Best Online Tax Software
Tax time can strike fear into the hearts of many people. Whether you work for a company or own your own, you want to make doing your taxes as pain-free as possible. The best tax software helps you get the most from your tax return, without giving you a headache.
If you want to be one of the millions filing your taxes online, at home, finding the best tax prep software is key. I've reviewed the features, cost, and functionality of several leading tax services. Here are my top picks for the best online tax software.
What to Look for in the Best Online Tax Service
With more than 27 million Americans e-filing from home in 2014, it's clear that tax return software is here to stay. Using online tax software is a win-win for you and for the IRS. Filing online means fewer errors, faster processing and, most importantly, faster refunds. If you end up owing money, online tax software usually lets you pay with a credit card.
No matter which tax software you end up using, it should offer certain features. My top picks for best tax service include the following features:
- Audit Support
- Options for All Levels of Taxpayers
- Stand-Out Customer Support
The Best Tax Software Needs to Be Accurate. If a tax program makes as many mistakes as a human working with pen and paper, what good is it? The best tax software programs promise accuracy. For example, TurboTax has a maximum refund guarantee. If you use a different tax prep method and get a bigger refund from it, TurboTax will give you your money back.
If you mess up your taxes on your own, you have to pay the penalty or interest charged by the IRS. But if you use TurboTax and it makes a mistake that results in a penalty, TurboTax will pay the fee.
When picking out your tax program, look for one with an error checking tool. A few programs run ongoing error checks as you work on your return. An import tool, which pulls information directly from your W-2 and other tax forms reduces the risk for transcription errors.
The Best Online Tax Service Helps You Get Deductions
Let's cut to the chase. When we do our taxes, we want to keep more of our hard-earned money into our pockets Taking advantage of the tax deductions and credits available to us lets us do that legally. The best tax service makes sure you are taking advantage of all of the deductions and credit you are eligible to claim.
First things first, it's important to understand the difference between a tax credit and a tax deduction. A credit applies to the amount of tax you owe. If your tax bill is $1,500, and you have a tax credit of $1,000, you only need to pay $500 in taxes.
A tax deduction reduces the amount of your taxable income. Let's say you earned $50,000 one year. You can deduct $2,500 from student loan interest payments, which means your taxable income falls to $47,500.
Tax credits and tax deductions are available for a number of reasons. If you have kids, you get a deduction for each dependent, and you might be able to claim a child tax credit, depending on your income. If you're going to school or still paying off your student loans, you might eligible for a tax deduction. Here are a few of the more common deductions and credits:
1. Child Tax Credits and Deductions
Every kid you can claim as a dependent reduces your taxable income. Plus, if your income is less than a certain amount, you can apply for a credit of up to $1,000 for each child in your family under age 17. You can also get a tax credit if you paid child care costs.
2. American Opportunity Credit
The IRS offers a number of educational tax credits. One of them is the American Opportunity Credit, which is available to people completing their first four years of post-secondary education. If you paid for college, you can claim a credit of up to $2,500 for the year.
3. Lifetime Learning Credit
The Lifetime Learning Credit is available for anyone in a graduate, undergraduate or professional degree program, no matter how many years they have been in school. It lets you claim a credit of up to $2,000 per year.
4. Tuition and Fees Deduction
Not everyone qualifies for an education credit. If your income disqualifies you from taking an education tax credit, you might be able to deduct up to $4,000 for the tuition you paid during the year.
5. Credit for the Elderly and Disabled
People over age 65 who are permanently disabled when retiring or who retired on disability might be eligible for a tax credit. Your income needs to be less than a certain amount to qualify.
6. Student Loan Interest Deduction
If you're paying interest on your Federal student loans and you meet certain income requirements, you can deduct up to $2,500 of the interest paid from your return.
7. Mortgage Interest Deduction
If you own your home and are paying off the mortgage, you can deduct the amount of interest you paid. To claim this deduction, you'll need to fill out an additional form when you complete your taxes online.
The Refund Process With the Best Online Tax Software
The best tax service speeds up the refund process, if you're eligible for one. There's no more waiting for the IRS to get your paper return and no waiting for it to cut you a check. These days, the IRS sends refunds over direct-deposit.
