Best Tax Software and Services

Accuracy

The most important feature of any tax software program is accuracy. An inaccurate tax return could cost a taxpayer hundreds or even thousands of dollars. Both errors in favor of the taxpayer and in favor of the IRS can be costly.

• Error check: Most tax software programs run an error check prior to filing the tax return.
• Accuracy guarantee: Companies typically offer an accuracy guarantee, which ensures that the calculations the program completes are accurate. The guarantee doesn’t cover human mistakes, though, so it is important that taxpayers verify all of the data entered into the system.
• Professional review: Some programs allow taxpayers to pay an additional fee to have their return reviewed by a tax professional.

Ease of use

No matter how accurate and well priced a tax software program is, if it isn't easy-to-use then customers will take their business elsewhere. Tax time is stressful for many taxpayers and the last thing anyone wants is the challenges of a difficult to use program.

• Online programs: Web-based software programs eliminate the need for a local software installation, which reduces compatibility problems.
• Interviews: The most popular tax software programs use an interview approach to gathering tax data; this makes tax preparation a simple and hassle-free process.
• Table of contents: In addition to the interview approach, many of the more popular programs allow taxpayers to pick and choose specific forms. This is a great feature for more experienced users.

Data security

Data security is of the utmost importance. Hackers, unscrupulous employees, fires and floods are just a few of the ways that your data could be compromised or lost.

• Data security software: A completed tax return has everything an identity thief needs to set up financial accounts in your name. Tax software companies need to utilize the latest in security software and post a security policy online.
• Account disclosures: Tax software companies should disclose what happens to your credit card or bank account information when your return is complete. Is the data stored for future use or removed from the system?
• Disaster recovery plan: Companies should also have an adequate disaster recovery plan in place because a fire or natural disaster could destroy your data. Taxpayers that failed to make a personal backup won’t have access to important financial records.

Help and support

Tax software, at its core, is a do-it-yourself project. There is a reason that taxpayers, by the millions, opt for software programs over an accountant – they like the DIY aspect. However, people do run into problems and a solid help and support system is an integral part of any tax software package.

• Live chat support: Companies can provide longer support hours by utilizing a live chat support service.
• Phone support: Even web-based programs need to have a phone support option because there are some problems that can’t be solved efficiently using text-based interactions.
• Knowledge base: Most DIY taxpayers would rather research their problems than wait for a customer service response, which makes a comprehensive knowledge base a valuable resource.

Tax refund options

Gone are the days of waiting months for a check from the IRS to arrive in your mailbox. While taxpayers can still opt to receive a paper check, the IRS and most tax software programs offer direct deposit and other refund options like U.S. Savings Bonds, prepaid debit cards and more.

• Direct deposit: All of the major tax software providers offer customers a direct deposit option.
• Paper checks: The IRS and software companies still offer paper checks to taxpayers expecting a refund.
• Prepaid debit cards: A prepaid debit card loaded with the refund is a great option for taxpayers without a bank account.

Filing options

A tax software program that offers multiple filing options is preferred. While online filing is a popular choice, not every taxpayer has access to the Internet or wants to submit sensitive data electronically. A program that offers both online and print and mail options leaves this decision up to the customer.

• Online: All of the popular tax software programs allow online tax filing, in addition to tax preparation services.
• Print and mail: Some programs allow taxpayers to print and mail a copy of their returns.
• Online and print: The best option is to file your return electronically and then print a copy for personal records.

Online

An online tax software program is entirely web-based. The program shouldn’t require any downloading, aside from a plugin or two. Most online programs store historical tax return data and allow users to download a copy for personal records.

Downloadable/CD-ROM

Unlike online programs, a package that is downloaded or purchased at a local computer store involves a local software installation. Returns can often be prepared without an Internet connection, although connectivity will be required for product updates and electronic filing.

Mobile apps

The rise in popularity of smartphones and tablets has opened up a new segment of tax software – mobile applications. Some tax programs allow a return to be prepared and filed entirely through a mobile app, while other companies use apps to supplement an online program.

Professional programs

Even tax professionals use software to complete tax returns. There are a variety of products marketed specifically to tax professionals but the vast majority of individual filers will never need to research or use these products.

Individual or basic filer

A taxpayer that qualifies for the 1040EZ, which includes married couples without children or deductions as well as middle-class individuals, can often file their taxes for free. Most of the popular tax software programs offer a basic free file for federal 1040EZ returns.

Families or high-income individuals

Married couples with children, individuals that earn more than $100,000 per year and other taxpayers that have to use a 1040A or 1040 need a more comprehensive tax software program.

Sole proprietors

Most sole proprietors file their taxes as part of an individual return, however not all tax software programs have the necessary forms to complete this type of return. Companies that offer enhanced individual or small business packages are a good choice for sole proprietors.

Small business owners

Small business owners have more advanced tax needs than sole proprietors and need a package that can fit their needs. A few of the major tax software programs offer packages for S-Corps, C-Corps and other small business entities.

Taxpayers with special situations

Not every taxpayer files a simple and straightforward return. Taxpayers in special tax situations, including those with rentals, individuals that need to file back taxes or those with foreign income need to find a software program that can meet their varied needs.