Personal tax preparation applications have been around for about a quarter of a century, first as desktop software and then as online solutions. They developed rapidly in their early years, adding forms, schedules, and state support until everyone was covered, and every deduction found. They also became unwieldy as they grew in complexity. In later years, the tax prep applications benefited from user interface tweaks that made them easier to use, and streamlined all-important taxpayer help systems.Thankfully, you usually don't have to view any official IRS forms as you work your way through your return online. Once you organize your tax documents, that should be just about the last time you need to look at an official document. The developers of these tax preparation services have taken apart Form 1040—and all of its supporting forms and schedules—and turned them into lengthy interview sessions. You provide responses, and they work in the background, taking those answers and dropping them onto the correct document lines.
Today, all major IRS forms and schedules are supported, and preparing your taxes using the best of these services is no more difficult than working your way through any giant software wizard—except for the part where you have a strict legal obligation to be sure that all of your answers are accurate, of course. Every screen contains a statement or question in understandable English (usually). You supply answers by clicking buttons or entering your response in blank fields or selecting an option from drop-down lists.
Help Along the Way
Even if a query is clearly worded, you may still be unsure whether you're supposed to supply information, and what that information might be. Tax websites help you understand those confusing elements in a variety of ways. They might turn a word or phrase into a hyperlink that opens a small window containing a more detailed explanation. Likewise, they might anticipate your questions and post links to related Q&As, right on the pages that might spur you to ask the question. This kind of context-sensitive help is extremely important. If you need to consult any of the other methods of help detailed below, it means that the service has failed to anticipate your needs, your time has been wasted, and your blood pressure has probably gone up, too. Sites that lack good context-sensitive help are heavily penalized in our reviews.
Still, no service can anticipate every contingency or question. Most tax preparation applications offer as a second tier of help giant databases of tax information that you can search if you're really stuck. Some offer glossaries, too. You may be directed occasionally to read IRS instructions or peruse an IRS publication, but that should be vanishingly rare in a good service. After all, IRS documents are free, and, unless you're using Credit Karma Tax, you're largely paying for the convenience of not reading IRS documents. The IRS is, of course, the last word on taxes, but creating lucid, reassuring guides is not one of its notable strengths.
If all that isn't enough, you might want to interact with a real human being. These sites offer connections to tax professionals that might occur via chat, email, or phone. Jackson Hewitt and TaxSlayer are the only two services we've reviewed to offer all three methods, this year. TurboTax provides the most innovative and potentially the fastest way to get human help. Its SmartLook creates a connection between you and a tax expert. You see them talking to you live on your screen. At the same time, they can see where you're having trouble by viewing your screen and troubleshooting your problem. If you're wondering how TurboTax can be so expensive and yet win an Editors' Choice award, features like this that are part of the answer. One note: if you think you're likely to need to rely on this kind of direct contact with your tax service, you're much better off doing your taxes early. Otherwise they might be overwhelmed by last-minute e-filers.
When you've gone through all the screens that pertain to your financial situation, these sites review your work and point out possible errors and omissions. They also transfer applicable data to your state return if you have to file one. When all questions are answered and your return is cleaned up, they ask for payment before they help you print your actual IRS forms and schedules or e-file them.
File Your Schedule C
Last year, we reviewed the deluxe versions of the major tax preparation websites because they tend to be the most popular. This year, however we looked at top-of-the-line sites that support the Schedule C, given the growing freelance and independent contractor market.
All but one of sites we evaluated come in multiple versions with different price points—Credit Karma Tax being the one (free) exception. Every application in a given family looks and works like the others, but the more expensive they are, the more IRS forms and schedules they support. High-level editions also come with special features that are usually enhanced support options. You'll need to check to make sure any particular features you're interested in are included in a less expensive version, if you don't need the top-tier software, but the ratings should reasonably well to the entire families of products, as they tend to share help systems, interfaces, support, and so on.
This Year's Tax-Prep Lineup
Most of the names of this year's offerings will be familiar if you've used tax applications before, but there's a new one this year. Credit Karma Tax is from parent company Credit Karma, a service that monitors your credit reports and gives you weekly updates. It's the only tax site that supports federal and state filing of complex returns at no cost, but it's new enough that it still needs to grow a lot to compete with the other sites reviewed here.
TaxAct stopped offering free filing years ago, but it's still the most affordable option among the paid sites: $30 for federal and $25 for state if you buy TaxAct Online Premium. Prices have been creeping up on this Iowa company's offerings in recent years, but the site offers something that no one else does: a price lock guarantee. Everyone else charges one price until usually sometime in March, when they raise it by $20 or more.
TaxAct Online Premium is not just affordable. It's an exceptional personal tax preparation website, and we recommend it for taxpayers on a budget that just can't swing TurboTax Self-Employed's high price. Both win Editors' Choice awards this year. TurboTax costs $114.99 for federal returns and $39.99 for state.
TaxSlayer Premium is not far behind TaxAct in price: It's $35 for federal returns and $22 for state. And it's improved since last year, edging up a half-point in our star rankings.
H&R Block Premium ($54.99 federal, $36.99 state) and Jackson Hewitt Premium $79.95 federal, $36.95 state) are our two midrange offerings, price-wise. H&R Block Premium is an all-around excellent offering, but Jackson Hewitt Premium suffers from spotty and a mediocre user experience. It looks quite overpriced in roundup that includes TaxAct and Credit Karma Tax.
Who Should File Taxes Online?
Keep in mind that the only people who need to purchase the most expense personal tax preparation solutions are those who have self-employment income and expenses (either full- or part-time) that must be reported on a Schedule C. If not, you can go one step down, save money, and still have access to the forms and schedules you need to report income, deductions, and credits.
