No tax filing software is perfect for every taxpayer. Consider these factors to help you pick the best tax software for you.
Your tax situation and complexity level
You can often use a free version of tax software when you mainly have W-2 income, you take the standard deduction and your filing status is either single or married filing jointly. Free tax software tends to make you manually input information and doesn’t provide much support – which may be OK when you only have a few tax forms.
But as your return increases in complexity (like you own a business, you have investment income or you itemize deductions), you may want to pay for a premium package that lets you directly import information and handles complex calculations.
Price
Many services have three or four tiers, one of which is free. But the advertised price often isn’t the price you pay. A seemingly minor detail (like having dependents or an HSA) can often trigger an upgrade from a free to a paid version. Many services have multiple add-ons. For example, you’ll often have to pay extra for access to a tax pro or for audit defense services.
Free software pitfalls
A lot of platforms advertise free tax filing, but you often won’t be able to use it unless your filing situation is extremely basic. Claiming dependents, having a health savings account (HSA) or receiving a 1099-NEC or two for freelance work are all common situations that can preclude you from using a free tax filing service. Many free filing services also limit your access to technical help or customer support.
DIY versus in-person expert help
The more complex your return, the more beneficial it is to enlist expert help. It’s also a good idea to hire an expert when you have a major life change, like marriage or divorce, the birth or adoption of a child, a major change in income or a home purchase. However, even if you need tax help, you don’t necessarily need to meet with them in person. Some tax software services let you talk to an expert by video and use live screen sharing.
The costs of getting expert help vary enormously based on your return’s complexity, whether you’re filing an individual or business return, the expert’s credentials and your location. But in my experience, it generally costs around $750 to have a certified public accountant (CPA) physically prepare your return.
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