When it’s time to do your annual income taxes, it doesn’t always mean that you need to have somebody else do the preparation for you. That is unless you’re uncomfortable doing it for yourself or if you have a complicated tax situation. For simple straightforward tax prep or small businesses, there are several online tax preparation software options available. We’ve checked into some of the more popular ones to learn why they are so highly recommended by other users. We discovered that each one of them have pros and cons and some are better than others.
Which tax preparation software is the best?
This depends on your tax situation and your personal preferences. If you ask a dozen people who use online tax preparation software, you’ll get different answers. It’s best to learn about the advantages and disadvantages that each has to offer and to make up your own mind about which would be the best option for you. Here we compare the three top options including TaxAct, TurboTax and H&R Block.
TaxAct online software
TaxAct offers a free version if your tax situation is straightforward and very simple and you are eligible to file a 1040EZ form. If not, you will need to go with one of the other premium plans.
- Basic Plus – This plan costs $9.95 if you are only filing federal and $19.95 if you must file both state and federal. It’s recommended for anyone filing as head of the household and claiming dependents on the 1040A form.
- Deluxe Plus – This plan costs $39.95 for filers who must file federal only and $39.95 if you must file state as well. It is the choice that is most appropriate for more complex tax situations and is the recommended choice if you are an investor or a homeowner or both.
- Premier Plus – The Premier plan costs $39.95 for federal and $39.95 per state and is recommended for complex tax situations with the exception of self employed filers.
- Self Employed – This plan costs $59.95 for federal filing and $39.95 per state and is used by filers who are self-employed. This package also comes with audit defense and a few other benefits.
- Charges to pay with your refund: $20
- Approximate time to complete: 115 minutes for more complex returns.
TurboTax offers a free edition for filing federal and state taxes if you qualify to use the 1040EZ or 1040A forms with a simple tax situation. If you delay filing state taxes to within a few weeks of the deadline, it is no longer free.
- Deluxe Plan – The Deluxe plan costs $39.99 to $59.99 if you do your taxes yourself with the software. It’s between $89.99 and $119.99 if you have their tax experts help or do it for you with TurboTax Live, with a remote assistant who is an IRS enrolled or CPA agent consultant. This is an on-demand service that they offer for tax situations that are moderate to complex.
- Premier Plan – The Premier plan costs $59.99 to $79.99 for do it yourself. With TurboTax Live, its $139.99 to $169.99. This option is for landlords and investors who do not qualify for the pass-through income with a forma legal business structure.
- Self-Employed – This plan is $89.99 to $119.99 for do it yourself tax preparation and $169.99 to $199.99 if you use TurboTax Live help. This option is for filers with complex tax situations and small business owners.
- State Return Fees – These fees are usually between $36.99 and $39.99 with the higher priced plan options.
- Cost to pay fees with refund: $34.99
- Average time spent preparing moderately complex taxes: 100 minutes
H&R Block offers free federal filing software for filers with tax situations that are simple to moderately complex.
- Deluxe plan – This plan costs $29.99 to $49.99 for federal with free functionality and a few additional features.
- Premium – The Premium plan is $49.99 to $69.99 and offers support for filers with tax situations that are more complex including investments, rental property ownership and itemized deductions.
- Self-Employed – The Self-Employed option costs $89.99 to $104.99 and it is intended for the most complex tax situations which involve income from small business.
- Tax Pro Go – This option is $49.99 and up. Tax Pro Go is a hybrid option that is similar to the TurboTax Live option involving a hybrid of do it yourself along with a remote agent that assists with the preparation. This option can become very expensive. The more complex the tax situation, the higher the charges.
- Tax Pro Review – This option is $119.99 and it involves a remote review of your taxes. It is an add on service that you can add for the fee to any do it yourself package.
- State Return fees: Free with the free edition and $36.99 for higher priced premium plans
- Price for paying with your refund: $39.95
- Average time spent preparing moderately complex taxes: 90 minutes.
Which online Tax preparation software is the best?
The least expensive option is TaxAct by far, but the one downside is that they do not offer the hyb. rid service of remote human assistance that is provided by H&R Block and TurboTax. TurboTax is the next cheapest, offering their live agent assistance on demand and H&R Block is the most expensive. What it really comes down to is a matter of preference. All three are popular choices and come with their own set of pros and cons.