there are also state taxes to file as well.
Even more usefully, however, there are a number of tax software packages available to help you manage your tax returns. These aim to make completing returns simple and easy.
While some have a basic fee for basic filing, some can cover additional tax areas such as investments and real estate, and usually charge extra to cover these additions.
Even still, if the software makes life easier it's worth trying. Here then are the best in tax return software currently on the market.
Note: Tax Day 2020 was postponed from April 15 to July 15 and you might also have been eligible for a stimulus check via the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The current lockdown scenario also means you might have been looking at filing online for the first time, instead of using a tax professional. That makes having the best tax software for now and in the future all the more important.
- Also take a look at the best free personal finance software.
H&R Block is all about good value but supplements that with lots of support for all kinds of tax filing requirements thanks to features like Online Assist and Tax Pro Review.
Most useful to less confident users is the option of dealing with real tax experts at many outlets across the US. There’s a brilliant free edition, H&R Block Free, which offers Form 1040 filing, along with sorting child tax credits, earned income tax credit and credit for the elderly or disabled.
Adding on filing options for schedules 1, 2 and 3 means H&R Block lets you cover a host of other tax bases too. Those with more complicated needs, such as landlords or freelancers should head towards the paid versions.
This tax tool is cloud-based, though there is a desktop edition, while the interface and general workspace is clean and easy to use. It’s possible to import W-2 and 1099 forms and H&R Block also integrates with other packages.
Help is plentiful and being cloud-based means you can log-in from other devices. Add-ons such as Online Assist for CPA help and Tax Pro Review come with extra costs involved, but this is one of the best tax filing options currently available in the US.
If you do your own taxes then get started with Online, which allows you to file easily and securely from either a computer or a smartphone. Choose Free Online if you have a W-2, kids and education costs. There’s a $0 charge per State filed too.
Deluxe Online is for maximizing credits and deductions, plus HSA contributions and currently costs $37.49 instead of the usual $49.99, plus $44.99 per State filed. You can initially start for free.
Premium Online is aimed at freelancers, contractors and investors and is currently $52.49 instead of the usual $69.99 plus $44.99 per State filed. It also allows you to start for free.
Self-employed Online, meanwhile, normally costs $104.99 and is currently $78.74, plus $44.99 per State filed. It's aimed at small business owners as well as the self-employed. That too allows you to start for free.
H&R Block’s Online Assist packages on the other hand, allow you to file online with on-demand help from a tax expert, enrolled agent or CPA. Basic Online Assist costs $49.99 plus $0 per state filed and suits if you have a W-2, kids and education costs.
Deluxe Online Assist is $99.99 plus $44.99 per State filed and is for maximizing credits and deductions, plus HAS contributions. You can start for free. Premium Online Assist is aimed at freelancers, contractors and investors and is $139.99 plus $44.99 per State filed. That too allows you to start for free. Self-employed Online Assist, finally, is just that with help when you need it and costs $169.99 plus $44.99 per State filed, with a start for free option available.
H&R Block offers more however, including tax offices and virtual filing. Its Drop-Off service lets you drop off your documents at your local tax office and starts from $69 plus additional fees per state. Tax Pro Go, meanwhile, lets you get expert tax preparation remotely, from $49 plus additional fees per state.
There’s a Student/Retired option for $129 plus $45 per State filed, a Family/Investor package for $199 plus $45 per State filed and a Business Owner option for $249 plus $45 per State filed package too.
Their In Office option, meanwhile, lets you work together with a tax pro and starts from $69 plus additional fees per State.
Finally, H&R Block does have downloadable software options. These include its Basic Tax Software for $29.95, for simple tax situations, Deluxe and State Tax Software, for homeowners or investors at $54.95, Premium Tax Software for self-employed/1099-MISC or rental property owners for $74.95 along with Premium and Business Tax Software for small business owners with 10 plus itemized expenses for $89.95. Additional fees may also apply for these however.
TurboTax is not cheap to use, but it does offer a quality experience via any one of its editions. There is actually a free edition, which allows Form 1040 filing but excludes schedules 1, 2 or 3.