While not everyone gets a refund, there are a few things you can do to increase your chances of getting back the money you're owed.
Lots of everyday expenses can qualify as deductions. Your mortgage interest and student loan interest can lower your tax bill, for example. If you have a lot of medical costs, you might be able to deduct those as well. Keep track of your expenses throughout the year and save your receipts so that you're ready, come tax time.
Use Tax Preparation Software
Unless you want to memorize the entire tax code, the best way to make sure you claim every deduction and credit you can is to use tax prep software.
Don't File Late
Tax returns are due April 15. The earlier you file your return, the sooner you'll get your refund.
Watch and Wait
One of the joys of filing your taxes online is that you can check up on the status of your return online. The IRS offers a "Where My Refund?" that gives you an estimate for how long you'll have to wait before the money hits your bank account.
Once you get your refund, what you do with the money is entirely up to you. Here are a few ideas:
- Beef up your retirement accounts.
- Pay down more of your mortgage or other debts.
- Save it for a rainy day or emergency.
- Put it towards your own or your child's education.
- Give it to charity.
If your refund was very high, it might be worth it to go back and re-evaluate how much tax is being taken out of your paychecks. Although getting a big refund is exciting, keeping that money in your paycheck is even better.
The IRS has a withholding calculator to use to see too much tax is being taken out of your checks. If that's the case, you can talk to your employer about updating your W-4, so that you get to hang on to more money each pay period.
The Best Online Tax Service
Which online tax prep software rises to the top? Each program has something to recommend it. After taking an in-depth look at the features offered by each, I've determined that TurboTax is the winner. Take a closer look and see if you agree.
- Simple and easy to use
- Customized tax advice, free of charge
- Files accurate returns
- Automatic importing
- Tools to avoid calculation errors
- A little more costly than some competitors
- There are no tools for importing tax data from other tax services
TurboTax is the best online tax software out there. It offers a great user experience and the mobile app is as good as the online version. The customer support and learning features are the best in the tax return software industry.
Most importantly, TurboTax guarantees that you'll get the biggest refund when you use it. Whether you use the free or a paid version, you don't want to pay more in taxes than required. With TurboTax, you can rest assured that you won't.
H&R Block Review
- Over six decades of experience and expertise
- Easy to use software
- Excellent levels of customer support
- In-person help if needed
- A range of options for filing your return
- User interface is slightly lacking, can be difficult to navigate
- Slightly higher e-filing fees than some competitors
- Below average reviews on some consumer review sites
Like Intuit, H&R Block has a good reputation in the tax preparation software industry. Their personal approach is what sets them apart from other tax programs. Although the software program provides a clean interface and enhanced workflow for filing taxes online it wasn't as streamlined or user-friendly as TurboTax.
- Speedy and efficient online tax filing
- Free federal return filing and competitive prices on state filing
- Several different account options
- Web based and online chat facilities
- Comprehensive information available for guidance
- No mobile versions available
- No free phone support for non-paying users
If you are looking for a budget-friendly tax return software program, TaxAct is the way to go. It allows you to quickly and efficiently prepare your returns and enjoy the convenience and ease of e-filing.
But you get what you pay for. With a max price of $12.99, TaxAct is pretty bare-bones. If you're self-employed, have a lot of investment income or own property, other tax programs better suit your need. For the basic tax filer, the software includes good resources for learning how to maximize deductions and tax credits and has all the basics of preparing your tax return covered.
eSmart Tax Review
- A cost effective option for those who have the skills to file solo
- Decent customer support for accountholders
- A choice of accounts to suit different needs and circumstances
- Good consumer reviews on a number of sites
- Free chat support and tax filing support
- No telephone support available
- Need to have an account in order to use the chat support
- More suited to those who have experience and confidence in preparing their own taxes
ESmart's tax return software boasts an updated, user-friendly interface with a straightforward filing process. Users with an account enjoy easy access to live chat.The deduction resources are not comprehensive, but with its affordable price, eSmart is a top choice for taxpayers whose needs are relatively straightforward.
- Free filing for military members
- Options to suit a range of needs
- No charges for additional forms
- Simple to use, efficient, and accurate
- Two account options to suit different needs
- No PC download available
- Limited customer service options (no live chat)
TaxSlayer is an online tax filing program that has some attractive features. You can use this affordable, user-friendly software to e-file both state and federal tax returns. It provides access to most all IRS forms you need to include. Active military members can use the product for free.
