With long tax processing delays expected again this year, the IRS is already warning tax payers to be patient when it comes to getting their refund. They are also recommending that you file your tax return as early as possible and electronically.
The main benefit of using self-preparation electronic tax software are lower costs relative hiring to a tax professional; and the fact that the software does all the math, factors in new government payments and tax considerations, and checks for accuracy before submission to the IRS. This ultimately means you should get your refund, if applicable, much faster.
The following well-known companies – and always go with established companies for your taxes – support the IRS e-filing option and provide decent customer service and audit support. Best of all, they are free to use for starting preparation of your return and you only pay when actually e-filing your return.
In short: TurboTax is easy to use and supports simple to complex returns for individuals and small business. If you are not as price sensitive and want a highly accurate and step-by-step guided tax preparation software than you won't go wrong with Turbotax.
TurboTax has been the #1 rated online tax software package for a number of years. There is a reason for that, it makes tax filing a breeze for most users by guiding them step-by-step through possible tax obligations, deductions and credits (see the full review).
They also have a calculation guarantee for their tax software, where if you pay an IRS or state penalty or interest because of a TurboTax calculation error, they pay you the penalty and interest. Competitively priced, it is definitely an option worth looking into when filing your taxes, even if you have a complicated return.
I have found their tax software very easy to use thanks to its excellent step-by-step program to guide you through filling in your tax return. You can even start with their guided tax calculator to estimate your tax liability or refund before signing up for any of their products.
Like any commercial package though, they will try to “up-sell ” you, so make sure you check the options you really need. Overall, this is the best option for most online tax filers in my opinion. See all filing options and discounts here.
In short: H&R Block is also a "premium" tax filing option like TurboTax, but offers a great user experience and customer support, which is useful for those tax payers who want a concierge type of service. Worth trying it for free and then seeing if it can help you maximize your refund.
Building on their well-recognized brand and national office network, H&R block tax software gets better every year and is nearly more effective and cheaper than their offline (i.e real tax preparer in an office) option. What’s also good about H&R block’s online offering is that if the IRS does come knocking you can get free audit support from their enrolled agents.
H&R block tax software used to be challenging to use a few years ago but thanks to major investments and user interface (UI) overhaul, things have improved considerably. Their UI is easy to navigate and step-by-step guidance along the way allows you to move through your tax filing relatively seamlessly.
If you have a complex return (wages, investments, real estate and business) then H&R block provides comprehensive offerings and you won’t disappointed with what you pay for.
In short: TaxAct is the up and coming challenger to TurboTax and H&R Block offering many of the same features, but at a much lower cost as they try and grow market share. If you are not wedded to one of the big providers out there or looking for cheaper alternative with most of the options for different types of tax filers than TaxAct has several options for you.
Whiles less prominent than the big boys, TaxAct is a strong up and comer in the electronic Tax software filing world. If offers high quality online software for tax payers with simple to medium complexity tax returns that generally costs less than TurboTax or H&R Block.
TaxAct also has nice features that allow you easily switch from TurboTax or H&R Block by importing last year’s tax return (PDF copy), so you don’t have to start from scratch and can import prior numbers like capital gain taxes that carry on year over year.
Where it does lack is in the amount of pre and post filing hands on support, which is getting better with their Xpert Help feature but has a ways to go. It also does not offer a free state filing feature.
However the less than stellar on demand help is offset with reduced filing costs which can be up to 25% lower than Turbo tax. Which for those with a straightforward tax return can be a big saving.
In short: If TurboTax and H&R block are premium providers and TaxAct is your economy vendor, then eFile is definitely your budget option. For those who don't need much live support with their tax return but need the advanced features at the lowest cost, then eFile is the way to go.
No frills, but lots of features is how I would describe eFile. With limited options to get a live agent or professional help with your online return (there is email support for questions & issues), eFile is for the do-it-yourself types that just want to file their tax return accurately at the lowest possible cost.
Its software and platform looks basic compared to the industry titans, but the streamlined nature can be less overwhelming. If you are comfortable with your tax situation (e.g. mainly W2 income from one state) and don’t anticipate needing help during and after your filing then save money and eFile.
Free Tax Filing Options
You can start filing for free with all the above tax software providers, but to take advantage of advanced features or support and to actually file/submit the return with the IRS you will need to pay. The amount you pay for filing varies and generally depends on the complexity of your tax return and situation.
However the IRS has a free filer program that allows most major tax software providers to make their federal (and state in some cases) tax return products available for free for filing AND submission to taxpayers who earn less than a certain amount (AGI) based on their actual tax filing.
For the latest tax season the IRS limit to participate in their free file program (via the above tax preparer packages) was baselined at $73,000. Some providers are more generous and allow those with higher AGIs to file for free entirely.
Which tax software is best for Cryptocurrency?
Given the popularity and phenomenal gains in cryptocurrency over the last 2 years, many tax payers will have to deal with paying taxes on these gains. Like other investments, Crypto is taxable and the IRS has guidelines on how to manage this. The key thing is to know your cost basis, so when you sell you know gains could be taxable.
In terms of the best tax filing providers w.r.t Crypto gains, TurboTax is my preferred pick. While there are some point solutions that focus only on taxes around Crypto trading, I have found that for the vast majority of people TurboTax (and TaxAct in second place) can easily handle your taxes around cryptocurrency transactions.
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