Whether you’re running a small business or have started a side hustle, one of the most common drawbacks is that your tax situation will be far more complicated. Unfortunately, for people who hate doing taxes, this can be a massive problem. However, there are some great software solutions on the market, so you can save money by taking a DIY approach to your taxes with the right software.
The Tax Software Basics
There are three ways that you can file a tax return; paper returns mailed in, using a tax professional or through a tax preparation software. While tax professionals offer expertise and experience, this does come at a cost. So, if you’re looking to make the most of every dollar, tax software is the next logical choice. Tax software allows you to complete your return at your own pace. There is often step by step guidance and you can access professional support.
| Method | Pros | Cons |
|---|---|---|
| Do-It-Yourself (Manual) | • Free or very low cost • Full control over every entry • Great for simple returns | • Time-consuming • High risk of errors • No guidance or support |
| Tax Professional | • Expert advice & personalized service • Can handle complex tax situations • May help reduce audit risk | • Expensive (can range from $100 to $400+) • Less control • Must gather and share all documents |
| Tax Software | • Affordable (often under $100) • User-friendly with step-by-step guidance • Faster than manual • Built-in error checking | • Not ideal for very complex tax situations • May have hidden fees • Requires some comfort with tech |
The IRS has a free web based platform, allowing online filing, but this is only available for simple returns and there are income limits. Additionally, there is little live support. So many people consider commercial tax software.
Many software companies offer a variety of tax packages, so you can decide which one is right for you with the forms you need at the price you feel offers the best value. You can then answer the prompted questions about your finances and upload the appropriate tax forms. Most companies also offer to file returns to state revenue departments or the IRS on your behalf. So, you should be able to file and arrange your tax refund directly through the software, saving time, hassle and stress.
What are Simple Tax Returns?
As we just touched on, if you have a simple tax return, you may be able to use the free IRS online filing system. But, what are simple tax returns? Essentially, these are the most basic forms of return that can be filed. It is generally prepared with an IRS Form 1040 with standard deductions, limited interest or dividend income and W-2 or unemployment income.
If you’re using a commercial tax software, there are some programs that provide simple tax returns with limited credits such as child tax credits, student loan deductions and earned income tax credit.
How to Choose the Right Tax Software for You
If you hate doing taxes, you’ll want a tax software that makes it as easy as possible to complete your returns. Unfortunately, there is no clear cut answer to which is the best overall option, as everyone has unique circumstances, preferences and requirements. However, there are some things that you can keep in mind to help you to find the right software for you.
Understand the Real Cost
It can seem counterintuitive to pay money to save money, but this can happen with tax software. The price of tax software can vary greatly, but if you understand the real cost and value, it can make it easier to choose the right product for you.
Higher priced software typically includes integration with accounting software and additional features, such as expanded functionality or live support. But, you may not need these features to file your return. So, you’ll need to think about the real cost of the product and whether it is the best value for you.
Desktop or Online?
Many tax software packages are available as an online program or a download. Typically, online programs are cloud based and can be faster compared to a desktop version, but desktop programs allow you to save details to your home device for a consistent user experience.
You’ll need to think about how you prefer to work. Are you the type of person that would prefer to sit down at your desktop computer for a little time each week or month to update your financial information or do you like flexibility which allows you to work on your taxes whether you’re on your phone, laptop or tablet?
Check the Ease of Use
Most good software is easy to navigate, but again, you’ll need to think about how you prefer to work. The software should have an easy to follow, smooth process that breaks filing a return into easy to understand, manageable steps.
If you’re not particularly tax savvy, the software should provide guidance at every step, with the option to get clarification for each area, particularly when it comes to those valuable deductions.
While it may not be possible to test drive the software, you can check ratings for ease of use and read reviews from previous and current users to see how others find it.
Think About Your Type of Work
If you have a small business, are a partner in a business or a freelancer, you’ll need to complete different tax forms, so you need a tax software that works well with your financial activity. Taxes can get more complicated if you do investments and receive dividends or investing income or have a corporation.
Some software tends to be better suited to those who simply want to add their business income to a personal tax return, while others are designed to aid more complex reporting. There is little point in purchasing a more comprehensive software if you have a relatively simple tax situation.
Does it Support Your Tax Forms?
This follows on from the previous point, but it is important to check that the software can process the type of return you want to file or if it is put on a premium tier. If you only need to file a Form 1040, it is likely that almost any software will work on even a basic tier subscription, particularly if you only have standard deductions. However, if you have income from several states, investment properties or are a gig worker, you are likely to need a more advanced tier that provides filing of the relevant forms.
Does it Offer Professional Support?
One of the reasons why you’re likely to hate doing your taxes is because it invariably gets complicated. Many people find themselves cruising through completing a return only to find themselves stumped by one question or a field that is trickier. So, it is very handy when your chosen tax software provides access to professional help.
Many software companies offer help in a variety of forms including live chat, email and phone support. Think about which form is best for you and whether it adds value to the cost of the product. If you’re likely to need lots of help, it may be worth purchasing a more premium product that offers enhanced support from live tax professionals, which can save you time and stress when you complete your return.
Are There Guarantees?
Tax rules continually change, so you need to know that the software you choose is not only up to date, but provides complete accuracy. The most reputable software companies offer an accuracy guarantee, so you have peace of mind that should a software error result in IRS penalties or fines, they will cover the costs.
Some software also guarantees that you will pay the least amount of tax or get the biggest possible return taking advantage of all the available deductions. In some cases, if you owe less or get a larger refund after you file an amended return through another tax preparation method, the software company will refund the cost of the program.