The Best Online Tax Software Has Something for Everyone
Everyone's tax needs are different. You might get one W-2 and not have a lot of deductions. Meanwhile, someone else is a freelancer with a handful of 1099s and a ton of deductions. Another person runs a small side business while working a full-time job.
The best tax programs are flexible. They can accommodate the needs of every taxpayer, from the first-time filer to the full-time freelancer. Here are few common options:
- Free version: Designed for people with the simplest tax returns, using Form 1040EZ/1040A.
- Basic or entry level paid versions: Designed for filers looking to maximize deductions such as home mortgage interest when they file taxes online.
- Mid-level paid versions: Targeted at taxpayers who also have investment and rental property income.
- Top-tier paid versions: Provide online tax preparation help aimed at those who are self-employed or own a small business.
Those different options often come at a variety of price points. Each of my top tax software programs participate in the IRS' Free File program. With Free File, you can use tax software for free, as long as you earn less than $62,000.
If your income is higher or you have a more complicated return, you have to pay using tax software for your federal return. You'll also have to pay to file your state income taxes with any tax program, no matter your income.
Spend as little as $9.99 for TaxAct Basic or $12.99 for TaxSlayer Classic version. The more comprehensive Home and Business Edition of TurboTax costs $79.99. These prices are for federal tax preparation and filing. It can cost anywhere from $9.99 up to $36.99 for the state filing version of each software program.
The prices above are just for the online versions. If you want to get a CD or download software to your computer, you'll need to pay an additional cost for the software program.
It's no surprise that you generally get what you pay for. The most expensive programs offer the most functionality and ease of use, as well as superior customer service.
Online Tax Preparation and Filing with the Best Tax Software
You might get stuck when working your way through your tax returns. The best programs give you multiple options for getting help. Whether you prefer live chat or speaking to a rep on the phone, make sure the program you choose makes it as easy as possible to get support when needed.
Usually, the cheapest programs provide the least amount of support. You might be able to email for help. Some let you call or chat online.
The best tax software programs offer email, phone, online chat and video messaging support. The better the product, the higher the quality of the help too. Look for access to enrolled agents, certified public accountants, and tax attorneys.
Some companies maintain a network of franchised retail tax preparation stores. You can drop in and visit for face-to-face tax advice. It's always a good idea to call ahead and check if you will be charged extra for an in-person consultation.
A good tax prep software also offers learning resources on their website, such as answers to common questions and a user forum where the community of software users can discuss tax issues.
Be More Efficient with the Best Online Tax Service
You're not a tax professional. The best tax prep software gets that. You want to use a program that's efficient and not bogged down by lots of complicated terms or jargon.
Many of the best online tax software programs use a guided interface. The program guides you through each part of your return with questions or prompts. The interface makes sure you put in all of the deductions you're eligible for so that you can get the most from your return.
Ease-of-Use. You should enjoy using the best tax software. At the very least, using the program shouldn't make you want to throw your laptop across the room.
The top online tax software programs such as TurboTax and H&R Block are a relative dream to use. They guide you through each section of your return in a logical manner with a streamlined workflow. It's not necessary to be familiar with tax law and the huge range of IRS forms available. Instead, the best online tax software programs prompt you to provide information on your financial, family, work and investment situation to direct you through the preparation process.
Some online tax software programs are less user-friendly than the top performers, making them a better bet for those more experienced with tax preparation. The best way to gauge user experiences is to check independent customer reviews of the online tax software products you are most interested in.
The Best Online Tax Software Offers Audit Support
You don't want to be audited. The IRS doesn't want to audit you. But it happens from time to time. If it does, you want the assurance that your tax preparation software has got your back. The best tax services offer audit support. They will help you prep for the audit, answer questions and offer one-on-one support.
Getting the Most from the Best Online Tax Service
When you shop for an online tax software program, take advantage of our advice guides to learn more about tax preparation and filing strategies. You'll get answers to some basic questions such as how to maximize deductions.
