Happy Tax Season! Yes, it is that time of year already. The time of year Americans will spend—according to IRS estimates—6.6 billion hours filing their income tax return: 1.6 billion hours will be spent on the Form 1040 alone. Happy times.
But it is not all doom and gloom. Although the tax code continues to grow in complexity, it has never been easier or cheaper to file your taxes. This guide will highlight the top tax preparation software products available. It will also highlight the features you need in a tax software product and those you can do without.
But first, let’s start with the good news. Yes, we're still talking about taxes.
The Good News About Income Taxes
The introduction of free electronic filing of federal and state returns and the increasingly competitive market of web-based tax preparation companies has tipped the scales of power for consumers. Nice change.
- According to an IRS report, 75% of taxpayers in the United States qualify for IRS Free File.
- Taxpayers have so many tax preparation companies to choose from, they have become extremely price-sensitive. Tax software companies have responded by slashing prices.
- Even top companies with professional grade tax software now offer free filing for taxpayers with simple income tax returns.
That is the good news. The bad news is that with so many web-based tax preparation companies to choose from it is not easy to differentiate between good deals and cheap products that could become expensive mistakes.
Features Your Tax Preparation Software Should Include
The SuperMoney team has trawled through dozens of companies and products to find the best tax preparation programs. These are the features that informed our analysis and that every good tax preparation software should include.
Accuracy Guarantee. Look for tax preparation companies that stand behind their product and guarantee to pay for any penalties caused by bugs in their software.
Audit-Risk Identification. The IRS uses software to filter through millions of tax returns and determine which ones to audit. The best tax software products flag income tax returns that are likely to be picked up by the IRS, and provide recommendations to minimize the risk of an audit.
Quality Customer Support. Choose companies that offer personalized help by phone, email, and chat.
Income Tax Calculator. Surprisingly, not all tax software products provide it. Look for tax preparation products with a tax calculator that give you a running total of your tax refund/debt, as you work through your return.
Free Tax Filing. If you have a simple tax return and earn less than $100k, you may not have to pay to file your state or federal taxes. Look out for the bait-and-switch tactics of companies that snare customers with “free” federal tax filing and only uncover the ruse once you’ve completed your tax return. Others offset the savings by charging extra for filing state returns.
Intuitive Interface. Good design and a simple interface are crucial when preparing your taxes. Saving a few dollars is not worth the wasted hours you’ll never get back struggling with a poorly designed interface.
Now we know the main features a tax software product should have, let’s see SuperMoney’s top picks.