The best tax software programs are specially designed to help you navigate the often-times difficult world of tax filing. They present better ways to navigate technical documents while also providing you with updated software that can keep up with the latest federal tax policy changes. You want a program that can help file your taxes quickly and conveniently while allowing you to maximize potential tax credits and returns.
In this article, we’ll uncover some of the most reputable tax software programs to help make the tax filing process much easier.
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The Best Tax Software for Online Filing in 2021
The many benefits of tax software have luckily translated into demand for the service, which in turn has resulted in a wide selection of programs available for both individual and business taxpayers. However, not all of the available software works the same. And so this brings us to the compilation of the industry leaders in the tax software industry, with excellent features that will make tax filing much easier.
Intuit TurboTax Deluxe
TurboTax by Intuit is premium tax software that offers online filing services for individual and business taxpayers. The software offers thorough coverage of tax topics in the form of a watered-down questionnaire that is easy to understand and fill out. The software also makes use of what is known as the wizard approach, which displays sections of questions, and you can shift back and forth on each section.
The questionnaire starts with your personal background, including your address, social security number, occupation, among other queries. Users who have used the program more than once will find their new documents auto-filled with details from pre-existing forms.
After that, the software will present you with key sections of the program, which involves identifying your sources of income, deductions, credits, and other relevant information also through questionnaire format. These tax-related situations can affect your tax deductions, such as owning a home and having children, among other situations. The program will also provide you with simply worded explanations to help you understand the process better.
The Deluxe version also stands out as it gives you more options to itemize your entries to help maximize deductions and credits.
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H&R Block Deluxe
H&R Block is a trusted brand name in the tax preparation industry. There are four services under the tax software lineup. It starts with a free version for federal state filing, a deluxe option, a premium version, and a self-employed version. However, we’ll highlight the Deluxe version, which focuses on your Wage and Tax Statement (W-2 form).
H&R Block Deluxe also features a wizard-type questionnaire. This questionnaire focuses on trying to identify your sources of income and proof of income. You can submit proof by uploading a PDF file or a picture or manually filling out the information. The Deluxe package also features add-ons like the option to itemize your answers to get more credits, more technical support and informative bits of information, and the ability to store and organize your tax returns for up to six years. Besides that, it allows users to connect directly to financial institutions to import data directly from those sources.
Once you’ve completed the questionnaire, the website will then review your returns and show you any errors they’ve found. It will also automatically transfer applicable data into your state returns. After that, the Wizard will guide you through the e-filing process and will give you the option to pay software fees before or after the filing process.
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TaxAct
TaxAct is less well-known in the tax software community, but it offers the same high-quality features for getting your taxes done. The software offers four services in its lineup. This includes:
- a free version for filling out basic 1040 forms without deductions and credits;
- a deluxe edition that lets you itemize and claim several other tax deductions and tax credits;
- a premier edition for reporting on investments and rental properties;
- and a self-employed package that comes with the complete set of tools for freelancers and the self-employed.
TaxAct also makes use of a questionnaire in wizard format to get your information throughout. The wizard questionnaire divides the questions into categories, and you can pick and choose which categories to fill in first. You will also find resources about tax topics scattered throughout the page. Other handy features include importing your previous years’ tax returns from external tax software and your W-2s and 1099 information. There’s also a TaxAct Donation Assistant, which helps you to quickly calculate the deduction value of donated household items and other objects.
The software stores your information through the website, which means that you can access it anytime using the same user account across different devices. TaxAct also offers much technical support via email or phone, and access to real-time advice from a tax professional.
TaxSlayer
TaxSlayer is polished and efficient tax software with a unique pricing strategy. There are four services in the TaxSlayer lineup. Each of these packages comes with different levels of support from tax professionals. Nevertheless, these packages offer the same basic functionality and features and only differ in terms of support.
TaxSlayer’s interface looks professional and well worth the cost. Like other options on this list, TaxSlayer also allows users to import previous tax returns, along with your W-2 and 1099 or 1098, from providers or photos. The software is also cloud-based, which means you can work on your returns using different devices.
As we’ve mentioned, the program is keen on offering different levels of support. It has a searchable knowledge base for general guidance, free tech support via email or phone. The premium and self-employed packages also get additional support in the form of live chat functions. There’s also on-demand tax assistance called Ask a Tax Pro. The latter feature requires users to submit their questions through their TaxSlayer accounts, and they can expect to receive written responses from IRS-certified tax professionals.
