The countdown to April 15, 2015 is on and its time to get a head start looking at the best tax software options. Why? Because, according to IRS disclosures, it takes a person in the US an average of 13 hours to plan, prepare and file their federal taxes. For most of us, it can seem to take much longer. Luckily, even if you drag your feet when its time to pay the tax man, the best tax preparation software companies can drastically reduce the amount of time and headache you experience this year.
There are no major shakeups on this list in terms of quality compared to last year. All tax software services on this list will come with standard updates based on changes to the tax code. However, if you have investment or self employment income, TurboTax has made a big change which will affect you, which I cover below.
Of course the biggest change to the tax code recently is the Affordable Care Act, and how it will impact individual and small business tax filers. Each of these top options have ACA forms fully integrated into all their versions. Here are the three products worth recommending again this year.
The three best tax software products for 2015 are:
Turbotax screwed up earlier this year by removing some common features from its Deluxe version. They’ve since issued a mea culpa, and are refunding the price difference. For people who bought the Deluxe version and were forced to upgrade to a higher version,TurboTax is issuing a refund of $25.
Turbotax ran an offer earlier this year for free federal and state tax filing. You can read more about the terms and pricing in this Turbotax Discount post. Unfortunately, the free state portion of the offer has expired, but you can still take advantage of free federal if you qualify.
2. H&R Block
Last year I wrote about why you should file your taxes online so I decided to file online again this year, and will never go back. This year I will again use Turbo Tax because it only took me 33 minutes to complete and file. As a bonus, I only needed the Federal Free version as you can see below.
Now unfortunately, TurboTax has stirred up a bit of controversy this year because it pulled some functionality from its Deluxe package. Specifically, the full interview sections for filling out Schedule C (self-employment income and all expenses), Schedule D (investments), and Schedule E (rental and partnership income) are no longer in TurboTax Deluxe. The complete Q&A Schedule D (with importation of brokerage data) and Schedule E are now only available in their “Premier” and higher editions. The full Schedule C is only available in their “Home & Business” version.
I think this type of move is designed to move more people into their online product, but it has clearly not been handled well by TurboTax. All the complaints seem to be quoting the Deluxe product at $59.99 – which is the advertised CD/download price. The online version for the Premier upgrade is advertised at $54.99, which may make the upgrade more manageable.
However, if you have investment income, or self employment income, I would go right to H&R Block and sign up.
For full disclosure, the other two products that made my top five are:
Now I’m going to compare the best online tax software and explain which one will work the best for you.
TaxACT, TurboTax or H&R Block: What is the Best Tax Software?
Simply put, all three of these products are thorough and easy to use. Additionally, these products offer more features to complete your taxes efficiently and effectively. TurboTax and H&R Block have a proven history and longstanding reputation in the industry, giving them an edge over TaxACT.
Of all the tax software on the market, none are more intuitive and reliable than TurboTax. I’ve used this product for years to file simple and complex returns. I can usually file my taxes in less than two hours. While TurboTax has created some ill will with the changes to Deluxe, TurboTax is still a premier tax prep software in terms of quality.
H&R Block is a great choice for someone who values the in-person support at one of their locations. H&R Block has over 12,000 retail locations across 50 states, which offer a convenient way to file in person if needed.
TaxACT is again the cheapest of the three. It shouldn’t be viewed as an inferior product in comparison to the other two, however. Despite its low cost point, TaxACT holds up well against TurboTax and H&R Block when it comes to features.
What Tools Make TurboTax, H&R Block, and TaxACT the Best?
The best tax preparation software have a combination of tools that other online tax programs do not. While several tax software products have a few of these features, only the best tax software offer all of them.
Some of these top features include:
- Accuracy guarantee
- Audit-risk identification and recommendations
- A variety of ways to claim your refund (check, direct deposit, prepaid debit card, or even savings bonds)
- Simple facilitation
- Ability to import all your forms and data
The other big difference between these services and many others is usability and intuitive design. That is a tough feature to pin down, but you know it when you see it, and each of these services have “it.”
Tax Software Comparison: TaxACT vs TurboTax vs H&R Block
Since I can’t say for sure which product is best for you, I’ll present a side-by-side comparison of each tax prep software and you can decide for yourself.
