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We are heading into crunch time for tax preparation. You should already have received any W-2 or 1099 forms detailing your income, as well as the IRS letters that are new this year to help you reconcile your stimulus payments from the federal government.
If you’re filing your taxes yourself, without help from a tax accountant or tax preparation company, there are plenty of do-it-yourself software options to help. But which tax software should you choose to file your 2021 tax returns?
How to Choose the Best Tax Software
Before you invest any time or money into tax software, think about some of the things you need. Ask yourself these questions to guide your choice.
- Are you a small business owner who needs to be able to file 1099 income?
- Is your return complicated, with investments and real estate, or fairly simple?
- Do you want access to expert help if needed?
- Does the company provide audit defense?
- Is there a maximum refund guarantee?
- Does the software provider participate in the IRS Free File program?
This last question is important if you earn less than $72,000 per year and want to file your taxes for free directly through the IRS website.
It’s important to note that two of the bigger names in tax prep software, H&R Block and TurboTax by Intuit, have stopped their participation in the IRS Free File program. H&R Block stopped in 2020, but TurboTax just made the announcement this January that it would no longer serve consumers through IRS Free File. The company cites “limitations of the Free File program,” saying that it wanted to innovate in ways “not allowable under the Free File guidelines,” TheStreet.com reported.
1. Cash App Taxes (cash.app)
If you’re looking for free, easy-to-use tax prep software, Cash App Tax (formerly Credit Karama Tax) could fit the bill. With a rating of 4.8 out of 5 stars in over 1 million reviews (under its former name), Cash App Tax is simple, streamlined, and straightforward. It’s equally easy to file through your smartphone or a computer, which is perfect for taxpayers who primarily rely on their mobile device for internet access. You can also import your past returns if you filed using Credit Karma Tax.
Filing both federal and state returns (when applicable) is free. And, if you sign up to have your refund direct deposited into your Cash App, you could receive it faster.
The company offers a Maximum Refund Guarantee if you file an amended return through another tax prep software and have a larger refund or smaller tax bill. You will receive the difference back, up to $100, in a gift card.
There are few downsides to this software, but you should be aware that you’ll need to download the Cash App to access it.
We pinpointed TaxAct as one of our favorite tax prep software companies recently based on its affordability, ease-of-use, and scalability based on your needs. Additionally, TaxAct offers all e-fileable IRS forms free.
TaxAct offers free expert help with your tax returns through March 31, 2022, whether you choose their freemium package or one of the more robust packages for people with more complex returns. The Xpert Full Service package delivers one-on-one help with filing from a tax professional. The company guarantees the accuracy of their returns with the maximum refund allowable by law, up to $100,000. When you’re comparing tax software, be aware that TaxAct does charge $19.95 for each state return filed through its freemium package.
TurboTax’s freemium version provides everything you need for a simple tax return. However, if you require guidance, you won’t be able to use the IRS Free File program with TurboTax. You can always upgrade to TurboTax Live for expert help, however. TurboTax offers one state tax return for free with its freemium version.
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Rated as the #1 best-selling tax software, TurboTax garnered an overall rating of 4.6 out of five stars across more than 250,000 reviews. With a solid reputation and an intuitive interface, TurboTax may be pricey if you require more than just the free version, but online user reviews say it’s worth it.
For self-employed taxpayers and 1099 contractors, TurboTax provides the added convenience of integrating with QuickBooks, as well as Square, Lyft and Uber to assist with tracking income and expenses.
Like TurboTax, the freemium version of TaxSlayer offers one free state tax return in addition to your federal return. The prices for the upgraded version are also incredibly reasonable, with the Classic package, which includes all forms, deductions and credits, at just $24.95. Even freemium and Classic users get unlimited phone and email support.
The Premium version of TaxSlayer, for $44.95, delivers expert help in the form of live chat and the Ask a Tax Pro service. You can also “skip-the-line” for phone and email support, making this package a tremendous value if you want the security of knowing you can get help if you need it.
Finally, self-employed people and 1099 contractors can easily file all necessary forms for their personal and business income and expenses for just $54.95. The Classic, Premium, and Self-employed versions, however, charge $39.95 for each state tax return, so it’s important to factor that in if you are comparing costs between software.
In addition to providing an accuracy and maximum refund guarantee, TaxSlayer also offers a few perks, such as the ability to file your taxes through your mobile device, and to cover the cost of the software with your tax refund.
Jackson Hewitt has brick and mortar tax prep locations, but for the do-it-yourselfer, or even those who want a little guidance, the online software delivers what you need for one, low, flat-rate price. You can file federal and state returns online for $25, regardless of the amount or type of deductions and credits you have. Live chat customer support can help if you need a hand. You’re guaranteed the maximum refund or you’ll receive the difference plus $100 back. The company also has an accuracy guarantee that will cover any interest or penalties from the IRS if there is an error due to the software.
