Best Tax Software Solutions for 2021
Does thinking about filing your tax return give you shivers? We can all agree that tax-related tasks are no fun. Luckily, there is a way to lower your tax season stress levels that doesn't include paying a lot of money to a CPA or other tax professional. Instead of undertaking the task all by yourself, you can use a tax program.
Designed for individuals and business owners with little tax knowledge and even less filing experience, the best tax software solutions can help you file your return correctly, get the maximum possible income, and avoid audits - all for a fraction of the fee a CPA would charge.
Taxes are complicated and confusing enough without the added stress of determining which tax software solution is the best fit for your situation. That’s why we’ve done the research and come up with a set of criteria to help you choose the perfect option.
Tax Software Solutions - 4 Best in the Industry
- •Wide range of tax forms covered
- •Ability to upload W-2 from your phone
- •Easy-to-use interface
- •Competitive pricing plans
- •Year-round tools to help you save on taxes
- •Excellent refund policy
- •Pricing varies by support level
- •Simple tax returns can be filed for free
- •Low additional fee for state returns
- •One of the market’s most affordable options
- •Access to tax and audit specialists
- •Free tax calculator
Picking the Best Tax Service: Our Methodology
Before you start exploring the market, it’s vital to establish a set of relevant criteria and make sure that the option you decide to go for meets all the requirements of your specific tax situation. The tax software industry is very competitive nowadays, so to help you make the best choice, we’ve looked at more than a dozen providers and made a list of the most important aspects to take into account. Here’s how we identified and evaluated our top picks.
Affordability is one of the biggest advantages of online tax filing companies. According to a recent survey, the average cost of hiring a tax professional to file your federal and state return is $176, although the figure can go up to as much as $1,563. On the other hand, if you decide to give tax filing software solutions a chance, you’ll probably pay less than $50.
That said, no two tax programs are made the same. Some charge a flat rate, others have a tiered offer, and certain companies even provide a free service to some extent. Either way, the best providers are those that are fully transparent about the level of service they are willing to provide for a certain fee.
No tax program - online or downloadable, paid or fee-free - will do you any good if it can’t handle your tax situation. Given that functionality is as important as cost, evaluating these two factors side-by-side makes perfect sense.
Decent tax software solutions should let you upload your return from the previous year, support all kinds of tax forms, offer options for different types of credits and deductions, walk you through the filling process, and offer assistance every step of the way.
It doesn’t matter if you have a W-2 income, work as a freelancer, run a small business, or anything in between - the best tax software providers will be able to meet your needs.
Guarantees and Reimbursements
When shopping for tax software, you should always check whether the solution you’ve decided to use offers accuracy guarantees, reimbursements, and refunds.
If the software you’ve decided to purchase doesn’t come with a 100% accuracy guarantee and a reimbursement policy that protects you from any penalties or interest the IRS may impose due to miscalculations or system errors, you should keep looking.
For most people, the best place to do taxes is one that doesn’t come with a steep learning curve and can help you complete your tax prep in less than an hour. If you don't have a lot of experience, detailed explanations of important tax concepts, clear instructions, and an easy-to-use interface can go a long way.
Even if you’re a pro at tax return prep, you’d be better off using neatly designed software that will help you get the job done as quickly as possible and keep up with any regulation changes.
As far as platform types go, most of the providers we’ve looked at offer online solutions, downloadable software versions, and accompanying mobile apps.
A professional customer support department plays a huge role in offering a high-quality user experience. The best tax software for the self-employed, small business owners, investors, or individuals in any other tax situation should come with a wide range of support channels.
These usually include email, phone, live chat, contact forms, on-site and in-app help centers, and knowledge bases.
Tax Software Reviews
H&R Block Review
Operating since 1955, H&R Block has established itself as one of the most trustworthy tax preparation firms for small businesses. The company has more than 12,000 offices around the world and offers state-of-the-art tax preparation, payroll, and business consulting services.
The company’s tax software solution is a good choice for both common taxpayer needs and more complicated scenarios. As one of the best tax preparation software providers, H&R Block offers competitive pricing plans, access to a human tax professional, and an overall excellent user experience.
Pricing and Features
You can use H&R Block’s service to file your taxes online by yourself, file with the help of a tax pro, or use one of the company’s tax software solutions. For the purpose of this review, we’ll focus on H&R Block’s downloadable software solution.
Designed for individuals with simple tax situations, H&R Block’s Basic Tax Software is priced at $69.99. You can use this option to deal with earned income credit, retirement income, cash and non-cash donations, medical expenses, personal property tax, and state and local sales tax.