Therefore, most users with anything more than very basic filing requirements should head in the direction of the Deluxe, Premier or Self-Employed packages. TurboTax is an online filing service, which delivers a simple interface that is no-frills but definitely bang on target for getting the job done.
You can import W-2 information from an employer and also upload a picture of it instead, which makes light work of basic filing tasks as does being able to import 1099s. The paid for editions also feature a practical ItsDeductible feature that works in tandem with a dedicated app.
Self-employed folks can use a similarly impressive expense tracking option via QuickBooks. TurboTax works on all platforms, either via a desktop web browser or using an app-based variation on a phone or tablet.
Support is plentiful and an added bonus is TurboTax Live that lets you speak with a CPA or enrolled agent year round. TurboTax can also help you with the dreaded audit situation.
The online offerings start with a free tier for Federal taxes, and the State adds a reasonable $29.95; this is fine for a 1040EZ or 1040A return, but not a full 1040. The full 1040 requires a step up to the Deluxe tier, which goes for $59.99, and the State return adds $39.99 to the package.
TurboTax includes the 'ItsDeductible' feature, which can assist in calculating the value of donated items. It can also store your documents online for safekeeping if they are needed later, such as for an audit.
TaxAct has been around for long enough now to know how to help its users take on tax filing in no-nonsense fashion. While it’s often seen as a leaner, less flashy online package it does still let you get the job done easily.
There are four versions with a free edition allowing Form 1040 filing but not schedules 1, 2 or 3. So anyone with anything other than super-basic needs should investigate the Deluxe+, Premier + or Self-Employed+ editions.
The latter two come with advanced levels of support for obvious reasons. Filing duties are easily handled using the basic but intuitive site structure, plus there are some useful tools such as being able to import last year’s returns along with W-2 and 1099 forms.
TaxAct is another cloud-based online package, which can be accessed using a web browser as well as via a mobile app. A healthy level of support is on offer, but you’ll need to stump up for the better paid for versions to enjoy live assistance.
A Deluxe+ package costs $54.95 (+ $54.95 per State filed) and delivers everything in the free edition plus more besides. It’s ideally suited to homeowners plus those with deductions, credits and adjustments to file.
The Premier+ model comes in at $79.95 (+ $54.95 per State filed), which includes everything in Deluxe+ with added features for investments, rental property and prioritized support. Top of the tree is the Self-Employed+ package, which for $109.95 (+ $54.95 per State filed) adds on Deduction Maximizer and year-round tax resources.
There are other options too, such as a business specific area of the TaxAct website. In here you’ll find a further four product options, all priced at $109.95 each plus $54.95 per State return. Options include Sole Proprietor covering Form 1040, Schedule C, or Partnership Form 1065, or C Corporation Form 1120 and finally S Corporation Form 1120 S.
Tax Act does a nice line in bundle deals, where you can combine your individual and business tax software for $200. You can also select downloadable editions of its Basic, Deluxe, Premier and Self-Employed packages too, which cost $26.95, $96.90, $101.90 and $124.90 respectively.
TaxSlayer is a little bit different to other cloud-based tax filing software services. Most notably, it’s got a pricing strategy that lets users get full value from its many and varied features while conversely making its support level costs more flexible.
In other words, you can get great value from its four different packages including Simply Free, Classic, Premium and Self-Employed and then only pay for additional help if you actually need it. A level playing field on the features front means that any of the packages can handle the same forms, though the Free edition does exclude schedules 1, 2 or 3.
Indeed, other limitations such as a taxable income under $100,000 will likely drive you towards the paid versions, but they’re all very useful. The TaxSlayer interface is up there with the best of the competition, but it’s leaner on the features front, such as lacking more sophisticated import of forms.
Nevertheless, it ticks over nicely in either a web browser format or through a mobile app edition. Help and support is at hand on all levels, though you’ll only get use of Ask A Tax Pro expert help from the Premium and Self-Employed packages.
If you’re starting out, have relatively simple tax affairs and are single, married and filing a joint return or a student then the basic Simply Free option is a good one. It allows you to file for no outlay with $0 State included.
TaxSlayer’s stated ‘most popular’ package is the next one; Classic which is suited to all tax situations, can be started for free and costs $17 plus a per State cost of $29. Meanwhile, Premium offers up a swift way to prepare and e-file, with the added bonus of priority support as and when you need it. That costs $37 plus State additional of $29.