Think of our guides as Tax Returns 101. Here are just a few of the topics we cover:
- Make Tax Prep a Snap. There are a lot of simple things you can do throughout the year to make your taxes hassle free. For some, it's a simple matter of tracking freelance business expenses on a ledger or creating a savings account dedicated to paying your tax bill. Check out these easy lifestyle hacks to improve your tax preparation experience.
- How to File Your Taxes for Free. Wouldn't it be great to file your taxes online for free? The IRS offers free, fillable forms. But there is an easier way to file for free.
- Miss the Tax Deadline? April 15th can sneak up on the best of us, and sometimes it becomes necessary to file your tax return late. Learn what happens when you file your taxes late.
Best Online Tax Service Recap
Tax prep is never going to top anyone's list of "fun things to do." Luckily, the right tax software takes some of the stress and, strain out of doing your taxes. You can have a positive, money-saving experience by using the right online tax software. With the best tax software, you know that you're filing a return that's accurate. You also save yourself a lot of time and hassle.
Best Online Tax Service FAQs
Can I use tax software if I'm a US nonresident?
If you are a U.S. nonresident alien either living, studying, or working in the country then you should indicate this status when inquiring with different tax services. The process to file taxes is quite different if you're a non-resident. Luckily, some of the organizations on our list have partnered with other sites to help facilitate the process. For example, Turbo Tax has partnered with sprintax.com to help individuals receive their proper exemptions, expenses, deductions, and tax treaty agreements. This applies to you if you're an international student in the United States, a non-resident landlord, a foreigner employed in this country, and don't have a Social Security number.
What happens if I get audited?
If you purchase a tax software program or service and happen to get audited in regards to the information on your documents, many companies like Turbo Tax, offer a free one-on-one audit guidance service. The members of their staff will tell you exactly how to prepare for it including everything you need to disclose or paperwork to provide. For an additional fee you can also opt for Turbo Tax Audit Defense. Another provider on the list, eSmart, offers a similar audit assistance service. Their terms suggest that any one of their software users will receive support if they get audited. This does not however include legal assistance or an agreement to reimburse the user for any penalties or interest imposed.
What companies are available for personal tax software?
There are many companies on the market which offer do-it-yourself tax software. Some of the most reputable companies are Turbo Tax, H&R Block, TaxACT, eSmart Tax, and Tax Slayer.
Can I use tax software if I'm a US non-resident?
When you are filing your taxes, you can specify if you are working, living or studying in the country during the initial filing steps. You must specify this information because filing taxes as a non-resident is quite different than processing US resident taxes.
Which tax software company should I choose?
That is really up to you and your personal preference. On each of the company's website and reviews, be sure to check out their customer ratings in all areas, to ensure that they are reliable, trustworthy and easy to navigate. There will usually be a customer star rating on each companies review; these are a good indication of the consistency of the company.
What happens if I get audited?
Everyone runs the risk of getting audited so it is important to ensure that your information is as accurate and correct as possible. The customer service department of the tax company you choose will notify you if you are in fact going to be audited. Some companies actually offer an audit defense that you can purchase.
What should I consider when purchasing tax software?
There are several things to be aware of when purchasing tax software. Some of these are how easy the software is to use, the accuracy of the software, the kind of support and assistance they offer you, how much the software cost, consumer ratings, and features of the software.
Can I file my taxes late?
There are several consequences in filing your taxes late but you still are able to file them even after the April 15th deadline. You can also file an 'extension' – this will help you have more peace of mind and will cut your penalties down. Upon approval of your tax extension, you will have six months to file your taxes. That brings your tax due date to Oct. 15th of that same year.
What types of penalties are there for filing taxes late?
You will be charged with a late payment penalty that you will be expected to pay due to the fact that you failed to submit your taxes by April 15th. If you opted against an extension, you will owe a late filing fee as well. This will cost you five percent of the taxes in which you owe plus interest.
Can I pay the IRS in installments?
Some people simply cannot afford to pay the IRS if they happen to owe money. This is where you are able to file for an extension so that you can financially afford to pay your taxes. You can create payment plans via credit card and even negotiate with the IRS in order to make a payment plan that best suits your situation.
How do I know if I owe money on my taxes?
Many tax companies offer an income tax calculator that will help you determine whether or not you can expect to pay. The calculators are updated yearly to ensure the most accurate calculations.