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Choosing the Best Online Tax Software
All of the top online tax software guides users step-by-step through the tax preparation and filing process, but each online tax software has strengths and weaknesses that make it a better option for certain tax filers. The lists below recognizes the best online tax software for those looking to file free online taxes or for people with other unique needs.
The Top 6 Free Tax Software of 2015
Using a free tax software often comes down to the tax preparation needs of each individual because you can only file simple federal taxes for free with most tax companies. Keep in mind that you will have to pay an additional fee if you want to file your state tax return. The best free tax software will offer easy guidance and advice while you file your taxes, along with live support via live chat or phone, and the option to file more than just the basic forms.
The 3 Best Online Tax Software for Beginners
Companies on the list of best online tax software for beginners all offer very user friendly interfaces and provide a large knowledge base containing helpful articles to facilitate the tax-filing process. The best online tax software will also have some method of support for individuals who need more personalized assistance, whether it's over the phone or in person. If this is your first time filing your taxes, the first thing you need to focus on is choosing the right edition. If you have simple tax needs, you may be able to get by on a federal free edition. For more complex taxes, you'll have to pay. Then, you'll want to focus on how easy the software is to use and what kinds of support are available. Based off this criteria, the three companies below are some of the best in the industry and make a great choice for any first-time tax filer.
The 3 Best Online Tax Software for Small Business
Choosing the best online tax software for small businesses involves the consideration of several factors, such as the availability of tools that help you find industry-specific tax deductions. You should also look at the types of support the company provides in case you need some extra support. Some programs offer in-person assistance, live-chat services, phone support, online learning resources, or all of the above. Price is also another deciding factor. If you've filed small-business taxes before, you probably want to look for a software program that allows you to import your previous year's information. The three companies listed here represent some of the best online tax software for small businesses on the market today.
What Online Tax Software Features Matter and Why?
Accuracy Tools includes the features and guarantees collectively designed to confirm taxes are accurate throughout the preparation and filing process. Some of these features include a tax calculator, refund double-check, and a real-time balance meter. For those concerned about being audited, audit risk identification is a useful feature that will indicate audit risk and recommend solutions to minimize it. The best software provides accuracy and maximum refund guarantees. Accuracy Tools is an important category, especially to those who lack confidence in the tax filing process.
- Accuracy Guarantee - The software company guarantees your taxes are accurate.
- Audit Risk Identification - The software indicates your audit risk and recommends solutions to minimize the risk.
- Double-Check Returns - The software automatically double-checks your tax return to ensure it is accurate.
- Maximum Refund Guarantee - The software guarantees you will get the maximum refund possible.
- Prior Year Comparison - The software automatically compares the current tax return with the previous year's return and highlights any differences.
- Real-Time Balance Meter - The software provides a real-time meter displaying the balance of your refund or the amount you owe.
- Tax Calculator - The software has a tool that allows you to estimate your tax refund or the amount you will owe.
Deductions refers to the types of deductions the software is able to accommodate. Having the ability to file standard or itemized deductions is a must. Processing charity donations is also common functionality. Additional deduction discovery resources are available for those who own businesses or rental properties. Identifying deductions is an important aspect of tax filing and can make a big difference in the amount of tax owed.
- Business Owner Deductions - The software identifies deductions specifically for business owners (Schedule C).
- Charity Donations - The software allows you to deduce charity donations.
- Depreciation Summary - The software allows you to enter depreciated items and provides you with summary figures (form 4562).
- Itemized Deductions - The software allows you to itemize your deductions.
- Rental Property Deductions - The software allows you to deduce rental property deductions (Schedule E).
- Standard Deductions - The software supports the standard deduction method.
- Vehicle Deduction Methods - The software allows you to deduct actual expenses or standard mileage rates for your vehicle.
Disbursement addresses the different ways tax refunds can be distributed. The most common methods of receiving tax refunds are through direct deposit or via check. Additional disbursement methods include pre-paid cards and purchasing U.S. savings bonds. Having the ability to distribute refunds into multiple accounts is a convenient feature found in the best products. For those looking forward to a tax refund, Disbursement is a highly important category.
- Check - Your tax refund can be disbursed via check.
- Direct Deposit Refund - Your tax refund can be deposited directly into your bank account.
- Multiple Account Deposit - Your tax refund can be deposited directly into multiple accounts.
- Pre-Paid Card - Your tax refund can be disbursed via a pre-paid card.
- Savings Bonds - Your tax refund can be used to purchase savings bonds from the U.S. government.
Facilitation refers to the features that help simplify the tax filing process. Facilitation is made up of common features like step-by-step guidance, deduction discovery, and a life events advisor. However, the best online tax software will provide tools to help you identify industry-specific deductions, appropriately process your charity donations, and use interview guidance, a process of asking a series of questions and mapping the answers directly into the correct tax forms. Solid Facilitation features are important as they alleviate much of the guesswork and ensure filing taxes does not become overly complex.
