How to Choose Tax Software
Consider your needs., Measure your skills., Consider the specifications of the program., Weigh your needs and skills against the programs’ capabilities., Compare costs across programs.
Step-by-Step Guide
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Step 1: Consider your needs.
How detailed do you need a tax software to be? How much are you willing to pay? The differences between all the types of software for simple returns are minimal.
For simple returns, the major differences are ease of use, simplicity of the interface, and price.
Decide which is most important for you.
The difference in capability for simple returns really is minimal.
Multiple sources show the major programs—TurboTax, H&R Block, TaxAct, and FreeTaxUSA--all produced the same returns for state and federal taxes for a person with one job, no dependents, and a savings account as their chief asset. -
Step 2: Measure your skills.
The flip-side of determining your needs is measuring your skills.
If you are a more advanced computer user, you might be more comfortable using software that’s less intuitive.
For example, TaxAct’s software is among the cheapest options, but is widely regarded as less intuitive than some of the others, like TurboTax.If you have a background in bookkeeping, business, or law, you might be more aware of deductions and tax credits, and better equipped to use software that allows you to skip around. , A certain set of features will be used by almost everyone.
Other features have more niche uses.
If you’ve taken a measure of your skills and needs, you’ll have a better idea of which feature you need.
Nearly everyone will want software that allows you to file federal and state returns, uploads the information from your 1099 forms and W-2s, allows for easy navigation, and has a thorough help and support section.
Features which are less widely used include: the ability to file multiple returns, ability to import data from other financial programs (such as QuickBooks), and allowing adjustments for inheritances, divorces, or the birth of a child. , A lot of people are going to want to find one tax software program and stick with it.
Since virtually all of the programs keep records for all the years you use that program, it can be helpful to have the records all in one place.
Although not everyone will need it, two of the big storefront chains, H&R Block and Jackson Hewitt, both offer support from tax professionals in addition to technical support, which all of the major programs offer.Multiple sources rate TurboTax highly.
They cite the software’s blend of advanced options, price, and ease of use.
TurboTax uses an interview style format that ensures that the user hasn’t missed any deductions or obligations.
In addition, TurboTax ease of use minimized liability and maximized returns for complex taxes for multiple reviewers., For most users drawing wages from an employer, the difference in price is going to be negligible—probably less than $30.
In addition, many of the programs allow people who make less than $62,000 to file federal taxes completely free.
The difference in price really comes into play for the self-employed, like freelancers, contractors, and sole proprietors.
Many of those users will need to use a software program that is tailored for those workers.
FreeTaxUSA allows the self employed to file federal taxes for free and state taxes for only $12.95, but it is not widely reviewed.If you are younger than twenty two, consider FreeTax USA.
It’s completely free for state and federal filings.
Be sure to look out for discounts, including advertised sales and gift card bonuses. -
Step 3: Consider the specifications of the program.
-
Step 4: Weigh your needs and skills against the programs’ capabilities.
-
Step 5: Compare costs across programs.
Detailed Guide
How detailed do you need a tax software to be? How much are you willing to pay? The differences between all the types of software for simple returns are minimal.
For simple returns, the major differences are ease of use, simplicity of the interface, and price.
Decide which is most important for you.
The difference in capability for simple returns really is minimal.
Multiple sources show the major programs—TurboTax, H&R Block, TaxAct, and FreeTaxUSA--all produced the same returns for state and federal taxes for a person with one job, no dependents, and a savings account as their chief asset.
The flip-side of determining your needs is measuring your skills.
If you are a more advanced computer user, you might be more comfortable using software that’s less intuitive.
For example, TaxAct’s software is among the cheapest options, but is widely regarded as less intuitive than some of the others, like TurboTax.If you have a background in bookkeeping, business, or law, you might be more aware of deductions and tax credits, and better equipped to use software that allows you to skip around. , A certain set of features will be used by almost everyone.
Other features have more niche uses.
If you’ve taken a measure of your skills and needs, you’ll have a better idea of which feature you need.
Nearly everyone will want software that allows you to file federal and state returns, uploads the information from your 1099 forms and W-2s, allows for easy navigation, and has a thorough help and support section.
Features which are less widely used include: the ability to file multiple returns, ability to import data from other financial programs (such as QuickBooks), and allowing adjustments for inheritances, divorces, or the birth of a child. , A lot of people are going to want to find one tax software program and stick with it.
Since virtually all of the programs keep records for all the years you use that program, it can be helpful to have the records all in one place.
Although not everyone will need it, two of the big storefront chains, H&R Block and Jackson Hewitt, both offer support from tax professionals in addition to technical support, which all of the major programs offer.Multiple sources rate TurboTax highly.
They cite the software’s blend of advanced options, price, and ease of use.
TurboTax uses an interview style format that ensures that the user hasn’t missed any deductions or obligations.
In addition, TurboTax ease of use minimized liability and maximized returns for complex taxes for multiple reviewers., For most users drawing wages from an employer, the difference in price is going to be negligible—probably less than $30.
In addition, many of the programs allow people who make less than $62,000 to file federal taxes completely free.
The difference in price really comes into play for the self-employed, like freelancers, contractors, and sole proprietors.
Many of those users will need to use a software program that is tailored for those workers.
FreeTaxUSA allows the self employed to file federal taxes for free and state taxes for only $12.95, but it is not widely reviewed.If you are younger than twenty two, consider FreeTax USA.
It’s completely free for state and federal filings.
Be sure to look out for discounts, including advertised sales and gift card bonuses.
About the Author
Timothy Hernandez
Timothy Hernandez specializes in non profit and has been creating helpful content for over 3 years. Timothy is committed to helping readers learn new skills and improve their lives.
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