Which tax preparation software is best?
When the taxman comes to the door, there’s no need to turn your house into a rummage sale just to pay your dues. All you need is the right tax preparation software. The best software for you should only be as complex as your finances. Otherwise, you can end up paying more for no extra benefit.
The best tax preparation software for the average person is Intuit TurboTax Deluxe Federal And State 2021. It covers all the most common deductions and credits and has an easy-to-understand interface.
What to know before you buy tax preparation software
Tax preparation software complexity
Some people’s taxes are simple enough to take 15 minutes once a year, while others must carefully track income and expenses all year. Varying levels of software match those needs.
- Basic software is for those with little to no complication and small incomes. If you’re filing taxes for the first time, start here.
- Advanced software is for those with complications and good-sized incomes. If you’re married with dependents and have a few revenue streams, go with this.
- Premium software is for those with several revenue streams and many complications. If you’ve ever considered an accountant due to your tax complexity, this is your best bet.
- Self-employed software is for freelancers and gig workers, etc. It covers the basics of expenses on top of premium offerings.
- Small-business software is more for year-round accounting than tax-time inputs.
- Business software is also for year-round accounting but for those with bigger businesses.
Operating system compatibility
Most tax preparation software can be used on only one operating system. The most common operating systems are Windows, found on the majority of computers, and macOS, found on Apple computers. Most tax prep software comes with a version for each, so make sure you order the right one.
What to look for in quality tax preparation software
Easy data import
The best tax preparation software makes importing your data as simple as possible. This can include uploading a picture of your files rather than needing to input them manually or letting you import your various accounts’ info.
Most tax preparation software includes the ability to e-file your taxes with the Internal Revenue Service. Double-check that yours does before you buy, or you’ll have to print and mail your return instead.
Tax preparation software customer support includes the usual help with technology issues, but the best also includes support for those with tax questions. Software that includes tax question customer support is a lifesaver for those new to filing taxes and those with complex returns.
How much you can expect to spend on tax preparation software
Basic tax software can be found for free, as you aren’t required to pay the IRS to file your taxes. More advanced software can cost as little as $20 or as much as $100-plus. All-year accounting software usually starts around $100 and can cost $1,000-plus.
Tax preparation software FAQ
Should I do my own taxes or hire an accountant?
A. Neither course of action is better than the other. It comes down to how complex your taxes are, how good you are with numbers and whether you’re willing to spend the time it takes to prepare everything.
If you run a business and it’s your first tax time after opening it then you may want to hire an accountant who can both do your taxes and explain to you how to do them on your own next year.
If you have multiple sources of income and complicating factors such as being married, having kids and paying student loans, it’s a bit of a toss-up. An accountant is more expensive than software, but you save time and effort and might get a bigger refund.
If you have one income source and few to no complicating factors, free tax software or services that walk you through the steps are probably best.
I’ve never done taxes before. Where do I start?
A. The first step is to collect every piece of information you have on what money came in and what money went out. The more information you have, the more complex software you need. If you’re really lost, hire an accountant.
What’s the best tax preparation software to buy?
Top tax preparation software
What you need to know: This is an excellent balance of simplicity and depth for those with more complex returns.
What you’ll love: It covers 350-plus deductions and credits and walks you through each of them while skipping those that don’t apply to you. You can import most of your tax files quickly and easily, including previous returns if you’ve used this software before.
What you should consider: This is last year’s version. The 2022 version comes out in November. Some consumers had issues installing it. State filing can be prepared but not e-filed.
Top tax preparation software for the money
What you need to know: If your taxes are simple, there’s no need for anything more complex.
What you’ll love: It covers simple income for both single and married people, whether filing jointly or individually. It also covers basic tax deductions and credits for those with dependents, such as children. It’s available for Windows and macOS systems. State taxes are available for an extra fee.
What you should consider: Like TurboTax, this is last year’s version with the 2022 version coming in November. A few customers found the font too small and the interface confusing.
Worth checking out
What you need to know: This is the best software you can get if you run a small business with employees.
What you’ll love: This software covers everything you need to keep your finances clean and precise, from tracking expenses to preparing your taxes. It can even create paychecks and lets you set up direct deposits for your employees. Your data is automatically backed up.
What you should consider: It’s only available as a yearly subscription and it’s among the most expensive. It’s complex and can take time to get the hang of.
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Jordan C. Woika writes for BestReviews. BestReviews has helped millions of consumers simplify their purchasing decisions, saving them time and money.
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