- Asset Depreciation - The software compares asset depreciation methods and indicates which option will be most favorable.
- Charity Donation Tool - A tool exists to help you identify, value, and process charity donations.
- Deduction Discovery - The software searches available deductions to ensure you get the maximum refund possible.
- Industry-Specific Tax Deductions - The software provides a walk-through of industry-specific deductions.
- Information Transfer - You can pull information from previous tax forms directly into current year forms.
- Interview Guidance - The software asks you questions and uses your answers to automatically complete the appropriate forms.
- Life Events Advisor - The software has functionality that helps you identify major life events and understand how these events impact your taxes.
- Prior Year Returns - You can access your return from a previous year.
- Reminders - You can flag or bookmark any areas of uncertainty and return to them at a later time.
- Rental Property Tool - A tool exists to help you identify and process deductions associated with rental properties.
- Step-by-Step Guidance - The software provides interfaces that guide you step-by-step through the tax preparation and submission processes.
Filing Options primarily refers to the various methods of filing federal and state returns. Online software generally includes the ability to electronically file (e-file) federal and state returns. Having the ability to prepare prior year taxes, and access, prepare, and print copies of amended tax returns are convenient features that will be found in the premier online tax products. Understanding what filing features will be needed and what software can best accommodate those needs is an important part of the tax preparation process.
- Amended Tax Returns - You can access, prepare, and/or print paper copies of amended tax returns.
- Costs Deducted From Return - Any fees associated with preparing and filing your taxes can be deducted from your tax refund.
- E-File Extensions - You can e-file an IRS tax extension.
- E-File Federal Returns - You can e-file your federal tax return.
- E-File State Returns - You can e-file your state tax return.
- Free Federal Edition - You can e-file your federal tax return for free.
- IRS Confirmation - You receive confirmation that the IRS has received your e-filed tax forms.
- Prior Year Filing - You can access, prepare, and/or print paper copies of prior year filings.
Filing Status is a straightforward category that specifies the filing status types the online tax software is able to accommodate. Possible filing statuses include single, head of house, married filing jointly, married filing separately, and qualifying widow(er). Filing Status is an important category to get right, but confirming that the necessary filing status is available also makes it easy to navigate.
- Head of House - The software supports filing under head of house status.
- Married Filing Jointly - The software supports joint filing for married users.
- Married Filing Separately - The software supports separate filing for married users.
- Qualifying Widow(er) - The software supports filing under qualifying widow(er) status.
- Single - The software supports filing under single status.
Data Importing encompasses the types of forms that can be uploaded and imported into the software. Having the ability to import W-2 and 1099 tax forms is the most common. However, some online tax software will accommodate importing tax forms prepared by an alternative company. Data Importing is a less important category, because it is more of a convenience as opposed to a necessity.
- Alternative Preparer Import - You can import forms prepared by other companies or software solutions.
- Automatic Import - You can automatically import your tax forms from partner organizations.
- Import 1098 Forms - You can import 1098 forms.
- Import 1099 Forms - You can import 1099 forms.
- Import Prior Year Returns - You can import your prior year tax return.
- Import W-2 Forms - You can import W-2 tax forms.
Learning Materials includes the available resources intended to help understand online tax software and troubleshoot problems independent of a support representative. The best tax products will include an active forum and a knowledge base full of useful articles. Learning Materials is an important category for those who like to teach themselves and prefers to resolve problems on their own.
- FAQ - The company provides a list of answers to frequently asked questions.
- Forum - The company provides an interactive forum where users can post questions and answers.
- Glossary - The company provides a glossary of tax terms.
- Knowledge Base - The company provides a knowledge base of detailed help articles.
- Video Tutorials - The company provides video tutorials.
Support refers to the types of resources the online tax company provides to answer questions and resolve problems. Many of the best products have been streamlined to handle common filings without complications, making comprehensive support less necessary. However, when a problem does arise, knowing assistance can be acquired through chat, phone, or email is comforting. For those who prefer face-to-face interactions, selecting an online software that also operates retail locations would be a solid choice.
- Audit Support - The company will provide audit support if you get audited in the future.
- Email/Tickets - The company has an email or ticket system dedicated to support.
- Live Chat - The company offers live chat support.
- Phone - You can contact the company by phone to get support.
- Retail Locations - You can get in-person support at local retail locations.
- Social Media - You can contact the company with questions through social media websites.
- Video Conference - You can prepare your taxes with a tax professional through a live video conference.
Mobile identifies whether the online tax software provides a mobile application and which platform the application is designed to operate on. In general, functionality on mobile tax applications is limited. However, for those determined to complete their taxes on a mobile device, the best online tax mobile applications are currently capable of processing basic tax forms.
- Android Application - You can download a native Android application of the software.
- Apple Application - You can download a native Apple application of the software for use on your iPhone or iPad.