Opting to file your taxes online involves tough decision-making. Which tax software or online program should you use? Should you buy the “deluxe” package? Or stick with the free version? Should you download your tax…
Opting to file your taxes online involves tough decision-making. Which tax software or online program should you use? Should you buy the “deluxe” package? Or stick with the free version? Should you download your tax software or complete it online? And what about your state return? Do you file through the same program? How much will that cost?
Before deciding whether, say, TurboTax or H&R Block has the right system for you, consider some of your more basic tax-filing needs. Once you understand whether you even should be using one of these products, you can start investigating your options. Read on for tips on finding the best tax software for you.
Before you determine which tax-filing package to purchase, investigate whether you should be filing online at all. When the Tax Cuts and Jobs Act was rolled out, politicians and advocates predicted that it would allow more people to file quickly and simply through online tax programs. But experts warn that if your tax situation is complex or you’ve worked with a tax preparer in the past, you might not want to shake things up this year. Navigating whether you should itemize, whether you qualify for special tax benefits as a small-business owner or whether you can claim special deductions if you survived a natural disaster will be complicated. If you’re a small-business owner, you should always consider visiting a tax professional, says Eva Rosenberg, a Los Angeles-based enrolled agent and founder of TaxMama.com. That’s because your tax situation is more complex, and errors can be costly.
But if your situation is less complicated, you may not need the services of a tax professional and can instead use a software provider. “If you’re a college student or a single, one W-2 worker, and go online and (file taxes) on the IRS website, you might be OK,” says Laurie W. Ziegler, enrolled agent based in Saukville, Wisconsin.
Before you select a tax-filing program, look into whether you qualify to file your taxes for free through the IRS’s Free File Alliance, which partners with about a dozen tax-filing companies to provide free federal returns that don’t push up-charges or other fees. To qualify, you must make an adjusted gross income below $66,000 in 2018. Among American taxpayers, 70 percent qualify for Free File, according to the Free File Alliance.
Depending your state and the software you use, you may be able to file your state tax return for free. If the system you use doesn’t offer a free state return, consider heading to your state’s tax website to see if it offers its own free product, Rosenberg says.
Even if you don’t qualify for a free IRS-partnered tax-filing program, Rosenberg recommends limiting your options to the companies that work with the Free File Alliance. These companies have been approved by the IRS and meet security and privacy standards.
Those companies are:
— 1040Now Corp.
— Drake Enterprises
— Free Tax Returns
— H&R Block
— Liberty Tax
— OnLine Taxes
These tax software programs may also offer their own free versions through their websites for basic tax returns, but you may need to dodge additional upsells and charges.
If you decide to buy a premium package, you’ll find that prices vary somewhat among programs, Rosenberg notes. But she suggests that taxpayers focus on the add-ons and extra features you truly need instead of getting hung up on comparing costs. “Don’t focus on price — pick the thing that will do the thing you need to do,” Rosenberg says.
For example, if you’re really concerned about audit risk, dig into individual programs’ audit protection packages for a sense of what the extra fees will get you. Look at whether the packages offer the services of an enrolled agent. “The enrolled agent selected to go with you will have IRS audit experience and will know how to represent you in an IRS audit,” Rosenberg says.
If you really need live expert help, view the kinds of experts and communication modes offered by these services and determine which one will actually help you do your taxes accurately, efficiently and on time.
*These prices are currently marked down from their original prices online.
Once you’ve determined whether to file online, which software to use and the features you’d like to buy, you’re ready for the start of tax season. Note that prices may change throughout the tax-filing season as discounts are offered or price increases are levied on late-season filers.