Tax season is kind of like the annual checkup with a doctor. No one wants to do it, but it is still necessary. Tax software can help make your life much easier come tax season. It helps you prepare and files your taxes quickly, accurately, and at low costs.
The Tax Cuts and Jobs Act goes into effect starting this year and the legislation is some of the most significant tax reform in decades. Taxes are no longer a simple business.
Regardless if you are filing for personal income, or a small business owner, getting some form of tax assistance in 2019 seems more necessary. Thankfully, tax software can help you effectively file a state and federal return, and at a fraction of a cost compared to hiring a CPA.
Why should I consider tax software for my personal income tax?
Did you know the average cost to hire a professional to prepare a tax return is approximately $275?
For many single filers or married, filing jointly couples this is unacceptable. They would like help with their taxes, yet do not want to blow most, if not all, of their refund on hiring a CPA.
The best tax software platforms make preparing and filing taxes a breeze. The top software providers walk you through the process, step by step – and ensure accuracy.
The Tax Cuts and Jobs Act has changed tax brackets, removed deductions, altered earned income tax credits, and shifted many other tax codes. It is no longer all that easy to create a Form 1040, and walk yourself through all the credits and deductions.
Tax software can significantly reduce the amount of time spent filing taxes. The apps for tax filing speak your language by breaking down comprehensive IRS jargon into easy to understand concepts.
What makes tax software so convenient for preparation and filing?
Online tax services are constantly updating their software to adjust to the latest tax changes, as well as make the process even more simple. Some of the latest features include automatic W-2 uploads (via a snap of a photo on your smartphone) and Q&A format style for creating the tax prep.
Here are some of the other top reasons people use online tax software:
- Time Saving
- Reduces Errors
- Maximizes Refunds
- Offers Live Chat Support
- Provides Audit Guidance & Defense
- Features Multiple Ways to Receive a Refund
Free vs. Paid Tax Prep Plans
All of the best tax software websites have a free version along with paid plans.
The free versions are introduced to provide a basic means to filing a Form 1040, and possibly claim a few credits like the earned income tax credit and child tax credit.
The free platform is basic with little to no online customer support though it can still help you get from point A to Z and file federally. Electronic filing for state taxes usually requires an extra cost, however.
Paid plans provide several more features, and most importantly online support. Some of the top tax software for 2019 includes live chat, email, phone, and community outreach for tax advice and help.
H&R Block takes it a step further by featuring in-person assistance along with their online support.
What features should the best tax software provide?
If you are paying for a tax service online, check to make sure they offer the following features:
- Online and desktop versions of the software (including mobile app)
- Easy data import like W-2 automatic uploads through a photo
- Accuracy guarantee on miscalculated taxes
- Refund disbursement options
- Audit-risk identification
- Excellent customer support with multiple types of outreach
Why do you need tax prep services for a small business?
While more taxpayers are turning to online tax prep services for personal income tax, one could argue that these types of software were first and foremost designed for self-employed individuals and small businesses.
The top tax software companies have paid versions specifically designed for SMBs or freelancers. The services take extra measures to ensure accuracy and that every single credit or deduction is being maximized.
Self-employed and SMB taxes are complicated, so the online support is generally exceptional with live chat in every step of the process. Some plans also include representation for the IRS in the event of an audit, or for an additional cost.
What deductions should tax software provide for SMBs?
Aside from the standard deductions, tax filing apps should also help support and provide assistance for the following deductions:
- Itemized deductions
- Business owner deductions
- Depreciation summary
- Vehicle mileage deduction methods
- Charitable donations
Gauging If You Need Audit Protection
The bottom line is no one wants to get audited. So like other unfortunate, terrible things in life – people are naturally afraid of it.
Tax services online often have two types of audit protection:
- Guidance: It’s not actual representation with the IRS in the event of an audit, but can help give tips and advice about the process.
- Representation: Even if the service is online, a tax professional will help represent you or your business and speak to the IRS on your behalf.
Most preparers offer free guidance, but you will have to pay for representation.
Often the more money you earned and reported, causes the IRS to study your taxes more closely so audit defense is definitely recommended for self-employed freelancers and SMBs. Single filers are much less likely to get audited.
Best Tax Software Apps Based on Type of Filing
Now that you have a good idea of what online tax prep websites can do for you or your business come tax season, here is a quick breakdown of the top services based on type of filing:
- Free to File: Tax Slayer
- Best Value: TaxACT
- Top Service for Families: H&R Block
- Best for SMBs: Turbo Tax
- Best for Landlords: Turbo Tax
- Ideal for Investors: H&R Block
- Top in Support: Turbo Tax
There are a number of high quality tax preparers on the market. Online software can let you get a head start on your federal or state taxes. You can save progress and even access the app via a smartphone.
Ultimately, tax software saves you time and money compared to hiring a CPA, or attempting to personal or business taxes on your own. Everyone wants to maximize their return, or reduce what they owe to the IRS, right?