How to Choose the Right Tax Prep Tool
Which Tax Software Is Best for You?
Some tasks are much easier and less stressful when you have assistance, and this is particularly true when it comes to preparing your annual tax return. Fortunately, there are a lot of people and programs out there standing by to help you.
Why You Should Use Tax Prep Tools
The tax code is riddled with overlapping rules and provisions that could cost you money if you get them wrong. You could fail to claim a credit or deduction that you qualify for, or—perhaps even worse—claim one that you’re not entitled to. Tax prep tools make the process easy by guiding you through your tax return by asking you simple questions about your income, investments, education expenses, and other tax topics.
Select a Tax Prep Tool
Selecting the best tax prep tool can be daunting because there are plenty of choices. You can narrow it down based on your income, and the complexity of your situation.
For Free Filing
The IRS Free File program is an alliance with several leading tax software providers. It offers free return preparation to taxpayers with incomes of $72,000 or less in 2020.
These partners are more than glad to sell you their software to prepare your tax return online if you don’t qualify for the Free File program. You’ll want to proceed with caution, however. Most of them have their own free editions for simple returns. You’ll be prompted to upgrade to a paid version if your tax situation is anything other than very basic (self-employed, homeowner, investor, etc.), or if your age and adjusted gross income (AGI) exceed the maximums set for free versions.
You also have the option of printing out tax forms, completing them yourself, and mailing them to the IRS if your income exceeds income or age limits.
Credit Karma is our top-rated free tax software. Other popular tax-prep sites with free filing options include TurboTax, H&R Block, TaxSlayer, and TaxAct.
For Complex Tax Situations
Investors and the self-employed—including landlords—have more complex tax situations that often require filing additional schedules and forms with their tax returns. Tax return preparation can become much more complicated in this case, and you might need the help of a tax professional. The IRS provides a search tool on its website that allows you to plug in your zip code, the type of professional you’re looking for, and the mile radius from your location where you’d like to find someone to help.
If you want a tax expert to file your taxes for you but prefer a completely online experience, TurboTax’s Full Service option may be a good fit. A TurboTax expert prepares your return and submits it on your behalf.
Next Steps and More Resources
Don’t accept it as a foregone conclusion that you’re going to pay top dollar if you decide to use one of the software providers and you don’t qualify for Free File or one of the providers’ free options. Do an internet search with the name of the service and include a word such as “discount.” You might be surprised by what pops up: Fidelity, for example, offers up to $20 off H&R Block tax prep.
In the meantime, learn more about some of the best software options out there and what filing tasks they can handle:
- Narrow down your software search and learn more about each program’s features and pricing: The 6 Best Tax Software Programs of 2021.
- Still can’t decide? Follow these 10 Tips for Choosing Tax Software.