If you opt for the Basic plan, you’ll be given an opportunity to go through a step-by-step Q&A session and learn about all available credits and deductions, import your W-2, 1099, and 1098 forms, upload your previous year’s return, and itemize deductions with Schedule A.
You’ll get an accuracy review, audit risk assessment, unlimited federal tax preparation, and printing along with five federal e-files for your return.
H&R Block’s second-tier tax filing software, the Deluxe + State Tax option, is meant for investors or homeowners and is priced at $49.99 (plus $36.99 per state). This option covers capital gains, investment property sales, stock sales income, mortgage interest, real estate taxes, and a child’s investment income.
Those who purchase this plan get everything from the first tier plus guidance on how to maximize real estate deductions and mortgage interest, reporting assistance on income from home sales, retirement, and investments, and assistance on optimizing charitable donations.
H&R Block’s Premium is the best tax software option for complex federal and state returns (mostly for the self-employed and rental property owners).
For a $69.99 fee (plus $36.99 per state), you’ll get everything offered with the first two tiers with the addition of tax calculators and tools to help define the cost basis of inheritance, gift, sale, and dividend assets, Schedule C guidance to maximize tax deductions on self-employment income, and Schedule E assistance for rental property-related income and expenses.
Lastly, H&R Self Employed tax prep software costs $109.99 (plus $36.99 per state) and is designed to help small business owners file state, federal, and business returns with expert assistance every step of the way.
If you opt for this plan, you’ll be instructed on how to prepare and file corporate and S-corp tax returns (forms 1120 and 1120S), LLC and partnership tax returns (form 1065), non-profit returns (form 990), and estate and trust tax returns (form 1041).
With this plan, you can also create employer (W-2 & 1099) and payroll (940 & 941) forms and maximize your tax benefits for business expenses, vehicle deductions, and depreciation.
Guarantees and Reimbursements
Another great thing about this tax preparation software is that it offers a guarantee of 100% accuracy and the maximum refund. In other words, if you find an error in your tax preparation made by H&R Block, the company will refund the fees you paid for the software and also let you use the service to amend your return at no additional cost.
Moreover, you’ll be reimbursed for any penalties and interest (up to $10,000) that you may face should H&R Block’s tax preparation software make an error on your return.
User Experience and Support
As one of the best tax prep software providers, H&R Block is praised for its comprehensive explanations of tax concepts, clear instructions, and easy-to-use platform. It’s also worth mentioning that the company makes sure that its customers’ personal data is secure, and their privacy is protected.
As far as customer service goes, tech support is available via phone or live chat. There’s a comprehensive help page on the website and customers can also visit a brick-and-mortar H&R Block location to speak to a tax expert in person.
- Wide range of tax forms covered
- Ability to upload W-2 from your phone
- Easy-to-use interface
- Limited Virtual assistant
Founded in 1998 with the aim of offering affordable online and downloadable tax filing services, TaxAct has already helped file more than 65 million federal returns. The provider is best known for its 100% accuracy guarantee, ease of use, and year-round tools that help small business owners make smart financial decisions and save on taxes.
Pricing and Features
As far as features go, TaxAct offers options similar to the ones provided by other tax software providers. Users can either prepare their taxes online or opt for the downloadable version supported by Mac and PC computers. Here’s an overview of TaxAct’s pricing plans:
The first of TaxAct’s four service tiers is the Free plan ($0 federal plus $4.95 per state filed). Designed for simple filers with earned income credit, college expenses, retirement income, child tax credit, and dependents, this plan also lets you determine your W-2 form and import your previous returns.
As one of the tax return software options, the Free plan also comes with unlimited account support and an online wizard that makes the filing process quicker and easier.
Marked as the most popular option, TaxAct’s Deluxe+ plan is priced at $24.95 (plus $44.95 per state) and meant for homeowners with credits, adjustments, and deductions.
The service at this tier comes with the assistance of a tax specialist (via phone) and covers everything from the Free plan plus itemized deductions, mortgage interest, real estate taxes, child and dependent care, adoption credits, health savings accounts, and student loan interest.
TaxAct’s Premier+ plan comes with a $34.95 fee (plus $44.95 per state) and is considered one of the best online tax filing solutions for investors. Along with everything from the previous two tiers, it also covers home sales and similar investments, investment expenses, foreign bank and financial accounts, rental property income, and royalty and Schedule K-1 income.
Another great thing about this plan is that it provides prioritized support with even screen sharing included.