Visit TaxSlayer Official Website
Credit Karma Tax
Credit Karma is a popular tax software option that will help you file taxes completely free of charge. The brand is a familiar name in the banking industry, mostly because they provide free credit monitoring and reporting services. The Credit Karma Tax is the latest addition to its services, and it offers basic tax preparation and filing services for federal and state filing. It also supports most major IRS forms and schedules, which means that most people should be able to use it to file taxes. Here is the catch though. Interested users must have a pre-existing Credit Karma account before they can access the Credit Karma Tax software.
Like all tax preparation services, Credit Karma Tax provides an online platform that takes down all your tax information. The software should offer up helpful content along the way to help you learn about specific tax concepts, should you get lost. Once you’ve completed the section that seeks to establish your federal tax situation, the site will then auto-fill your state returns using the data it got from the federal form. Credit Karma is only available in a single-tier, free package that you can sign up for online.
Visit Credit Karma Official Website
FreeTaxUSA
FreeTaxUSA is low-cost tax software that offers basic federal filing completely free of charge. We say low-cost because it will still cost you some money, at least for state filing and the software’s deluxe edition.
The user interface of FreeTaxUSA is practically a hybrid between a guided and independent questionnaire. This means that the user will need to apply some critical thinking skills to figure out where to enter pieces of information. Important sections of the questionnaire tend to contain more information, such as the deductions and credits section. But the best feature of all is the summary section. This lists all the information you’ve entered into the questionnaire through a single panel. The purpose of this section is to allow you to check if you’ve accidentally missed any critical information.
Overall, FreeTaxUSA offers an impressive user interface and quick navigation features. It also features easy-to-use in-software calculators for depreciation, withholdings, credit, and more. Some calculations ran in the background without users needing to touch them. For the most part, free Tax USA is a free service, with minimal charges for state filing.
Jackson Hewitt Online
Jackson Hewitt Online is another tax software with a long-standing reputation in the tax preparation industry. The company currently offers one method of online filing through the Jackson Hewitt Online service. Unlike many other online tax products or downloadable tax software, Jackson Hewitt Online covers all tax filers and tax situations with one product.
The Hewitt platform is minimalistic, no-frills, and uncluttered, which highlights its practical value. While the DIY software doesn’t offer direct consultation with experts, it does offer customer service help via chat and phone. Suppose you’re dealing with more serious issues. In that case, you also have the option to hire a Jackson Hewitt tax professional to give you advice or to file your taxes on your behalf. When it comes to the issue of security, the software encrypts your data and lets you opt into multi-factor authentication. Overall, Jackson Hewitt offers a simple, straightforward, and affordable service for filing taxes.
Visit Jackson Hewitt Official Website
How Online Tax Software Works
Tax software programs usually require users to create an online account, submit documents that verify their identity and tax details, and then fill out a detailed questionnaire patterned after various IRS forms. The questionnaires will ask you for a series of information. It starts with details to identify you, such as your Social Security number(s) and tax ID number, among other information.
The questionnaire will then move on to tax-specific questions. These questions identify your income, deductions, credits, health insurance, past tax dues, and more. The software performs calculations and analysis in the background as you key in your answers. Most tax software applications are also designed to be more aesthetically pleasing than the highly technical and boring IRS forms. The forms they provide are also flexible and editable. This means you can always go back to particular sections to change or complete your answers.
Once you’ve filled out everything that the software asks for, the software will automatically review the document for any incomplete or erroneous entries you might have made along the way. The software will also automatically calculate your taxable income, tax bracket, and total tax dues for the year. Once everything is ready for submission, the software will handle your tax data transfer to any state returns you must file. You’ll be asked to pay a small service fee, usually within the range of USD 35 to USD 100. After that, you should be able to file your taxes for the specific year with just the click of a button. You should also be able to receive proof of payment for the transaction.
Practical Benefits of Tax Software
While filing your taxes on your own is the standard expectation, many people tend to miss out on a few details. This easily leads to them paying more or less than what they actually owe the government. On the other hand, you can always pay an accountant or professional to handle your taxes. But of course, that comes with a labor cost that brings up your total fees. The middle ground between these two options would be using tax software, which offers independent filing but with technical assistance. In addition, tax software also comes with a variety of unique benefits which help prove its worth as an essential service for filing taxes:
Maximizing Tax Deductions
There are many changes to tax policies, and the changes occur so frequently that it can be hard to keep up with them. For example, new deductions are made available to those who work from home every year. Missing out on this information will lead to you missing out on tax savings. The latest edition of tax software should take into account all of the latest policies regarding deductions and credits. This would be a big help in getting you the most accurate calculations. It will also ensure that you get all the deductions and credits due to you. The right software will also take note of your personal circumstances to determine if you are qualified for deductions and credits. This way, you won’t underpay or overpay your taxes.
