Tax Preparation Software: The Best Options for Easy Filing
If you are a DIY tax filer, check out our 4 favorite tax preparation software options.
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Unless you're fairly certain that you're expecting a refund from the IRS, tax season isn't usually a happy time for most Americans. Even if you are getting a refund, that really only means that you've given the government an interest-free loan!
That being said, preparing your taxes doesn't have to be a horrible experience, and you don't necessarily need the assistance of a tax expert in order to prepare and file your taxes.
Thankfully, there are some great tax preparation software options that will handle the hard work for you. They’ll lead you through the process step-by-step and ask you the right questions so you can complete your tax returns without stress, aggravation, or high costs.
Some of the industry leaders offer both free and paid versions of their software. Of course, the details will vary (and we’ll cover the specifics below), but in general, free versions may be adequate for more simple scenarios (like W-2 income or non-itemized deductions).
Here are four of our favorite tax preparation software options:
The free version of H&R Block will be sufficient for some people. You can even file your state and federal returns at no cost.
The free version can handle:
- W-2 income
- Income from interest and dividends (1099-INT and 1099-DIV)
- Retirement plan income
- Social security income
- Earned Income Credit (EIC)
- Childcare expenses
- Child tax credits
- Student loan interest
You’ll need the paid software for:
- Itemized deductions (Schedule A)
- Self-employment or freelance work
- Rental income
H&R Block also features a user-friendly interface that makes the process straightforward and simple. You can use the software online, in the app, or download it to your computer.
If you opt for the paid software, you’ll be able to get technical support by phone or online chat. The premium version starts at just $23.99, but you’ll need to pay $67.99 if you’re self-employed or a small business owner. With any paid plan, you’ll also have to add $36.99 to have the tax return filed with your state.
Like H&R Block, TurboTax is another household name in the industry that supports a huge user base and has plenty to offer. TurboTax is widely recognized for being intuitive and easy to use. The software will essentially interview you, asking all of the important questions to get the necessary details for completing your tax returns.
The free version of TurboTax can handle:
- W-2 income
- Earned Income Credit
- Child tax credits
Overall, the free version of TurboTax is more limited than the free version of H&R Block. However, if you have a simple tax situation, the software is a breeze to use and it’s also free to file your federal and state returns.
The paid plans of TurboTax start at $70 plus $40 per state. The Deluxe plan ($70) will search for more than 350 possible deductions and credits to help minimize your tax bill. It will also help you to maximize mortgage and property deductions, and it can handle deductions for charitable giving.
The Premier plan ($100) also supports investment income (including gains and losses from cryptocurrency transactions), and rental income and expenses.
The Self-Employed plan ($130) will be needed for personal and business income and expenses.
TurboTax also offers integration with Quickbooks, which can be a huge timesaver for small business owners, plus excellent customer service and support.
Overall, TurboTax is generally not the cheapest option, but it does offer the most comprehensive software and the best user experience.
If you’re looking for a free option, Credit Karma Tax is one you’ll definitely want to consider. It stands out in some significant ways:
- Unlike competitors, it is completely free
- You can also file your federal and state taxes for free
- It supports itemized deductions
- It supports business income and expenses
- It offers excellent mobile access
For those who are self-employed or have income aside from a W-2 job, the free options are limited with most competitors. However, Credit Karma allows you to file a Schedule C without the need to pay.
Of course, there are some downsides as well. Although Credit Karma does support Schedule C and many other IRS and state forms, the guidance and information that you’ll receive within the program is limited. Some competitors, like TurboTax and H&R Block provide much more in-depth content that can help you to answer any questions you might have.
Credit Karma users also receive limited customer service. Support is for technical issues, like if you’re having trouble with the functionality of the site or app. However, there is no option for support or assistance with tax-related issues. That’s not surprising for free software, but it could be a limitation that pushes some users to pay for a competing product.
Keeper Tax is a new player in the market and significantly different than the other three options that we’ve already covered. For starters, Keeper Tax was created specifically for freelancers and the self-employed. It’s a bookkeeping app that’s also capable of filing your taxes for you.
As a Keeper Tax user, you’ll connect the app to your financial accounts. Your assigned “keeper” will monitor your purchases and keep track of business expenses. You may get a text every now and then to ask if a certain expense is work-related. All of your expenses will be well organized, making life easier at tax time.
Use of the app costs $16 per month, with a 14-day free trial. You can either export a report from Keeper Tax (for a $39 fee) to use in your tax preparation, or you can pay $89 to have Keeper Tax file your federal return for you.
Although Keeper Tax is intended to be used year-round, if you’re looking for an option to file your taxes this year you could still use Keeper Tax. In that case, you’ll connect it to your financial accounts and it will go back and analyze your bank and credit card transactions for deductible expenses.
Keeper Tax is entirely app-based. As you might expect, an app-based tax filing system is not going to be able to handle complex situations that desktop software might be able to handle. For example, Keeper Tax is not ideal for those who participate in high volume trading and it also does not support K-1 or Schedule E forms. However, it handles a Schedule C very well with an easy, user-friendly experience.
Now that we’ve looked at the details of four leading options, here are our top choices for different scenarios and types of users.
Best Overall: TurboTax
Turbo Tax's paid software is the most capable and most comprehensive in the industry. Users also benefit from excellent guidance, both in the form of content that can be read as well as personal expert assistance. However, TurboTax is also priced higher than competitors.
Best Free Tax Software: H&R Block and Credit Karma
Both of these companies provide excellent tax preparation options for free, but in slightly different ways. Credit Karma stands out because of its support for business income/expenses and itemized deductions at no cost.
H&R Block's free version is not an option for the self-employed and does not support itemized deductions, but it does provide more thorough guidance for those who are not tax-savvy.
Best for Freelancers and the Self-Employed: Keeper Tax
Those who need to keep track of business expenses and file Schedule C will appreciate the time that can be saved thanks to Keeper Tax