The average cost of hiring a professional to prepare a basic tax return was about $188 in 2018-2019, according to a survey performed by the National Society of Accountants, and you can rest assured that inflation has tweaked that upward at least a little bit since then. This fee was for the simplest of returns, and it could go up or down depending on your area of the country. You can save yourself some money if you identify your tax-time priorities in advance and find the best tax software to address them for you.
Some programs are pricier than others, but they’re still generally cheaper than hiring a professional, and you’ll spare yourself having to cram all those tax documents into your briefcase or a box and carting everything off to your accountant’s office.
These software options have you covered. Some of them are actually free—yes, free, at least for filers with simple returns.
The 7 Best Tax Software Programs of 2020
Best Overall: TurboTax
TurboTax is arguably the name in personal tax preparation software, and its developer—Intuit—charges accordingly. You’ll pay top dollar for this one unless you qualify for the free version, but users and experts alike seem to think it’s worth it. It scores kudos in almost every category, from user experience to being able to import a good many employer tax IDs.
You can take pictures of your W-2s and 1099 forms rather than type in all the information they include, risking typos and mistakes. It can lift potentially tax-deductible expenditures directly from your bank account and categorize them, add them up, and input them accordingly. The software will search more than 350 tax deductions and credits to see if you qualify.
TurboTax offers experts to chat with if you use the online version and get confused or otherwise hit a brick wall. It also has a “SmartLook” feature that will put you face-to-face with a tax expert, and it offers audit support. And if TurboTax makes a mathematical goof? They’ll pay all associated IRS penalties on your behalf. They also offer free audit support.
So how much will all this cost you? $50 for TurboTax Basic as of January 2020 if your tax situation is pretty simple, although this doesn't include a state return. And a free product is available for certain eligible taxpayers.
The cost to e-file is free as well for both state and federal returns…at least for the time being. You can expect this to increase when tax season gets underway.
Runner-Up, Best Overall: H&R Block
H&R Block Premium does just about everything that TurboTax does at slightly less cost. It's chatty and friendly, too, asking questions and deciphering your answers as you prepare your tax return. But H&R Block isn’t always as efficient at deciphering your answers. You can either dig for informational answers in the Help window or solicit unlimited live professional tax advice through the website.
You can pay extra to have an expert review your finished return for an added measure of confidence before you file, or just back up your file and head off to one of the thousands of H&R Block offices in the U.S. if you really run into problems. You can then sit down with a professional for free if you’ve purchased the software. When it comes to this sort of handholding, H&R Block is said to be the best. It even offers a “tax prep checklist” to track down the documents you’ll need to prepare your return.
The Deluxe version costs $29.99 as of 2020, but this doesn't include state returns. Keep in mind that most of these providers ratchet up their prices a little when filing season gets underway.
Best Bargain: TaxAct Premium
TaxAct offers fewer bells and whistles, but it is equipped to handle returns that include self-employment and investment income. It also has a nice feature called Life Events which zeros in on potential changes in your tax situation from last year to this one. The web-based program offers 19 icons relating to situations that might currently apply to you. Maybe you bought a home, or you got married or had a baby. You can click on the corresponding link for extra tips, information, and guidance, although the program won’t incorporate the information into your tax return for you. That part is up to you.
TaxAct offers live customer support, as well as hyperlinked words and phrases that provide explanations and more information. It also has an extremely comprehensive TaxTutor Guidance Center. The Deluxe version will run you $29.95 as of 2020 for a federal but not a state return, and TaxAct offers a free version for simple tax situations as well.
Best Free Software: Credit Karma
Credit Karma Tax used to be the new kid on the block, and it showed in some respects. But that was then and this is now. The company first launched into tax preparation in 2016, and it’s made some significant improvements in time for this filing season. Both state and federal returns are still 100% free.
Credit Karma isn’t limited to simple returns. It can handle all major IRS schedules and forms, including those related to more complex tax situations. Similar to other software programs, it will begin by asking you a series of questions when you click “start,” guiding you to enter your information. It also allows you to import previous years’ returns you completed using a competitor.
Best of all, that “free” price tag includes an audit defense guarantee. Now that’s getting your money’s worth.
Best Wizard: Jackson Hewitt Premium
Jackson Hewitt’s contribution to tax software will cost you a little less than H&R Block and TurboTax, and you’ll get a really efficient and extensive wizard in return—a feature that walks you through a series of questions then spits out a completed tax return based on your answers.