Finally, TaxAct’s Self Employed+ plan is priced at $64.95 (plus $44.95 per state) and designed to help freelancers, independent contractors, and sole proprietors maximize their deductions.
This is easily one of the best tax filing software solutions available, as you’ll get everything from the first three tiers plus the ability to easily report your business income and expenses, calculate depreciation, stay on top of your business taxes with year-round planning resources, and reduce your audit risks, as TaxAct will inspect your return for errors and omissions.
Guarantees and Reimbursement
Unlike most of its competitors, which offer much more limited reimbursement options, TaxAct guarantees that its product is 100% accurate and capable of getting you your maximum refund.
If not, the company claims it will pay the software fees, as well as any difference in your higher tax liability or lower refund and even any legal or audit charges up to $100,000. As one of the best tax websites, TaxAct also lets you request a refund within 30 days if you’re dissatisfied with the service.
User Experience and Support
TaxAct offers a simple and easy-to-use platform that can handle most business and personal tax prep needs. Customers can either use the online version or download the software to their computers. There’s also a mobile app, but it’s not as full-featured as the aforementioned options.
As far as customer service goes, support levels are dependent on the service package you decide to go for. Either way, all customers get access to the provider’s detailed help page, as well as unlimited chat, email, and phone support.
- Competitive pricing plans
- Year-round tools to help you save on taxes
- Excellent refund policy
- High state fees
Launched in the early 1990s, TaxSlayer is easily one of the most affordable tax filing companies among the industry’s major players. Founded by Rhodes-Murphy & Co., a Georgia-based tax preparation service, TaxSlayer today employs more than 200 individuals and helps file 10 million personal and business tax returns each year.
Pricing and Features
As one of the best tax software providers, TaxSlayer offers a four-tiered service. Unlike most of its competitors, this provider ties its prices to the level of support, not to the tax forms and situations a software package can handle. Let's take a look:
Meant for individuals with a simple tax situation, the Simply Free plan doesn’t incur any fees for federal returns and even includes one free state tax return. This package lets you prepare, print, and e-file your tax return, import your W-2 form, and report education expenses and student loan interest. Should you hit any bumps on the road, you’ll be able to contact support agents via phone and email.
Marketed as the best fit for most taxpayers, TaxSlayer’s Classic plan is priced at $17 (plus $32 per state). Designed to suit almost all tax situations, this option covers everything from the Simply Free plus earned income tax credit, child tax credit, all deductions and adjustments to income, and all income types without any form or schedule restrictions.
Priced at $37 (plus $32 per state), the provider’s Premium option is one of the industry’s most affordable tax software options at this level of service.
It comes with everything offered in the Classic option with the addition of premium-level support features such as IRS audit assistance for three years, priority phone and email support, live chat for quick tech support, access to a tax professional, and the ability to file faster with unlimited assistance.
Lastly, TaxSlayer’s Self-Employed plan comes with a $47 price tag (plus another $32 per state) and is best suited for freelancers, side-hustlers, contractors, and 1099ers.
As one of the best online tax software solutions, this version includes everything from the lower three tiers, plus access to a tax professional with self-employed expertise, the ability to maximize work-related expense deductions on your Schedule C, guidance with 1099 income, estimated tax payment reminders on a quarterly basis, and year-round income and tax tips.
Guarantees and Reimbursement
Much like most of its competitors, the company claims that its software is 100% accurate and offers reimbursements for any state and federal penalties and interest charges that you may incur due to its mistake. As one of the best places to file taxes, TaxSlayer states that it will refund any applicable fees if you don’t receive the maximum refund you’re entitled to.
Another great thing about this provider is that it lets e-filers who’d like to avoid using a credit card pay for tax prep use the File & Go feature. If you opt for this option, you won’t have to pay anything in advance, as your tax fees will be deducted from your refund.
User Experience and Support
As one of the best software options for taxes, TaxSlayer offers a simple and easy-to-use interface. Customers start by explaining their tax situation or importing their previous year’s tax return, entering their income, or importing a W-2 form. That’s enough for the software to start finding the best deductions.
Although TaxSlayer doesn’t offer as detailed on-screen explanations as its competitors do, all users can easily access customer service via phone and email.
Support available via phone and email is free and valuable for most types of situations. However, tax help - the most valuable kind of help - comes free with only the highest two service tiers.
Pricing varies by support level
Free filing for active members of the military
Low additional fee for state returns
Tax help only available in highest tiers
Rightfully considered one of the best free tax software solutions among IRS-authorized e-file providers, FreeTaxUSA is one of the fastest-growing tax platforms. Its service is best suited for experienced filers who know what they’re doing and don’t need overly engineered software with lots of on-screen explanations.
