The Best Tax Filing Software

The Best Tax Filing Software

For slightly more complicated returns—for example, you need to itemize because you own a home—TurboTax Deluxe is the best software for the job. In our seven years of testing tax apps, we’ve found TurboTax to consistently offer the best guidance. And if your adjusted gross income (AGI) is $36,000 or under, you can access most features for free through the government-sponsored IRS Free File Program delivered by TurboTax.

For those who have a more complicated return—for example, you’re self-employed or you sold stocks—we suggest finding a tax professional.

Our pick

Credit Karma Tax

Credit Karma Tax

Free tax filing for basic returns

For most people who have only a couple of standard forms to enter, such as a W-2 or a 1099-INT for interest income from a bank, Credit Karma Tax is the best option to prepare taxes. It’s straightforward to use and completely free.

Buying Options

Buy from Credit Karma
(free)

Credit Karma Tax is ideal for simple returns, such as when you have only a few forms to enter: one or two W-2s, a 1099-INT or 1099-DIV statement from your financial institution, and maybe a 1098-E for reporting student-loan interest. We found that the site’s clean interface—which clearly highlights the most common forms that might apply to you, so you won’t feel overwhelmed by the more uncommon forms—made it easy to enter information.

As our pick for the best free online tax software, you can rest assured that you won’t be charged an unexpected fee after filling out your info. However, the no-frills app offers only basic guidance and support, so if your tax situation is more complex and includes things like multistate filing, mortgage interest, investment trading, or self-employment income, you should skip Credit Karma—you’ll have more peace of mind and a better chance of uncovering additional savings with the more sophisticated TurboTax Deluxe (or a tax pro).

The taxes we’d file with it:

  • simple returns including a W-2, a 1099-INT, a 1099-DIV, or a 1098-E

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Also great

IRS Free File Program delivered by TurboTax

IRS Free File Program delivered by TurboTax

Free tax filing for any scenario, if you qualify

If your adjusted gross income is $36,000 or less, you can file your taxes for free with the IRS-sponsored version of TurboTax, which offers the best guidance and interface of any of the tax software we’ve tested over the years. And unlike other TurboTax versions, it’s free of any upsells.

Buying Options

Buy from Intuit TurboTax
(free)

If you need more guidance than what Credit Karma Tax offers, TurboTax is an excellent option: We found it to have the best interface and in-app explanations and support. But before you jump in and start with TurboTax Free or TurboTax Deluxe (the latter of which is designed for people who might itemize), check to see if you’re eligible to use the hard-to-find IRS Free File Program delivered by TurboTax. The software is the same as TurboTax’s other online versions but doesn’t have any upsell screens. It does, however, include forms not available in the more well-advertised TurboTax Free, such as those for student-loan interest, business profit or loss, or investment capital gains or losses.

To qualify for free federal and state returns, you need to meet one of the following criteria: 1) Your AGI is $36,000 or less ($69,000 or less if you’re active-duty military), or 2) You are eligible for the Earned Income Tax Credit (EITC). Free File is available through other tax apps, some of which have higher AGI limits—but based on our testing of those apps’ commercial options, we think TurboTax is the better tax program, if you qualify.

The taxes we’d file with it:

  • returns eligible for the EITC or with AGIs of less than $36,000 (less than $69,000 if you’re active-duty military)
  • simple returns including a W-2, a 1099-INT, a 1099-DIV, or a 1098-E
  • returns with basic itemized deductions like mortgage interest, childcare expenses, local taxes, and charitable donations

Our pick

TurboTax Deluxe

TurboTax Deluxe

The best tax wizards for guiding you through an itemized return

If you are a homeowner, if you have student loans or paid education expenses last year, or if you want to maximize your other deductions and credits (for instance, you meet the criteria for the child and dependent-care tax credit), TurboTax can walk you through your return smoothly without using confusing, jargony terms. Just watch out for those upsells.

Buying Options

$60 from Intuit TurboTax

If you don’t qualify for the IRS Free File Program delivered by TurboTax, if you have more than a few forms to report, or if you think itemizing might result in a larger refund or a lower tax bill, TurboTax Deluxe is the best paid option for online tax software. It’s the most polished tax app around, with context-sensitive help and explanations that are clear and concise. Over the course of setting up 12 fake returns for testing this year, it caught obvious errors and suggested deductions that other software missed. If you’re not sure whether you need Deluxe, you can use TurboTax’s four-question standard versus itemized deduction tool to find out which camp you might belong to.

You can also start with TurboTax Free and upgrade later if you need to, but be warned: All TurboTax versions (except the Free File one sponsored by the IRS) promote add-ons that might cause you to pay for a package you don’t need.

TurboTax Deluxe doesn’t cover deductions and expenses for self-employment or freelancing (Schedule C), capital gains and losses (Schedule D), or rental-property income (Schedule E). For those, you’d need to upgrade to one of TurboTax’s higher-priced tiers, but we think such advanced scenarios call for a consultation with a tax pro.

The taxes we’d file with it:

  • returns with basic itemized deductions like mortgage interest, childcare expenses, local taxes, and charitable donations
  • multistate returns

Our recommendation for self-employed individuals and complicated returns: A certified public accountant (CPA) or an enrolled agent (EA)

As with auto repair, home improvement, and first aid, there are situations in which it makes sense to DIY and situations that are better left to the pros. If you freelance or own a business, if you manage rental property, or if you have investments more complex than interest or dividend payouts, find a good tax professional.

The upper tiers of online tax-filing software can quickly get expensive: It’s often more than $130 to file one federal and one state return with TurboTax Self-Employed, but add-ons like live CPA support bump that to upwards of $200.

Though a tax preparer likely costs more than even the most expensive tier of tax software—CPA fees vary depending on where you live and the complexity of your return—you get a lot of value from that higher price tag. Once you turn over your forms and documents, the pro enters your data for you, which not only saves you time but also prevents DIY errors. Plus, their pricing is often more up front than some online software that tries to upsell you midway through the filing process.

Should you have any problems with the IRS, your CPA or EA will be available to help (sometimes for an additional fee, and sometimes as part of their normal responsibilities). Importantly, this also lets you establish a relationship with one person whom you can count on every year. A tax pro who knows you can provide personalized advice and help you save money in future tax years. We even have advice on finding a trustworthy CPA near you.

The taxes we’d file with a professional:

  • returns with investment property income, freelance or small-business income and expenses, complex investments, and capital gains or losses

Source: NY Times – Wirecutter

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