Finally, TaxSlayer’s Self-Employed product will set you back $47 and also has the State additional charge of $29. There is an online guide to assist users in choosing the best version of the program for their needs.
Even at these affordable prices, a notable feature is the included phone and email support (24 to 48 hour response) on the lower tiers, and live chat on the higher tiers.
Jackson Hewitt Online is as much about having support from real people as it is getting you from the beginning to the end of your tax return. Currently, there are three differently priced tiered packages, with a free edition costing nothing for both Federal and State Returns.
To use the free model you’ll need to have less than $100,000 annual income and only basic W-2 financial affairs. It’s pretty basic in other words. A Deluxe model comes in at £29.99 for Federal Returns and $36.99 for State Returns. The price tiering on this option still requires you to have less than £100,000 annual income and to not be using Schedule A, but it’s useful if you have dependents and you have to factor in tax breaks.
The priciest option comes in at $49.99 for Federal Returns and $36.99 for State Returns, which is impressive thanks to a more universal range of options suited to the majority of folk. While Jackson Hewitt Online can be accessed from anywhere with an internet connection and across platforms, it’s not as well focused for mobile users as the competition.
However, the real selling point for many will be the ability to visit a Jackson Hewitt Online outlet when and if it’s needed.
Credit Karma will most likely be a familiar name as it’s been around for a number of years now, most notably supplying free credit scores. Its range of services now includes Credit Karma Tax, which is another online service for filing personal taxes. One of the most appealing aspects of Credit Karma Tax is that it’s free to use, although the trade-off to that is the fact you’ll need to sign up for a Credit Karma account.
If you’ve already got an account with them though it’s even easier to get started with the step-by-step filing process. Credit Karma Tax also benefits from the addition of support staff who are also on hand to help get you out of tricky tax spots.
Getting your taxes done for free does sound like an attractive offer, and yes, the name of this product does indicate the truth. Federal taxes can indeed be done for free - for all returns including a full 1040, and even more complicated tax situations such as an Earned Income Credit, or a K-1. Adding a State return tacks on an affordable $14.95 fee.
Compared to the competition, FreeTaxUSA does indeed represent the bargain here. There is a higher Deluxe tier offered, which adds Audit Assist, Priority Support and can handle amended returns, but true to the cheapskate origins, it's only an additional $6.99.
Filing federal taxes
The coronovirus pandemic means that Federal income tax returns do not have to be returned until July 15 2020. This provides an extra three months in which to file your federal taxes. Additionally, a law signed in December 2019 means that tax breaks have been extended.
However, do note that the three-month extension for filing federal taxes does not apply to state and local taxes.
However, you may not need to file a federal income tax return if your income is below a certain threshold, though you will need to file a return to claim a refund, such as for tax credits or withheld income tax.
You can find out more information on filing federal taxes at the IRS website.
Filing state taxes
Not every state has a state income tax. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, do not have an income tax. Others, such as New Hampshire and Tennessee tax dividend and interest income, but not earned income.
Instead, these states supplement state income in other ways, such as through property taxes, sales taxes, and a variety of other forms of small taxation.
Additionally, a number of states do not charge state income tax unless you earn over a certain threshold, so low-income workers may not have any state income tax to pay anyway.
However, there are nine states where a flat-rate state income tax is charged regardless of earnings, and these are: Colorado, Illinois, Indiana, Kentucky, Massachusetts, Michigan, North Carolina, Pennsylvania, and Utah.
It therefore remains important to be able to identify your tax liability according to the state you reside in, according to your earnings.
Tips for paying and filing taxes
It's important to keep accurate records of all forms of your income, not just for paying taxes but also for claiming deductions where available. Because state and local taxes as well as tax exemptions and tax credit refund criteria vary from state to state it's important to be able to account for all this information, to ensure that you file accurate tax returns.
If you're unsure about your tax liabilities, especially if you have multiple income streams, then talk to a tax advisor who can help advise you. Using the software featured above can significantly simplify your tax affairs, but they are only as good as the information you provide them with.