No one enjoys tax time and not everyone is lucky enough to have a personal accountant tracking expenses and vigilantly searching for write-offs and deductions. Luckily, there are a host of tax programs that are affordable and can help self-employed individuals maximize their annual savings.
Self-employed individuals, in particular, can benefit from cataloging their expenses and tracking their income using an organized tax software, as self-employed individuals typically have to navigate a more complicated myriad of tax laws.
Quick Look: The Best Tax Software For Self-Employed
- Best Option – TurboTax Premier – For Self Employed
- H&R Block Self-Employed – Start Filing
- TaxAct – File With Taxact
- Credit Karma
Table of contents [Hide]
From minimizing your capital gains tax payments to tracking down every possible tax credit and deduction, tax programs do more than just help you stay organized once tax season rolls around—they can also help extend the life of your business by saving you time and money.
We’ve collected and reviewed some of the best tax programs available for self-employed men and women, along with some additional tips that you can use to identify a great tax preparation software.
What is Tax Prep Software—and Do You Really Need It?
Many Americans use a tax prep software to compile their tax documents if they are handling their reports themselves. Tax software can help self-employed individuals quickly file their taxes and locate deductions.
Self-employed men and women often have more complicated tax returns, a host of 1099 forms to compile and enter, and self-employment taxes to pay. Tax software can help self-employed individuals make their taxes easier, and in many cases, can even analyze returns and expenses to find deductions that lower their tax burdens. All types of self-employment are not created equal.
Special and more in-depth tax software is also available for users who will have particularly complicated returns. Some users who will likely require special tax software include:
Those Who Own Rental Property
Investment taxes, particularly those related to rental properties, are some of the most complicated in the tax code. A tax program with specialized content can help you work within the bounds of the law by locating and helping you pay taxes that you might not even be aware that you owe—as well as locating all deductions related to your property.
You’ve Had a Major Life Change
Whether you’ve tied the knot, had a baby, or recently switched careers and saw a drastic change in your income levels, major life changes also come along with major changes to your tax documents. A tax program can help introduce you to the new taxes you’ll have to pay, as well as the new deductions you can now take advantage of.
You’ve Recently Became Self-Employed
If this is your first time handling your taxes as a self-employed individual or small business owner, having a comprehensive tax program to support you can be reassuring—as well as save you a massive amount of time and stress.
What Should Self-Employed People Look for in Their Tax Prep Software?
You should look for these qualities in your tax prep software.
Quarterly Tax Payment Support
As a self-employed individual, your taxes are not automatically deducted from the checks you receive like your counterparts who work for a larger employer. In addition to an annual tax payment, you are expected to make estimated quarterly payments on both the state and federal level.
While these payments don’t have to be 100% accurate (they’re called “estimated payments” for a reason!) you may have to pay a penalty to Uncle Sam if you neglect to make them entirely. The best tax software programs for the self-employed can help you set up quarterly payments for the next year that are automatically deducted from your account every three months.
An Easy-to-Use Interface
As an independent contractor or a small business owner, you’re busy enough as it is. Trying to work through a confusing or non-intuitive tax software isn’t just annoying—it can also increase the likelihood that you make expensive mistakes or miss a deduction.
Check out a few YouTube tutorials before purchasing a specialized tax software program to make sure that the interface is easy to understand and at your level of technical skill.
It Asks Tons of Questions
Every self-employment situation is unique—and as a contractor or business owner, you need your tax software to ask you a comprehensive set of questions to ensure that you’re tracking down every deductible possible. The best tax software providers understand this and offer a long list of questions and use A.I. to deduce and cater to your individual situation.
The Best Tax Software for Self-Employed Individuals
1. TurboTax Premier
Intuit’s TurboTax is one of the most widely-recognized lines of tax software currently on the market, offering both powerful and easy-to-use programs in an aesthetically pleasing package. TurboTax’s design and flow are what makes the software shine; the software scrolls through a dynamic set of questions that change depending on how the user answers them in a straightforward and easily understandable style, much in the same way that a tax professional would conduct an in-person consultation.