The Best Tax Software for Those Who Hate Filing
While your circumstances may be unique, there are some great picks that could be a good option for you.
TurboTax Self Employed
If you’re self employed or a gig worker, TurboTax Self Employed is a solid tax software choice. The basic tier offers pretty much everything you would need, but you can upgrade to the Plus tier, which includes a final review from a CPA or EA. This means that a real, qualified professional will check over your return for peace of mind that you’re unlikely to have to deal with an audit or IRS queries.
In addition to having the standard TurboTax features, which includes the ability to search for tax deductions/credits, investment support and e-filing, TurboTax Self Employed has specialist features that are geared towards your work activities. This includes hundreds of self employed tax deductions, industry specific deductions, one on one support and easy expense tracking. You can integrate TurboTax with QuickBooks Self Employed, so all you need to do is take a photo of receipts when you make business purchases and upload it, so you can make expense tracking a breeze.
TurboTax Business
If you have a partnership, multi-member LLC, corporation or trust, TurboTax Business is one of the easiest to use, cost effective tax software solutions. This reasonably priced software can be downloaded or you can purchase a disc to use on your desktop computer.
The software makes it simple to import your last year’s tax return, pulling information from the return to make it quicker to complete the bulk of this year’s return. It integrates with Quickbooks, automatically importing your income and expenses and TurboTax will even classify them for you.
There is free phone support and if you’re a new business, the TurboTax team can even walk you through all the start up deductions. There are industry specific deductions and CPA guidance, with TurboTax checking the return for errors before you file officially.
You’ll also have the reassurance of a maximum refund and accuracy guarantee, which means if they’re wrong, they will pay any IRS penalties.
H&R Block Premium
If you want a lower cost tax software without compromising on the level of support, H&R Block could be a good option for you. The software is reasonably priced with tiers for freelancers, small business owners and those with more complex financial situations. You can also visit a brick and mortar H&R Block location for in person support (with an additional fee.)
The premium level software offers all the tax software basics, but there is a focus on organizing income and expenses for the self employed. If you’re an LLC, corporation or partnership, you’ll need to upgrade to the Premium & Business tier, which provides guidance for payroll and employer forms.
H&R Block is available as online software or a download, which allows you to prepare your return offline, only needing to connect when you’re ready to file. The software makes it easy to upload income forms and H&R Block partners with banks, investment companies and payroll providers, so you can quickly import relevant forms.
The software is supported by a 100% accuracy guarantee, so if there is an error and you are charged a penalty or interest by your state taxing authority or the IRS, H&R Block will cover the costs up to $10,000.
TaxAct
TaxAct is a well developed tax software that has actually been around since the 1990s. It offers web based and desktop solutions for individuals and businesses to file the appropriate taxes. The company offers a Maximum Refund guarantee and a $100,000 accuracy guarantee, so you’re well covered against state penalty or IRS penalties due to a TaxAct error. There are several software tiers, with the very basic free tier that is suitable for simple returns, but the higher tiers are still quite affordable.
If you need to file for a business and personal return, TaxAct offers bundling services to save money. The software is able to handle complex filings and there is filing help with online support, guides, checklists and more. You can also benefit from live tax expert phone advice through the Xpert Assist feature for an additional fee.
Tax Software Filing Tips
While the right tax software can make filing easier, there are some tips that may help the process to be even more painless.
Allow Yourself Plenty of Time
Although it may be tempting to think that since you have software, you can wait until the last minute to file, this can make it incredibly stressful. Instead, start as early as possible. Many software platforms allow you to add information throughout the year, which means that once filing opens, you simply need to clarify a few details to complete your return. However, if you prefer to leave it to do the task in one go, don’t leave it to the last moment. Should you run into any queries or issues, you will need to have some time to access the software support team or you could end up with a late filing penalty.
Gather all Your Documentation First
While taking breaks as you’re preparing your return can be a good idea, you don’t want to spend your breaks hunting around your house and office for specific bits of paperwork. So, before you sit down, gather all of your documentation together.
You’ll need your W-2s, 1099s, any receipts for deductions and other relevant paperwork to answer the prompt questions once you start. So, have these gathered together and handy before you begin.
Try Direct Importing
Many software platforms allow you to directly import financial information from your employers, banks, financial institutions and bookkeeping software. This is not only a time saver, but it reduces the potential for errors caused by manual data entry.
If you have a particular bookkeeping software that you prefer to use, make sure that you choose a tax software that is compatible. For example, Intuit is the parent company for both TurboTax and Quickbooks, which makes compatibility and direct importing as easy as it can be.
Don’t Guess
Finally, if you’re not completely sure how to answer a software question prompt, don’t make assumptions and guess the answer. Instead, check the software help or reach out to the support team for clarification. Guessing can compromise the accuracy of your return and you may encounter filing delays due to errors, or in a worst case scenario, you could get an IRS audit.
Remember that the accuracy guarantees will only cover reimbursement of penalties or fines if the software is in error. If you don’t enter accurate information, you’ll bear the cost of those expenses. So, guesswork could end up being a costly mistake.
The Easiest Tax Software
Just like with the inclement winter weather or hurricane season, tax season is often an unwelcome yearly visitor, but if you choose the right tax software, you can minimize the stress and hassle of filing. Even for tax filing haters, software solutions can make it far easier to avoid unraveling tax codes, dealing with forms and hunting receipts.
The right software can even allow you to integrate your preferred bookkeeping software or financial institution information, so you can minimize the manual entry needed to complete your return. With accuracy guarantees and easy to navigate interfaces, tax software can make filing a whole lot less annoying and while you’re unlikely to ever love tax season, you can get the task over and done with, so you can get on with life for another year.