Jackson Hewitt Premium can handle complex tax situations, although you can’t count on explanatory popups to tell you why it’s done what it’s done, at least not in every situation. There are help topic links, however, as well as readily available links for live support, something most other tax software developers don’t offer. Then again, Jackson Hewitt has more than 6,000 brick-and-mortar locations, so the company is really positioned to offer this service. And it offers a refund advance up to $3,200.
There’s a free version for easy returns.
Best Simple Data Entry Option: TaxSlayer
TaxSlayer was initially designed for tax professionals, then it branched out to help individuals prepare their personal returns in the 1990s. It’s 100% web-based, so you can access it from just about any device.
The neat thing about TaxSlayer is its “Quick File” option that's particularly efficient. This should particularly appeal to users who cringe at the idea of spending hours inputting their tax information in a sequential order that’s dictated by the program. It’s cued by simply typing in a keyword rather than hunting through lists of links.
The cost is incredibly reasonable, too, ranging from free for the most basic returns to $17 for the Classic edition, $37 for the Premium edition, and $47 for the Self-Employed edition.
The Classic and Premium editions are pretty similar, but Premium has better support options. State returns are extra, and these prices might creep upward as tax filing season gears up.
Best for Savvy Tax Filers: Liberty Tax
If this isn’t your first rodeo—you’ve been preparing your own tax returns for years using one method or program or another—Liberty Tax might be for you. It’s more suitable for experienced filers.
Liberty Tax lets you decide what aspects of a return you want to work on when you want to work on them, presented in chronological order, and it offers recommendations. This program will effectively tap you on the shoulder and ask if you want to file this, that or the other tax form to potentially save some tax dollars. It helps if you already understand what those tax forms are.
Liberty Tax will warn you if you enter information that might provide an audit trigger for the IRS. Audit support is included in the price, and you can purchase an upgrade for actual audit representation.
What Do Tax Software Programs Do?
Tax software programs help you prepare and file your personal or business state, federal, or corporate taxes. They can save you a trip to the accountant’s office and usually are less expensive than paying someone to do your taxes for you. Most programs come with a step-by-step guide that helps you complete your taxes and e-files them or prepare them for mailing.
How Do Tax Software Programs Work?
Tax software programs act as a template or a guide to filing your taxes. By entering your personal and financial information, the software autofills applicable federal and state tax forms. The software calculates how much you owe or how much your refund will be.
Many programs also provide explanations throughout the form. For example, when asked to enter certain expenses, there often will be a link to more detailed explanations about what is or is not deductible. When finished, you can e-file using the program or print out your completed forms to be mailed.
How Much Do Tax Software Programs Cost?
Depending on income and complexity, it might be free. For filers who exceed income requirements or have more detailed deductions, costs generally start around $15 to $20. The more complicated your return, the pricier it typically will be.
Are Tax Software Programs Worth the Cost?
If you meet the requirements for free filing, software programs definitely are worth it as long as you are comfortable completing it and filing it without the help of a professional. Even if you don’t meet the requirements, the cost of the software likely is cheaper than hiring an accountant.
However, all tax software doesn’t ensure accuracy and doesn’t guarantee you won’t get audited. If you have a complicated return, it may be better to spend the money and have a certified public accountant complete and file your taxes for you.
How We Chose the Best Tax Software Programs
We chose these as our best tax software programs based on the companies’ reputations, cost of the software, features, and customer service.
National Society of Accountants. "NSA Survey Reveals Fee and Expense Data for Tax Accounting Firms in 2016 and 2017 Projections." Accessed Jan. 17, 2020.
intuit TurboTax. "Free Guaranteed." Accessed Jan. 17, 2020.
H&R Block. "Deluxe Online." Accessed Jan. 17, 2020.
TaxAct. "Simple Federal and State Filing for Free." Accessed Jan. 17, 2020.
Credit Karma. "Hooray for Tax Season!" Accessed Jan. 17, 2020.
Jackson Hewitt Tax Service. "Need Money Today?" Accessed Jan. 17, 2020.
TaxSlayer. "Start Filing for $0." Accessed Jan. 17, 2020.
IRS. "Free File: Do Your Federal Taxes for Free." Accessed Sept. 11, 2020.