Convenient Filing From Your Computer
The traditional way of filing taxes involved filling out forms in longhand, then submitting them in person to IRS stations. But with the advent of high-speed internet and the availability of advanced tax software, there is simply no reason for you to take the more difficult route. Most programs have e-filing capabilities, which is a most crucial feature. This allows you to file your taxes directly through the software. And that means you no longer have to submit your documents directly with IRS offices. Mind you, IRS offices normally take anywhere between five to seven days to process your filings. But at the very least, the program can forward your documents nearly to the IRS for immediate processing and for much less effort. You’ll also get to choose how you want to receive your tax returns. That’s either through mail or direct deposit into your bank account.
IRS Audit Compliance
The IRS is very strict when it comes to the accuracy and veracity of the information on tax filings. Of course, being human makes us susceptible to making mistakes. But in the case of taxes, we are not allowed to make even the smallest mistakes. Suppose you’re not good with details or are filing your taxes for the first time. In that case, tax software can help you reduce errors. This in turn will reduce your risk of getting penalized if and when the IRS audits your tax filing. Tax software will automatically check for errors in your documents before you file. Some programs even offer a guarantee for any errors that the software fails to detect. What this means is that the company will pay you for any penalties that you encounter as a result of the software failing to detect an error on your filing.
Answering Difficult IRS Questions
The subject of taxes is a very serious and intricate business, and most people have questions about their own filings. A tax software application can be a most informative tool to get taxpayers the information they need. First off, tax software offers easy-to-understand comprehensive questionnaires. And by that, we mean they are watered-down versions of what you will find on technical IRS documents. They also offer trivia and other bits of information related to particular sections and associated tax policies. These help to ensure the reader understands the context of each query. The best services also offer real-time technical assistance. This usually involves allowing users to get in touch with a live community of experts. At the end of the day, the best tax software not only helps you comply with IRS requirements. They also help you learn more about the tax system and policies.
Long-Term Storage of Tax Documents
Record-keeping is an important business, especially when it comes to taxes. Your tax documents contain your personal and financial information, and that makes them highly confidential documents. Other than that fact, you will most certainly need your tax documents again in the future, and as such they must be kept in long-term storage.
If you’re having trouble retrieving tax documents from the past, tax software can help solve your storage problems going forward. The tax software always retains a copy of your filing for storage either on your computer or a remote server. Given the option, store your documents long-term on a cloud storage solution with security features or network-attached storage that you can access across multiple devices. It’s also a good idea to have a VPN to obscure your private information from the prying eyes of potential hackers. Set up your own VPN today with this comprehensive guide.
Saving Time With Auto-Fill Functions
Most tax software has auto-fill functions. This basically keys in the information that you’ve already typed in previous queries. This way, you won’t have to input the same information twice. And this in turn saves you a precious few seconds each time you need to fill out a document. For example, most tax software has the ability to take note of your answers on federal filings. It then automatically copies them onto similar questions on your state filings.
With this ability, you will only have to type your basic information once and then click on similar sections to accept the suggested answers using auto-fill. This is a little aspect that you can’t do when you’re filing your taxes manually. The combination of auto-fill functions and auto-scans for errors will not only save you time. It will also help to ensure the accuracy of the information on your filings.
Filing Taxes Online Has Never Been Easier With the Best Tax Software
We’re hoping that our review will give you ideas about what to look for in a tax software program. For starters, the software must offer the option to send your documents straight into the hands of the IRS office with jurisdiction over your place of residence. Ideally, the service should guide you through the tax filing process and explain difficult concepts. It should also offer real-time tax assistance through chat, email, or phone. Also, look for the latest version of the software as this ensures that it is up to date with the latest tax policies.
With the right software, you should be able to handle all of your IRS responsibilities each time the tax filing season comes around. If you found this article useful, you might also be interested in reading about the best budgeting apps and the best robo advisor platforms to help you manage your money.
