Benzinga readers like using TurboTax when they’re searching for the best online tax software.
Online tax prep software has gradually advanced over time; major progression has forged from just boxed or downloadable tax programs. Powerful web apps or even mobile apps, competing products from well-known software providers and even some lesser-known upstarts have kept innovation moving forward. Products are easier to use and generally affordable, but not all tax software solutions are created equal. Read on to determine which tax preparation software is best for you.
Best Online Tax Software
- Best for Live Advice: TurboTax
- Best for Seasoned Business Owners: TaxAct
- Best for a Free Version: TaxSlayer
Take a look at our round-up of best online tax software options to see which of these software programs might work for you and your personal income tax or business tax situation.
1. Best for Live Tax Advice: TurboTax
TurboTax has long been an online tax software leader. While not the least expensive option in tax software in our roundup, TurboTax may represent the best value, especially if you’re interested in time-saving features and if you own various types of assets, including stocks and homes. If you’ve used TurboTax before, the software saves your history from prior years, making the user experience that must better for carryovers and other calculations.
Self-employed tax filers will enjoy TurboTax’s Expense Finder, which can scan your bank account for business-related deductions that can lower your tax liability and improve the status of your income tax return. TurboTax can even categorize and input the values it finds automatically. Of course, as one of Intuit’s leading products, TurboTax can also import accounting data from QuickBooks if you choose TurboTax Business. Personal tax versions of TurboTax can interface with Quicken, Intuit’s personal finance software.
TurboTax is often a better fit than some other options for stock investors or those with a more complicated tax return. Plain language questions guide you through your return while the software does the math, providing you with helpful prompts throughout the process.
Pros
- Helps you find expenses so that you know what should and should not be deducated
- Account importing from QuickBooks helps you keep all your finances in one place
- Always saves your history so that you can work on returns with confidence
Cons
- May not work well for business owners
2. Best for Seasoned Business Owners: TaxAct
TaxAct is often thought of as one of the least expensive options for online tax software. Generally, this rings true for TaxAct’s online editions. Pricing and promotions vary, however, so consumers should check current pricing before making a purchase. One comforting feature of TaxAct is the company’s $100,000 Accuracy Guarantee, which guarantees the accuracy of your personal or business returns but also ensures that your refund is maxed out as well.
TaxAct backs its guarantee with up to $100,000 in coverage for any smaller refund or tax liability due to software errors. Human error — including input errors — isn’t covered, but the software is guaranteed. You can import tax returns from previous years with H&R Block or TurboTax, and TaxAct makes your previous tax returns available for up to seven years. Free phone or chat support with a CPA or an IRS enrolled agent is there to guide you if you get stuck.
Be aware that tax pros can’t assist with tax strategy or advice but can guide you on how income or expenses should be reported within the software. However, it’s great to have an agent at the ready to help navigate any bumpy sections on your return.
Pros
- Promotions can help you save even more money
- Importing tax returns makes it easier to review your current and outstanding tax liability
- Certified agents are available
Cons
- Customer support does not include tax advice, which many people need for their tax situation
3. Best for a Free Version: TaxSlayer
TaxSlayer takes a different approach to pricing before, during and after tax season. Tax returns are completed online or through a mobile app, which helps to keep pricing affordable. Additionally, TaxSlayer makes all major tax forms available in all packages except the free package, which only supports Form 1040 EZ. Step-level and premium packages bring additional options, like live chat and help from the company’s “Ask a Tax Pro” service. Many competitors require a premium package for access to special forms, like investment income or itemized deductions.
This means that if you can forgo some of the support features, TaxAct might be the most affordable option in our tax software roundup. TaxSlayer provides an accuracy guarantee and use of its tax-free software is risk-free; you pay nothing until you e-file, which gives you ample opportunity to learn if TaxSlayer is the right product for your needs.
Pros
- Guarantees let you know that the platform stands behind what it does
- Ask a Pro feature is free
- The mobile app helps you review or work on your return wherever you are
Cons
- Free services are only designed for EZ returns
What is Online Tax Prep Software?