The comparison below highlights the similarities and differences of key features for the three products — not every single feature that exists. The table also uses data for the online versions of these products where available. The CD/Download versions may have different prices.
|Federal Price Range||$0 – $74.99||$0 – $49.99||$0 – $12.99|
|State Price Range||$27.99 – $36.99||$27.99 – $36.99||$5 – $14.95|
|Editions||Free Federal, Basic, Deluxe, Premier, Home & Business||Free Federal, Basic, Deluxe, Premium||Free Federal Edition, Deluxe|
|Receive Payments by Multiple Methods||Yes||Yes||Yes|
|All Tax Filing Options||Yes||Yes||Yes|
|Visit TurboTax||Visit H&R Block||Visit TaxACT|
Online Tax Software Reviews: A Deeper Look at the Top 3
TurboTax: The Best Tax Preparation Software
As mentioned, I personally use TurboTax because it’s had the longest online presence and all of my information is stored there. I also think their software, tools, and ease of use are the best on the market. I have used this service ever since I started fileing my own taxes in college.
- The easiest tax software to learn, even for first-timers
- Simple, intuitive, and logical design
- If you get a larger refund or smaller tax due from another tax preparation method, TurboTax will refund the applicable federal and/or state purchase price paid
- Impressive educational resources — if you need direct help, you can call them (although they have no retail locations)
- Great deduction tools designed to let you know what you can deduct
- Comprehensive disbursement options
- TurboTax lets you know if you’re at higher risk for that dreaded audit and helps you make corrections as you file
- Tools that help discover a variety of deductions associated with your home, family, running a small business, owning rental properties, education, charitable donations, and more
- With the Federal Free Edition, you can access 1040EZ, 1040A, and 1040 forms and live chat support for no cost
H&R Block: The Best Customer Support and Service
The biggest difference between H&R Block parallels TurboTax is customer support. H&R Block has 12,000 locations across 50 states, so they have the ability to deliver personalized support when you need it. This in-person support is a feature unmatched by any of the other top tax software services. For those that need this level of support such as small businesses, H&R Block is your choice. If you’re trying to stick to a strictly software option I rank H&R Block slightly behind because their website isn’t as easy to navigate in certain ways, and you can find cheaper options.
- Having physical office locations is a major differentiator (you can also get help via phone, live chat or teleconference)
- Standout tools to help with more complex tax needs, including deductions
- Helpful page-by-page overviews and step-by-step workflow
- Peppered with links throughout each page to answer any questions you might have, such as “What qualifies?”
- The bookmarking system enables you to tag anything you want to go back to
- File federal taxes for free with the At Home Free Edition, which provides many tax forms other competitors don’t, plus free audit support and representation
TaxACT: The Best Cheap Tax Software
TaxACT offers competitive pricing and all the tools you need, including strong learning materials – as long as your taxes aren’t too complex. One reason TaxACT is less expensive is that they don’t have several of the higher end options for the self employed or property owners and investors. So, if you are a W-2 employee with a fairly straight forward return, you could save some money with TaxACT, but not miss out on the right tools to get the job done.
- TaxACT offers top value, as it’s affordable without sacrificing quality
- TaxACT provides a pre-built spreadsheet where you enter information like reporting category, sales proceeds, gains/losses, and other relevant stock information
- Mini-alerts identify errors, along with robust learning resources that make sure you get all the help you need
- With the Free Edition, you can file federal tax forms for simple and complex tax returns for different statuses and life situations
Online Tax Software That Missed the Cut
I set out to find the best online tax software on the market. The top three tax software programs lead a pack of very well-designed and dependable products. However, since the competition is fierce, I wanted to mention some options that barely missed the cut. Although these programs listed below have many great tools and definitely cover the basics, they lack a few key features.
TaxSlayer has all the fundamentals down and it’s also quite affordable. This product is especially great if you prefer to do things your own way, assuming you’re comfortable enough doing so. So if you really know what you’re doing, you can choose to skip around unguided, and perhaps complete your return even faster.
- You can choose to be guided or not, which is great if you want to bypass all the quizzes because you’re confident in your tax abilities
- Prior-year tax form access makes it easy to prepopulate your forms and alter them to save time
- The very helpful life events guide makes sure you correctly input information about births, a new home, etc.
Why It Didn’t Make the Cut
- Deduction tools aren’t as strong as the top three — items like charity donations, rental properties, and industry-specific deductions aren’t identified
- No live chat or user forum to get help instantly, however through the premium service, your questions do jump to the front of the queue for faster response time
Affordable and simple, eSmartTax works if you have very simple tax needs. New for their 2015 update, eSmartTax showcases the all important Affordable Care Act forms. Sure to be one of the most confusing parts of tax returns this year, eSmartTax is poised to be a big help for people affected by the healthcare law changes.