TurboTax’s paid versions also support online chat options, which can provide a convenient and direct line to tax professionals should the user get stuck. Users who are TurboTax veterans will also love how easily the software is able to pull information from last year’s data. TurboTax offers a variety of tax preparation software packages but the one that self-employed people will likely find to be the most useful is TurboTax Premier.
The Premier version offers a particularly in-depth version of TurboTax’s standard software, with additional options for calculating brokerage taxes and taxes associated with buying and selling stocks, as well as taxes and deductions associated with owning and maintaining rental properties.
TurboTax Premier can also quickly calculate capital gains taxes and is especially effective at importing entries from GainsKeeper—making it an ideal software program for self-employed individuals who make the majority of their income through the stock market or through rental properties.
2. H&R Block Self-Employed
H&R Block offers a less expensive alternative to TurboTax without sacrificing functionality. Like TurboTax, H&R Block’s software is friendly and easy-to-use, though some users have complained about the software’s ability to interpret their answers.
H&R Block’s Self-Employed software package is the most useful option for self-employed people and small business owners, offering additional assistance handling self-employment taxes and navigating the sometimes confusing labyrinth of deductions that come along with being a contractor or business owner. The biggest factor that sets H&R Block’s Self-Employed apart from its alternatives is the software’s focus on their three main guarantees.
Their Self-Employed software works to get you the maximum refund when it comes to your employment needs, looking at deductions specific to your industry and expenses. They provide audit support which helps you understand any notice you may get from the IRS when you file with them. H&R Block also prides itself on ensuring 100% accuracy on all calculations, and are willing to reimburse you for any penalties that might occur.
TaxAct is a budget-friendly alternative when it comes to tax software. The software offers a number of packages, ranging from their free version (that is intended to cover simple employees’ returns) to special software just for freelancers and self-employed individuals who are looking to maximize their deductions. Packages with TaxAct range in price from $0 to $49.95.
TaxAct also offers users a unique money-back guarantee; accuracy is guaranteed for everyone who files their taxes with them with u to $100,000 in compensation for errors. In exchange for a lower price point, TaxAct cuts some of the bells and whistles that make H&R Block Premium and TurboTax appealing for those who make a large amount of their income through rental properties and stock trading—but the system is more than capable of handling most other types of self-employment.
TaxAct’s “Life Events” section is particularly useful for those who have undergone a major life change from last year to this year. The Life Events section hones in on factors that differ from your previous return (filing status, property ownership, tax bracket, etc.) and clearly explains how this change will affect your return. TaxAct loses points for its interface, which is a bit more cluttered than its competitors, but the software still shines for those looking for a cheaper alternative to TurboTax and H&R Block Premium.
4. Credit Karma
Credit Karma is well-known as a credit monitoring service, but the company has recently expanded its offerings into the sphere of tax return preparation. Unlike most competitors on this list, Credit Karma does not offer a host of packages based on functionality. Instead, the company offers a single free version for all users—with a surprisingly wide range of functions.
Credit Karma’s software is unique because its free version is vastly superior to the free versions of its competitors, with enough options and A.I. power to handle basic self-employed returns. The software also does much less hand-holding than TurboTax and H&R Block, so users who are filing their first tax return as a self-employed individual may have a tough time following Credit Karma’s instructions.
Though Credit Karma’s system does still have a few streamlining issues to work out, it offers a great free alternative for customers who need to file a relatively simple 1099-based return.
Self-employed individuals can make their lives easier when tax season rolls around by continuously tracking their expenses throughout the year. Many new business owners or freelancers are surprised to learn just how many deductions and write-offs they are eligible for—depending on their specific circumstances, self-employed men and women may deduct a portion of their mortgage, utility bills, and even vehicle payments from their annual tax payments.
If you’re self-employed, Benzinga is here to support your financial goals—whether you’re looking to grow your business or just make it through this tax season, we offer a wealth of resources to help you. Check out our guide to saving for retirement when self-employed to get started.