In fact, for e-filers with very simple returns (the 1040EZ in particular) most of these service offer free mobile apps that can get the job done in a snap...of your smartphone's camera, which is often the way you get the data into the app. We're busy reviewing those apps right now and will update this roundup once we've finished.
If you've never reported self-employment income but want to try tax prep on your own, I'd recommend that you create an account at the site of your choice (my favorites are obviously TurboTax Self-Employed and TaxAct Online Premium) and run through it far enough to see what Schedule C reporting is like, especially if you're going to try to claim business use of your home and/or vehicle expenses. You can do this without paying anything. Are you confident about your ability to complete those sections accurately?
Do-it-yourself personal tax preparation isn't for everyone. And there's no magic formula that dictates which taxpayers are likely to succeed on their own. Beyond gauging your confidence in your ability to complete this complex task, consider the time you'll spend doing it. Price professional tax preparers. And then balance your ability and the value of your time with that cost.
That said, keep in mind that millions of people, from 1040EZ filers to full-blown, full-time freelancers, use these sites every year to prepare their taxes.
What About Business Taxes?
All the sites reviewed here support sole proprietorships and single-member LLCs because they include Schedule C preparation and filing. But what if your small business was organized as a multimember LLC, S Corporation, C Corporation or partnership? You'll need tax preparation software or a website that supports different forms, primarily the 1065, 1120, and the 1120S. You will also probably need payroll forms (940 and 941) and employer forms (W-2 and 1099) for each of your employees. Depending on your business structure, you may need to file additional IRS documents.
There are software and online solutions available for these business types. They cost a bit more than the sites reviewed here, but they offer similar usability features, data entry methods, and help tools. That said, the taxes in question may be much more complicated, depending on your business. You may be able to import reports and other income and expense data from existing files. And you can transfer related information to the appropriate state returns (for an additional fee) and file your return electronically. The process of preparing business returns is understandably more complex than completing a 1040, but there are options if you want to tackle it yourself. Of course, you may also opt to go with an accountant, too.
Can You File Your Taxes from Your Phone?
Yes, you can. Both Intuit and H&R Block have produced mobile versions of their top-of-the-line personal tax preparation solutions for a couple of years now. You can complete the same complex return on both your desktop browser and your smartphone or tablet. In fact, you can start your return on one platform and pick up where you left off on another.
But it your return is simple enough, you can do so at no charge. For tax year 2016, I have reviewed free mobile tax preparation apps from the four leading tax software producers. TaxAct Express and TaxSlayer Simply Free offer free preparation and filing of both federal and state returns if you only need to use the 1040EZ. TurboTax Absolute Zero also supports the 1040A. And H&R Block More Zero lets you itemize deductions found on the Schedule A in addition.
You could use these free versions on your desktop browser, or switch back and forth between browser and smartphone by entering your user name and password. Or you can complete your entire return start to finish on your phone. The app's creators have done a good job of creating step-by-step interviews. They ask questions and provide ways for you to supply responses, similar to the way the browser-based versions work, only optimized for iPhone and Android. When you're finished, they review your return looking for problems, then go on to help you file.
H&R Block More Zero wins our Editors' Choice for free mobile tax preparation software this year, and not only because it covers the most tax territory. It's a little more businesslike and straightforward than TurboTax Absolute Zero, which is breezier and offers what I think is the best, most interactive user experience. H&R Block, though, wins for both substance and support. Its help content is both in-depth and voluminous. You probably don't need a lot of guidance to get through the 1040EZ/A, but you may have questions when grappling with some Schedule A topics. H&R Block More Zero has answers.
E-File Your Taxes Today
Assuming, however, that you have a reasonably complex return this year, good old-fashioned browser-based premium tax preparation services like the ones rounded up here are your best bet. Check out the table above, read the capsule review below, and click through the links to the full reviews. Do you have a suggestion for e-filers or an opinion (good or bad) about these services? Let us know in the comments.
When you finish e-filing, you may have some sensitive documents that you want to safely dispose of; don't worry, we have plenty of selections when it comes to the top shredders for tax time and beyond. And once you have your your taxes in order, you might also want to get a handle on your money for next year. Get ahold of your own dollars with one of our favorite personal finance services.
Featured Tax Preparation Software Reviews:
H&R Block Premium 2017 (Tax Year 2016) Review
$79.95 MSRP
Bottom Line: H&R Block Premium is a highly capable tax preparation service with strong help content and a well-designed interface.
Intuit TurboTax Self-Employed 2017 (Tax Year 2016) Review
Editors' Choice
$114.99 MSRP
Bottom Line: TurboTax's top-tier Self-Employed service is expensive, but it's the best. Plain-spoken help resources, thorough exploration of tax forms and schedules, and an unparalleled user experience m...
TaxAct Online Premium 2017 (Tax Year 2016) Review
Editors' Choice
$37.00 MSRP
Bottom Line: TaxAct Online Premium provides affordable, reliable personal tax preparation tools that support all major tax scenarios. This, combined with its excellent support, make it our top choice for...
Credit Karma Tax 2017 (Tax Year 2016) Review
$0.00 MSRP
Bottom Line: The completely free Credit Karma Tax supports all major IRS forms and schedules for federal and state returns, but its help system is spotty and incomplete, and it doesn't offer returns for ...
TaxSlayer Premium 2017 (Tax Year 2016) Review
$35.00 MSRP
Bottom Line: TaxSlayer Premium is an affordable service for preparing your taxes, but its context-sensitive help is lacking, and its user interface needs some work.
Jackson Hewitt Online Premium 2017 (Tax Year 2016) Review
$79.95 MSRP
Bottom Line: Jackson Hewitt Premium provides personal tax preparation tools with admirable options for one-on-one support, but its built-in help and user experience aren't up to par
Post a Comment