The Best Tax Software

Would you rather prepare your tax return or get a tattoo that says "IRS"? Well, about 20% of respondents in WalltHub's recent tax survey would get the tattoo. A full 39% would rather paint their house. Preparing tax returns is not something most of us look forward to, but a good tax software program can make it much less painful.

For example, there's TurboTax, TaxAct, TaxSlayer.com, FreeTaxUSA, Quickbooks, and more. When you need to prepare your tax return, companies from Intuit to H&R Block to Jackson Hewitt offer software for you. So what's the best tax software out there? Well, the answer depends to some degree on you and your particular needs.

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For example, your situation will dictate which version of the 1040 tax form you'll need to use. The 1040EZ form is the simplest, as you might have guessed, but you can only use it if you meet certain criteria, such as filing as a single person or married and filing jointly, claiming no dependents, having taxable income below $100,000, and not claiming any adjustments to income (such as contributions to a traditional IRA or 401(k), self-employment taxes paid, and alimony paid). The 1040A still requires taxable income below $100,000, but it will accommodate a slightly more complicated tax profile, such as if you have made contributions to retirement accounts and are only claiming certain credits and deductions.

The best tax software

Without further ado, following are the main tax-prep software packages you're likely to run across. Here's what you need to know about them: Each offers a version that's free to use for preparing your federal tax return, with the free version supporting the 1040EZ form, sometimes supporting the 1040A form, and not typically supporting the full 1040 form. (Even the IRS offers free online tax filing, for some taxpayers.)

Most offer a range of software versions that will cost you, with the more costly versions best suiting those with more complicated tax situations, such as people who claim tax deductions and credits, who are self-employed, who have investment income, who have rental properties, and so on. Most also charge extra to prepare your state tax form, though some offer that service free with certain products. In the following table, note that the list price is for the least expensive non-free software.

Data source: company websites. *First or all filings free with some software versions.

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Why use tax software?

If you're not quite sold on the idea of using tax-prep software and are wondering what's so great about it, here's the case for it: It can take a lot of stress out of the process and can be more thorough, asking you lots of questions in order to determine just which tax breaks you qualify for. There are always new tax rules and changes to existing rules, and a good tax software program will incorporate all of them. One of the biggest problems with preparing taxes by hand is doing all the calculations without making errors. Software will do all the math for you. Plus, using software can cost you much less than hiring a human tax preparer.

Note, though, that in many cases, a human is your best choice, as good tax pros can help you plan and strategize at tax time and throughout the year, too, and can save you much more than they cost you. Still, for millions of people with relatively simple tax profiles, software is an excellent choice.

To give you a clearer idea of just what software can do, here are some features of TurboTax, which many other software programs offer as well:

• Allows for easy prep, print, and e-file, with 100% accurate calculations guaranteed.
• Searches 350-plus tax deductions and credits (Schedule A).
• Maximizes mortgage/property tax deductions (Schedule A).
• Gives a head start by transferring last year's info from your TurboTax return.
• Covers stocks, bonds, employee stock purchase plans, and other investment income (Schedule D).
• Automatically imports investment income, including cost basis (Schedule D).
• Covers rental property income and tax deductions (Schedule E).
• Maximizes business deductions for vehicle, phone, supplies, home office, and more (Schedule C).
• Finds business expenses you may not know about and lets you keep more of the money you earn.

Some software programs can also alert you if anything in your return is likely to trigger an audit, such as if you've failed to include some income or have run afoul of some rules.

Image source: Getty Images.

So which software is best?

Any of the programs in the preceding table will serve you reasonably well. But some are better than others in certain regards. I looked at a bunch of reviews of many software packages and found that the general consensus is that the following are the best, overall:

• TurboTax
• TaxAct
• H&R Block

Here are a few comments about them:

• TurboTax: This is the industry leader. It's very comprehensive and many find it the easiest to use, as well, with solid educational features, too. But is also more costly than other options, with many of its handy features costing extra fees.
  
  
• TaxAct: This option can be considerably less costly, though some found it less ideal if your tax profile is more complicated than usual -- such as if you're self-employed or have many investments. It's also reportedly less easy to use than TurboTax. That might not be a big problem if you're a savvy taxpayer who knows your way around many forms.
  
  
• H&R Block software: This option is also not quite as easy to use as TurboTax, according to some reviewers, but it offers easy access to live help, through its many thousands of locations across the country. It has been praised for its good customer service.

Give tax-prep software some consideration, as it can make preparing your tax return easier, while boosting the accuracy of your return and perhaps increasing your tax refund, too.