January 21, 2021
The Best Online Tax Software For 2021
Taxes are complicated, but we’ve got your guide to finding the tax software that will ease the process, no matter your specific needs.
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It’s that time of year again—when the IRS is about to come knocking, and you swear that this will be the year you’re not scrambling to figure out your taxes at midnight on April 15th.
It’s not an easy goal. Filing taxes in the US is notoriously complicated, but tax software can ease that burden. Online programs like TurboTax walk you through the process, uncovering the deductions or credits you’re eligible for and making it easy to collect the refund you’re owed.
Not sure where to begin? Here’s our complete guide that breaks down everything you need to know about tax software.
What is tax software?
Tax software is the name for online programs that assist people as they prepare and file their income tax returns.
Instead of filling out multiple pieces of paperwork and mailing them into the IRS, tax software allows you to do the process digitally. You generally don’t have to download anything to your device—you simply go to the tax company’s website.
To begin the process, you’ll enter your tax info like a W-2 or Social Security information, as well as any personal information that could impact your tax return, like if you bought a condo this year or started taking your RMD.
Tax software also generally asks you question prompts to make sure your filing is complete, providing you with more information than tax paperwork does. It may also suggest the best form option for you when multiple are available. For instance, the software might help you realize that you qualify for a tax break you didn’t even know existed, or let you know that you’re eligible for the new, simplified Form 1040-SR designed for older taxpayers.
Once the process is complete, the tax software provides you with a digital copy of your filing and sends all the necessary filing information to the IRS, so you never have to make a trip to a post office.
Additionally, whether you earned or owe money, the software will set you up to receive a check or a direct deposit with your money, or create a plan to pay the IRS. If possible, the IRS encourages you to use direct deposit. Last year, COVID-19 slowed the mailing out of refund checks, and it’s possible the ongoing pandemic (or other bureaucratic issues) could do the same this year. Entering your direct deposit information will likely get you your money faster.
You may also have to pay a fee to the tax software company for using the program, though depending on the complexity of your return and your income level, you might be able to use a free version.
Tax Prep Checklist
Before you get going with filing your taxes online, it’s great to have all your documents ready. Here’s a checklist of items you may need to complete your filing:
- Personal Information: The birthdays and Social Security numbers (or other identifying information) for everyone listed on your return. You may also need a routing number or other bank information to facilitate payments.
- Income Information: Any information related to income you made in 2020, such as W-2s or 1099s, as well as forms about income from last year’s tax refund, unemployment, taxable alimony, rental properties, IRA or pension distributions, dividend income, or income from the sale of property, stock, or land.
- Investment Information: Forms including contributions to an IRA or other investment accounts. Often, this info can help you get tax credits like the Saver’s Credit.
- Social Security Benefits: If you collect Social Security, you should receive Form SSA-1099 in January; it will show your Social Security income for the year.
- Deduction Information: Information about any potential deductions you can take, including retirement contributions, mortgage interest, charitable donations, and medical or dental expenses (including prescriptions and insurance premiums, as well as home medical improvements like building a wheelchair ramp). If you own a small business or are self-employed, you might also have information about your home office, union or professional dues, mileage records, or other expenses related to your business.
- Miscellaneous: Forms regarding any income that doesn’t fall into the above category, like hitting a jackpot at the casino or performing jury duty.
What tax software should I use?
TurboTax has been around since 1984, and is the most widely used tax software available. You might be familiar with accounting software Quicken—it was developed by Intuit, the same trusted company that designed TurboTax. H&R Block’s online tax software is a natural extension of the company’s decades of experience filing paper taxes for businesses around the world. And TaxSlayer may be slightly newer to the crowd (it was founded in 1994 as an extension of a Georgia-based tax preparation company), but its simple interface and affordable, inclusive offerings have helped it quickly become a trusted leader in the space.
There’s no one-size-fits-all option for the best tax software. Since the tax filing process looks a little different for everyone, we’re breaking down some of the most common programs so you can find the one that best fits your specific needs:
Best Tax Software with Live Support: TurboTax with Live Support
Sometimes you just want the reassurance of a human expert when you’re filing your taxes, and TurboTax is your best bet for that option.
In addition to having one of the most user-friendly interfaces, it’s easy to connect via chat or phone to get live help when you have questions during any part of the filing process. For an added fee, you can also video chat with an expert who can see your screen and walk you through the entire process, as well as a CPA or EA to review your filing before it heads to the IRS.
Price: TurboTax Deluxe (which covers a relatively complex return) with Live Support costs $120 for a federal return and an additional $55 per state return, but Silvur users can get an extra discount at Silvur’s Retirement Store.
