Tax Tools and Technology
Guide to Using Tax Tools and Software
Frequently Asked Questions
What is the best tax software?
The best tax software programs make it easy to quickly do your taxes accurately. They also come with fair pricing for your tax preparation needs and good customer support if you have any questions along the way. Some of the best tax software to prepare and file include TurboTax, H&R Block, TaxSlayer, and Credit Karma.
What are your free tax software options?
Some services only offer free tax services for people whose income falls below a set limit. Others only offer one free year of filing, so you'll have to pay more or switch to another service if you used it last year. Keep an eye on any extra fees for state tax returns as well. Along with H&R Block and TaxAct, the IRS offers its own Free File service.
What type of H&R Block software do I need?
H&R Block Deluxe Online Tax Filing package is a relatively easy, cost-effective online tax filing option for homeowners with other tax situations, deductions, or credits to take into account, such as charitable donations or health savings accounts (HSA). You can sign up for any one of H&R Block’s service offerings on its website and begin filing online.
How much is TurboTax software?
TurboTax offers four tiers of pricing in three different sets of options. The level of tax-related services and bonus features you get access to depends on which option you select. Prices range from $0 for free file to $60 for most basic tax needs to $120 for the Home and Business package. If you are self-employed or own rental property, you will probably need one of the mid-range packages, which cost between $90 and $120.
A tax return reports income and earnings to the Internal Revenue Service (IRS). Filing one allows taxpayers to claim various deductions to reduce their taxable income to the least amount possible. Both individuals and businesses are subject to federal income taxes, but not everyone must file a tax return, and not every state charges income tax.
IRS Free File
The Federal Office of Management and Budget’s Quicksilver Task Force obligated the IRS to start offering free tax preparation and filing to eligible taxpayers back in 2001. As a result, the Free File Alliance was formed by the IRS in 2003. Eligibility for the IRS Free File depends on your adjusted gross income (AGI).
E-File is the term for electronic filing or sending your income tax return from tax software via the Internet to the IRS or state tax authority. It's simple and efficient and has become increasingly popular since it was introduced nationally in 1990.
Internal Revenue Service
The Internal Revenue Service (IRS) is the federal agency that collects tax revenue for the federal government. It's the entity that's behind all those deductions in your pay and those quarterly estimated tax payments you make if you're self-employed. The IRS has rules you must follow and, if you choose not to, you can face some pretty stiff consequences.
Form 1040 is used by U.S. taxpayers to file an annual income tax return. The 2020 version of the form was its third major restructuring since tax year 2018. The 2020 version continues to replace Forms 1040-EZ and 1040-A, which were eliminated from the tax code in 2018.
Form 1040-X is an amended tax return which can be filed electronically and effectively replaces a Form 1040 that contained errors. It allows you to set things right with the IRS, but it doesn't just include the changed information. The correct information from your previous return must be transferred from your Form 1040 to Form 1040-X as well.
The term "tax year" refers to the calendar year for most individual taxpayers—the 12 months from Jan. 1 through Dec. 31 when you earned income, had taxes withheld from your pay as an employee, paid in quarterly estimated taxes if you're self-employed, or made tax-deductible expenditures. It's the year preceding the typical April 15th deadline for filing your tax return.
Identifying your correct filing status is critical because it determines the tax rates you'll pay and the standard deduction that applies to your income. The IRS offers five statuses you can choose from (and you can choose only one): Single, Married filing jointl, Married filing separately, Head of household, Qualifying widow(er)
OnLine Taxes (OLT.com) is part of the Free File program, an alliance between tax software providers and the IRS that offers many taxpayers free tax filing options. It's web-based software that you can use to prepare federal tax returns, but you must qualify. With no price tag for many filers, it's one of the best values available.
"TXF" stands for "tax exchange format," a file extension for data files that contain tax-related information. Most income tax preparation software will import this type of file, as do accounting software, spreadsheet programs, and accounting programs. TXF files have the .txf file name extension and are intended for import by tax preparation software.