In the past, filing your taxes often meant late nights spent surrounded by complicated IRS forms, piles of receipts and head-spinning financial documents. You might’ve hired a tax prepared or invited someone over to help.
Online tax software has been with us for a while now, and it makes tax filing easier, faster, and if you value time as money, perhaps less expensive as well. Though not as easy as handing everything over to a tax prepared, the best tax preparation software options provide an easy way to file your taxes accurately and often offer online assistance from a tax expert.
Most of the online tax software solutions offer tiered pricing. In many cases, the entry-level tier is free, which usually includes Form 1040. If you need to itemize deductions or account for investment income, a tiered product offers the additional forms you’ll need. Typically, tax filers who can use Form 1040 enjoy the lowest pricing (or free filing) while more complicated returns, like those for homeowners, investment income/rental income, real estate taxes, business taxpayers, student loan interest, assorted dividend income, freelancers or returns for self-employed tax filers with business deductions pay more for access.
Some online tax software program providers still offer boxed or downloadable software for your income tax return with a refund guarantee, while others incentivize the use of a web app with discounted pricing when compared to the cost of installable software. One common advantage of an installable tax software program is that some providers allow multiple uses of the software, meaning you can use the same software again the following year with no additional purchase. Many of the top online tax software providers also provide a mobile app, which may be a good fit for tablet users or those with very basic taxes.
What to Look for in an Online Tax Software
Choosing an online tax software can seem like a daunting task. The goal of most tax filers is to submit an accurate return and to save as much money as possible in the process. Let’s face it: Taxes can be difficult to understand.
- It's Easy to Use and Understand
Even if the underlying tax concept is easy to understand, reading IRS guidance on how to calculate capital gains taxes or how to account for brokerage taxes is enough to make your eyes glaze over. Tax software should be easy to use and provide a way to guide filers through the process with easy-to-understand prompts and guidance. In short, your income tax return should flow easily through the program without the need to reach out to customer service every few minutes. If preparers are confused by the platform, it may be wise to seek tax assistance elsewhere.
- It's Affordable
Affordability is another consideration when handling your income tax filing. While many tax software solutions provide a good, better and best product tier, pricing for comparable functionality should be close to competitors and more affordable than utilizing an accountant to complete your taxes. Also, consider your state taxes. A state filing fee is charged in addition to the federal filing cost and can range from $0 up to about $35 per state, depending on the software vendors or package you choose.
- It Has Excellent Customer Support
Support is also essential. The answer to one question often leads to new questions. A comprehensive help center is needed at a minimum and, ideally, live support is just a click away — where questions can be asked and answered in plain English. If you cannot find the contact information for the platform, you may have an even harder time with audit support, assorted tax information the platform can provide or the promise of expert help during the process.
Final Thoughts on Online Tax Software
Close only counts in horseshoes, as the old saying goes. It’s important to get it right the first time with your taxes. In some cases, oversights or errors in tax filing can come back to haunt you up to six or seven years after you file, by which time the details or records may be gone or misplaced. Choosing the best online tax software for your needs is the first, essential step when filing.
If cost is the primary factor in your buying decision, a no-frills option like TaxSlayer may be a good fit. However, taxes can be a complicated topic and more advanced products like TurboTax can help make taxes easier to understand, likely reducing errors and a bit of angst as well.
Frequently Asked Questions
What is an example of do-it-yourself tax software?
DIY tax software is a platform that walks you through the process of filing your taxes, collecting documents, taking deductions and files electronically to the government. It can also allow you to print your tax forms for mailing.
Is online tax software worth it?
Online tax software is worth the investment if you feel you need the help but do not want to visit a physical location.
Can a business file its taxes online?
Yes, you can file your business taxes online, but you should make certain that you choose a platform that makes it easier to file business taxes, handle documents, tax credits and more.
Related content: How to File Late Taxes