Best Tax Software with Live Support
TurboTax with Live Support
Pricing starting at $120 for a federal return.
Best Tax Software for Complicated Returns: TurboTax Premier
If your filing is going to include several complex components—anything including investment or real estate incomes, self-employment expenses, multi-state filings, foreign incomes or accounts, operating a business with payroll, or becoming a beneficiary of a trust—you’ll need tax software that can accommodate these complications.
TurboTax Premier is your best option for a few different reasons. For one, the live support it offers throughout the process is unparalleled, which is helpful not just for your own peace of mind but for avoiding audits or incorrect filings later on. Additionally, the easy-to-use interface drastically simplifies what would otherwise be a complicated, bogged-down process.
If your main complication is self-employment, opt for TurboTax Self-Employed rather than Premier. The program walks you through all the different deductions you can take (perhaps discovering ones you didn’t even know about), makes it easy to import 1099s, includes an audit assessment, and can help you determine a payment plan if you owe the IRS.
Price: TurboTax Premier costs $90 for a federal return and an additional $50 per state return. TurboTax Self-Employed costs $120 for a federal return, and additional $50 per state return. Silvur users can get an extra discount at Silvur’s Retirement Store.
Best Tax Software for Itemized Returns: H&R Block Deluxe
If you know your filing will include several itemizations, check out H&R Block Deluxe. This is great for people who have a wide variety of potential itemized expenses, from property taxes to HSA contributions to sizable charitable donations. It will also help you uncover deductions and credits.
H&R Block offers helpful live support, but it also does a great job of providing quick extra info and explanations without having to access support. Sometimes they’ll point you in the direction of online forums who’ve discussed issues you may be having, or provide in-text explainers about confusing questions, making filing a breeze.
An added bonus is that there are H&R Block branches all over the country. If you live near one, you can simply drop-off your documents, decide if you want to meet with a tax pro for a free 15-minute consultation, and have them do all the heavy lifting. You can check out your drop-off options on their website, as well as their virtual options if you’re looking to avoid in-person interactions. If you choose to meet in person, H&R Block is keeping you and their employees safe by following COVID-19 protocol including wearing masks, providing protective barriers between you and the consultant, and practicing social distancing.
Price: H&R Block Deluxe online costs $49.99 for a federal return and an additional $44.99 per state return. Drop-off services start at $69, with an additional fee for state returns. Silvur users can get an extra discount at Silvur’s Retirement Store.
Best Tax Software for Itemized Returns
H&R Block Deluxe
Pricing starting at $49.99 for a federal return.
Best Affordable Tax Software: TaxSlayer
If your taxes are relatively uncomplicated or you’re already familiar and comfortable with the filing process, TaxSlayer is a great affordable option. The free version includes some forms other free versions don’t, and even the paid version (which includes personalized support) won’t set you back as much as other companies will.
Price: TaxSlayer Premium (which includes support) costs $37 for a federal filing and an additional $39 per state. Silvur users can get an extra discount at Silvur’s Retirement Store.
Best Affordable Tax Software
Pricing starting at $37 for a federal return.
Best Free Option for Filing Taxes: IRS Free File
If you’re over the age of 65 and your total household income is less than $69,000 per year, you are eligible to file your state and federal taxes for free online via the IRS Free File program. If you’re under 65 and have an adjusted gross income of $72,000 or below, you can also use the Free File program.
Free File isn’t separate tax software; it’s a program that partners the IRS and several popular tax software options to provide free filing to about 70% of Americans. You can browse your Free File options here. After entering your AGI and other applicable information, the website will connect you with the tax software program where you can file for free.
One drawback to Free File: depending on the complexity of your return and your income level, the Free File program may not present you with many tax software options with which you can file your taxes. You may find, after exploring your options, that it only gives you one or two software options, none of which offer the level of support that you’re comfortable with.
If that’s the case, you may want to check out our best pick for support, TurboTax Deluxe with Live Support, which offers live video chat support right on your screen, or TaxSlayer Premium, which is an all-around great bang for your buck that provides helpful support via email, phone, or chat.
If you have a simple return, you might also find luck filing for free under H&R Block’s free version, as it supports more forms than many of its free competitors. However, if you have a less-than-simple return with items like retirement or HSA contributions and itemized business expenses, and you don’t qualify for Free File, you’ll likely have to pay at least a small fee in order to file your taxes.
With the right preparation and software for you, it doesn’t have to be a complicated chore to file your annual taxes. To make the process even more affordable, head over to our Retirement Store to find some deals on popular tax software systems—and don’t forget to check out the discounts on tons of other items you can splurge on once your refund rolls in!