Federal returns are completely free, even for individuals with rental properties, investors, and the self-employed. However, state returns come at an additional cost. Users also have the option to upgrade for a higher level of support.
Pricing and Features
It’s the pricing that makes FreeTaxUSA arguably the best place to do taxes online. The deal is simple - you won’t be charged anything to file a federal return, regardless of your income, filing status, or the type of 1040 you’re filling out. However, note that filing a state return does incur a fee ranging from $12.95 to $14.99, which is still competitive with most of FreeTaxUSA’s closest competitors.
If you’d like to file your federal return for free, FreeTaxUSA lets you choose from its three service tiers. The Basic plan comes with a 100% accuracy guarantee, more than 300 options for deductions and credits, the ability to compare your filing history, and the option to print past and current tax returns whenever you want.
The Premium option is best suited for homeowners and those with investments and rental property income. This plan lets you write off mortgage interest and property taxes and deduct the amount you deposited in your HSA.
As one of the best free tax sites, FreeTaxUSA also offers a Self-Employed plan. Supporting all 1099 forms, this option is an excellent choice for those with complex tax situations, as it lets users report small business income, asset depreciation, real estate sales, and more.
Each of the aforementioned free service plans comes with a state return add-on. For a $12.95 fee, you can save time by filing your state and federal return together. You can prepare the return with just a few clicks, e-filing and direct deposit included. To top it off, FreeTaxUSA offers a maximum refund guarantee.
FreeTaxUSA may be one of the cheapest tax software options, but despite its name, it isn’t completely free at all levels of service. If you’d like access to priority support via live chat, audit assistance, and unlimited amend returns, you should get the Deluxe plan for $6.99.
Guarantees and Reimbursement
Much like most of its competitors, FreeTaxUSA accepts responsibility for any errors that occur on the system’s end. In other words, should the IRS impose penalties or interest for incorrect tax calculations, the provider will take care of the costs.
Thanks to this feature, you get peace of mind knowing that you’re protected from any financial repercussions due to a miscalculation. Just keep in mind that you must input the correct information.
User Experience and Support
As one of the best online tax programs, FreeTaxUSA starts your state and federal return tax prep with a step-by-step interview. The platform also lets you skip the questionnaire and go straight to the forms. FreeTaxUSA’s interface is simple and straightforward - there are no animated on-screen explanations or over-engineered color palettes.
While some users may dislike the plainness, others may welcome it, especially users who already feel more or less confident doing their taxes and want to finish this task as quickly as possible.
Taxpayers who are afraid of being audited or feel like they need a lot of help filing their returns may not find FreeTaxUSA’s free income tax software good enough.
While all customers get access to the company’s searchable knowledge base and support via email, this may not be enough if you happen to have a specific burning question. For a higher level of support via live chat, we suggest you upgrade to the Deluxe plan.
- One of the market’s most affordable options
- Access to tax and audit specialists
- Free tax calculator
- No expert tax help
It’s hard to give a simple answer to this question. However, there are a few things that you should keep in mind when looking for the tax preparation and filing software solution that’s a good fit for your tax situation.
Make sure that you opt for a provider that offers an affordable and reliable service with the right amount of support and completely transparent refund and reimbursement policies. To help you make a choice and make the process less complicated and time-consuming, we’ve made a list of professional tax software providers you should consider. These are H&R Block, TaxAct, TaxSlayer, and FreeTaxUSA.
Tax software solutions help taxpayers with little to no tax knowledge file their tax returns accurately, get the maximum refund they are entitled to, and avoid IRS audits. Best suited for individuals with relatively simple tax situations, these services are as reliable as hiring a tax expert, but much more affordable.
The most significant benefits of using a software or an app to prepare and file your federal and state tax return include affordability (the industry’s top competitors offer their services for a fee below $50), speed (with most tax programs, preparing and submitting your return won’t take more than 30 minutes), and ease of use (most tax software options provide a step-by-step filing model that helps you avoid costly mistakes).
According to a recent survey conducted by the National Society of Accountants, individuals who hire tax professionals to help them file their tax returns pay $176 on average.
However, the cost of hiring a tax expert can go up to as much as $1,563. On the other hand, the best tax software providers charge less than $50 to prepare even more complex tax returns. What’s more, their services usually come with 100% accuracy and a maximum refund guarantee, along with reimbursement for any losses due to system errors.