- ACA forms and resources
- The clean and modern interface makes the software extremely easy to use
- Owned by Liberty Tax, eSmartTax has office locations available for in-person help
- You can import prior-year forms and prepopulate information to save time
Why It Didn’t Make the Cut
- Missing some of the more common features like a life events adviser and tax calculator
- Deduction discovery resources are very limited, which won’t suffice for more complicated taxes
- Sale of home feature is only available at its Premium level. Sale of a home is a fairly common transaction that would be a no-brainer at a Deluxe tier level.
How I Chose the Best Tax Software
My Goal: To determine the top online tax software, I wanted to find the most reputable products that consistently provide:
- a presentable, intuitive interface
- a comprehensive suite of tools, including those for specific industries and special circumstances
- accessible support to supplement all their filing tools
How I Selected the Top Tax Software
- I collected a list of 15 online products.
- I then looked at different popularity metrics, such as web traffic and third-party reviews.
- I came up with a top five based on their solid reputation, history of reliability, and their consistent delivery for every type of filer, from the novice to the business owner.
- With the top five, I evaluated their performance in key areas: facilitation, disbursement, accuracy tools, and deduction discovery. The companies that excelled in all of these categories made the top three (TurboTax, H&R Block, and TaxACT.
- I also took into consideration the different editions offered by each company, including Free, Basic, Deluxe, and Premium. Free versions are almost always just for federal taxes, but they do offer state tax returns, though for a fee. The other versions simply offer more as you go up the tier. For example, Basic Editions typically include basic deduction identification tools, data importing, and more live support. When you get up to the Premium Edition, you can find tools for rental properties and other business-specific tax deductions along with advanced calculators and additional investment resources.
How to Choose the Best Tax Preparation Software for You
First determine what your tax needs are. Do you have one salaried job and nothing else? If so, you can definitely go with a free, basic edition. On the other hand, do you own numerous stocks, freelance on the side, or own lots of property? Then a Deluxe or Premium Edition suits you better.
First-Timers: Start with TurboTax Free Edition
Of course, knowing exactly which edition of which product you’ll need isn’t the easiest to identify right off the bat, so here’s what I suggest:
- Try TurboTax, the best-selling and easiest-to-use tax software. It’s reliable, intuitive, comprehensive — you won’t be disappointed.
- Sign up for their free edition.
- You may be able to stick with their free edition if you have simple taxes.
- If you discover your taxes are a bit more complex, simply upgrade to the next version.
Best Small Business Tax Software: Go with H&R Block
People looking for business tax software should start with H&R Block because it’s easy to use and you can take your taxes into a local office and have them double-check it for free. H&R Block offers the best support and you’ll need that if you want a tax software for small business. You can get in touch with any questions you may have about any deductions.
Best Professional Tax Software for Experienced Tax Filers: Stick with TurboTax
TurboTax is the best software for the independent or “professional” tax filers because the software can handle complex tax needs and it’s a breeze to use. With TurboTax, you can import your information and get started quickly. The product quickly calculates everything on the fly, including your audit risk and refund. You’ll think you’re using the same professional tax preparation software used by an accountant. Again, the simplicity of the software is what makes it great for first-timers and advanced tax filers alike.
Beware Different Versions of Tax Software
Many people think that figuring out which version to go with is a time consuming endeavor. In fact, it doesn’t need to be. These services are set up to allow you to upgrade on the fly if and when you run into a situation that requires a higher version. This is why I often recommend starting with a free version if you are unsure. The right version to go with ultimately depends on your tax situation. You generally won’t have a say in what version you go with — your income stream and situation dictates that.
Experienced filers usually know which version suits their needs, but to have a better understanding of all available versions, I’ve provided you with a description of each below (keep in mind not all products offer these versions):
- Federal Free Edition — usually provides the resources to prepare and e-file both federal and state taxes and is generally utilized by those with the most basic tax needs. Federal filing is free, but state typically incurs a fee.
- Basic Edition — includes all the features found in the Federal Free Edition with the inclusion of access to basic deduction identification tools and improved support.
- Deluxe Edition — generally offers more to identify deductions through industry- or occupation-specific deduction searches. May also include more robust tools for life events, donations, and audit risk.
- Premium Edition — generally grants access to the full functionality of the software with deduction assistance that expands to include rental properties and other business-specific tax deductions, along with advanced calculators and additional investment resources.
Get Started for Free
TurboTax ranked as the best product year after year and it will cost you nothing to start filing your taxes. Should your situation require more complicated filing, you can always upgrade to the next version up as you file your taxes. The software will tell you which version is required based on your tax situation as you work through the filing process. I also rank TurboTax as the best free tax software again for 2015.
H&R Block is a great alternative to TurboTax and is the only software that has physical locations across the country to help you in person.
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