For $99, you can file your taxes online with a Jackson Hewitt Tax Pro without leaving your home. At less than half the price, TaxSlayer may be more affordable for those needing tax assistance. But Jackson Hewitt does all the tax prep for you, rather than you filling out the return and requesting help along the way.
FreeTax USA is part of the IRS Free File program and has a freemium offering for filing Federal taxes, with a $14.99 charge for each state tax return. Unlike most other tax software programs, FreeTax USA is free for even more complex returns, including those for self-employed and 1099 contractors. If you have a home, investment income, rental income, or deductible student loan interest, filing is still free. You’ll also enjoy free step-by-step guidance as you complete your tax return.
You can also import your prior year’s returns for free to make filing even easier.
You can pay an extra $6.99 for priority service with the Deluxe package, which delivers priority support through the live chat, unlimited amended returns, and audit assistance from tax professionals. You can pay for state returns or the upgraded Deluxe package with your tax refund or with a credit card.
As with most other tax software, FreeTax USA offers an accuracy guarantee in their calculations and formulas, and a maximum refund guarantee. However, the refund is not as generous as other companies. FreeTaxUSA refunds fees paid for using their software and offers a coupon for a free amended return. If you’re looking for straightforward, free tax filing software to fit any situation and accommodate up to 350 different types of deductions, FreeTax USA could be a solid choice.
Like Jackson Hewitt, Liberty Tax is a brick and mortar tax prep service that moved into online DIY tax software. The company has been around since 1997 and has 2,700+ locations nationwide. Liberty Tax offers three tiers of service for online tax filing, but does not offer a freemium version for simple returns.
The Basic package is a pricey $34.95 for taxpayers with no dependents, investments, interest, or other deductions. The Deluxe package is listed at $55.95, and covers taxpayers with homes, investments, dependents, child care deductions, and other itemized deductions that could make filing taxes a bit more time-consuming and confusing. Finally, the Premium edition is $74.95 and is designed for 1099 contractors or self-employed individuals. While some tax software offers separate packages for taxpayers with rental properties and those with other 1099 income, Liberty Tax covers it all in the Premium package. In all cases, state tax returns will set you back an additional $36.95.
As with other tax software companies, Liberty Tax offers a maximum refund guarantee, and protection that their calculations will be correct. If there is an error on your return stemming from the software, they will reimburse you the penalties and interest assessed by the IRS.
Liberty Tax has a longstanding reputation as a reputable tax firm. If you want to work with a locally based company but want the convenience and cost-savings of filing your taxes yourself online, consider Liberty Tax. Liberty Tax also offers virtual filing services through their local professionals in offices near you.
H&R Block is another trusted name in tax prep services, with locations nationwide. It’s important to clarify H&R Block’s offerings. The company provides online filing, with prices ranging from free for simple returns up to $114.99 for self-employed taxpayers. The company also has downloadable tax software starting at $29.95. You have to read carefully to determine which offering you’re buying, but the software and online filing options are both easy and intuitive to use.
As far as pricing, the Basic software costs $29.95 plus $39.95 for state tax software and another $19.95 to e-file through the state. The Deluxe + State package is $54.95 but includes one state tax return and e-filing included. The Premium package, designed for rental property owners, 1099 contractors, and other self-employed taxpayers, costs $74.95 but includes the state tax program. Finally, the premium and business plan, which can help if you have deductible business expenses, payroll, or you hire 1099 contractors for your corporation, is $89.95, including the state program.
If you opt to file online instead, you won’t pay anything for the H&R Block Basic package. This covers students, anyone with unemployment income, and parents who qualify for the Child Tax Credit. There is no cost for state returns, either. The Deluxe package is for families with slightly more complex returns, such as child or dependent care expenses, itemized deductions, and an HSA plan. It costs $54.99, plus $44.99 for state returns. The Premium package is for those with rental income, investments, or cryptocurrency sales to account for, and costs $74.99 plus $44.99 per state return. Finally, the self-employed package is $114.99 plus $44.99 for each state return.
Finally, like Liberty Tax, H&R Block offers the option to have a professional file your taxes in their office, or virtually over chat, phone, or video. You can also drop off your files and a tax pro can prepare your taxes for filing.
H&R Block is hardly the cheapest tax software, but it’s also not the priciest. It’s important to compare the different packages with each company to find the one that meets your needs.
Finding the Best Tax Software for You
Cost, of course, should not be the only factor when you choose the best tax software for 2022.
Another key consideration is ease of use. If you choose an interface you’re comfortable with, you’re less likely to make data entry errors that could result in an inaccurate return. Software and apps can ensure the math is accurate on your return, but they won’t recognize data entry errors.
Fortunately, with so many options on the market, there is sure to be a tax software that fits your comfort level and your budget.