Do you visit the local tax preparer in town because you don't think you can complete your taxes online by yourself? Some complex tax returns, like owning your own business or having several rental properties, need to be completed by a tax professional. However, most people can file their taxes online themselves and save hundreds of dollars in prep fees to get the exact same refund amount. The best online tax preparation services make it easy to complete your taxes; sometimes completely free!
Below are the four best recommendations for the best tax prep software. They all feature free filing for basic federal tax returns that only use the 1040EZ form to enter W-2 information and interest earned from bank accounts and investments. If you can itemize (Schedule A), are self-employed (1099 employee/Schedule C), sold a stock (Schedule D), or have rental property income (Schedule E), but you still find it's cheaper to file in 2018 than 2017 in most case!
While it is possible to file your federal income tax return for free, these services will charge an extra fee if you have a state income tax return to file.
What is the Online Tax Prep Software?
Depending on your filing needs, you may benefit from one program over another. Having entered my own information into each program and getting the same refund results from each, your two main criteria should be looking for the overall price and how easy it is to use the platform.
Recommendations are broken down into the following categories to help make your decision easier.
Easiest to Use: TurboTax
Their walkthrough process is very efficient and foolproof. You will probably be able to complete your tax return the quickest with TurboTax.
Best Free Federal Option: H&R Block
The ability to itemize for free and file a state return for free makes H&R Block the winner without a doubt. It has never been cheaper to file an itemized return online.
Although, TurboTax does receive an honorable mention if you do not need to file a state return because of their easy-to-use platform.
Cheapest for Complicated Returns: TaxAct
If you sold investments, have rental property income, or are self-employed, you need to file additional forms beyond the basic 1040A. This means you can pay a hefty sum with any tax prep service. TaxAct is definitely the most affordable option if high-end returns.
Best for Self-Employed (Schedule C) Returns: H&R Block or TaxAct
This category is a toss-up and it boils down to quality or cost. TurboTax will confidently guide you through the various Schedule C deductions. H&R Block and TaxAct are also very good and either is a cheaper option, it comes down to which perks you like better from either of these two companies.