What Is The Best Online Tax Software

Were There Tax Changes In 2021

The standard deduction for 2020 is $12,400 for single filers, up $300 from 2019, and for married couples filing jointly, the standard deduction rose to $$24,800, up by $400. For heads of household, the standard deduction is $18,650 — an increase of $200.

But perhaps the biggest changes for the 2021 tax season have to do with the ongoing pandemic. Thanks to the Coronavirus Aid, Relief and Economic Security Act, you can deduct charitable donations up to $300 even if you don’t itemize. If you do itemize, you may want to take advantage of the IRS’s decision to suspend limits on the percentage of charitable contributions taxpayers can deduct.

The CARES Act also gave retirees a reprieve from the required minimum distribution for 2020.

For the 2021 tax year, taxes will also accommodate people who didn’t receive the full stimulus check amount they’re owed. If you never received an Economic Impact Payment or believe the amount was wrong, you can claim the Recovery Rebate Credit.

Best For People Seeking A Tax Refund Anticipation Loan

Stimulus checks are on their way, but 2020 has been a tough year. If you need your tax refund to pay the bills, a tax refund anticipation loan may be on your radar.

Unfortunately, too many lenders will charge high-interest rates to give you an advance for a few weeks. We dont recommend a tax refund anticipation loan, but there are a few interest-free options that may make sense this year.TurboTax and H& R Block both allow eligible filers to get a tax refund anticipation loan when they file online. Filing in a branch typically costs over $300, but the online filing can be done for free or at a low cost.

The Tax Code Has Changed Significantly

As we said earlier, tax law changes have gotten lost in the shuffle this year. But you should know about them since they may well affect you. Tax website developers have built all of these modifications into their online solutions.

For instance, standard deduction amounts are different for the 2020 tax year. Theyve actually been increased a bit. If youre a married couple, the standard deduction is now $24,800. In addition, each spouse 65 or older gets a $1,300 deduction. If youre single, you can claim a $12,400 standard deduction. You get an $18,650 deduction as head of household plus $1,650 at age 65 or older.

Income tax brackets themselves didnt change for 2020, but the brackets include a broader range of income due to inflation.

Long-term capital gains rates stayed the same for 2020, but their income thresholds increased. For example, you now qualify for the 20% rate if you earned more than $441,550 as a single filer. For couples filing jointly, the income threshold is $496,600, and heads of household, $469,050. Most taxpayers will fall into the 0% or 15% range. Some high-income taxpayers will be hit with an additional 3.8% net investment income surtax for both short- and long-term gains.

If you dont itemize deductions on a Schedule A, you can still deduct up to $300 in cash contributions to qualified organizations.

Some tax breaks that were slated to expire were extended late last year, including the mortgage insurance premium deduction and energy-saving credits.

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Best Support From Tax Pros

Tax filing time can be a challenge, especially if youre facing new tax situations. Trying to figure out what you can legally deduct is important. You dont want to overpay your taxes, but you also dont want to end up on the wrong side of the IRS.

Several companies offer ask a tax pro options for their online filers. By appointment , filers can get their tax questions answered.

How Did We Choose The Best Tax Software

We realize that if you’re searching for the best tax software, you’re probably either willing to spend time filing your own return or you’re looking for a more affordable option than hiring a tax professional.

With that in mind, we weighted heavily the following factors when reviewing each platform: cost compared to competitors, user experience, value, availability of tax return import and document upload, an accuracy guarantee/liability, optional audit support, and quality of customer service. Each of these factors was rated on a five-point scale to determine an overall editor’s rating.

We also considered the breadth of tax forms included in the various packages offered by each company, with an emphasis on what’s available at no cost. Finally, we consulted other experts, like Wirecutter and NerdWallet, to make sure we weren’t missing any major features or drawbacks of any of the services.

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Should I Hire A Tax Professional

Whether you hire a professional like a CPA or a tax preparer to handle your small business’s taxes depends on a wide range of factors. No two business’ tax situations are the same the decision should ultimately come down to the complexity and filing status of your company.

Your business’s tax filing process is very different from filing your personal taxes. While most individuals file a simple 1040, businesses require complex tax forms that vary, depending on the structure of the business. Your personal life also plays a major part in your business’s filing needs, as important life situations like your marital status, number of dependents and any income from a different state all matter.

Ultimately, whether you hire a professional comes down to time and money. If you can afford it and don’t think you have enough time to run your business and still file on time, you should hire a pro. Similarly, if you’re worried that you may improperly file your business taxes, risking your own money and your business because of costly errors, hire a tax professional.

Ready to decide which tax software is right for your business? Here are more resources for you to consider before making your decision:

• Best Software for Tax Professionals: Drake Tax

When To Use A Tax Preparer Over A Tax Software

Perhaps the biggest question surrounding tax preparation software is why use it at all. It might be easier for some people to find a nearby tax preparer that carries out the messy work for them. It might be even easier to just hand their tax information over to friends or family members who have some experience filing returns. But due to its ease of use and flexibility, self-filing with tax preparation software has become a popular alternative for millions of Americans each year.

The truth is, the method selected for filing taxes depends on multiple factors such as how much you master the tax code and your own tax situation how much time you have before the federal due date how much money youre willing to spend on your tax preparation and the really big one: how complex your tax return is.

The cost, time, and complexity of your taxes will be the deciding factors on which method you should use for filing your returns.

*As explained by CGESoft software developer, José Vidal

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Key Features Of Turbotax

• TurboTax has an intuitive interview-style filing process . You answer simple questions tax-related questions, one after the other, until you hit âsubmitâ at the end.

• There are many pages or notes that offer regular encouragement and reassurance that youâre doing a good job.

• You can upload your W-2 as a photo from your smartphone. Many human resource services also allow you to easily upload tax documents from your employer into your TurboTax account.

• A mobile app, ItsDeductible, can track your donations to help you claim any charitable deductions you qualify for.

• You have live access to tax experts, whether you have questions or want someone to fill out your whole return for you .

• TurboTax filers can receive tax refunds via direct deposit, as a physical check, or on a prepaid Visa debit card in the mail.

• Thereâs integration with QuickBooks to help you track work expenses year round.

Simple Tax Return Vs Complex Tax Return

A simple tax return is the most basic type of tax return you can file, and many tax software programs let you file this return for free. A simple return generally includes W-2 income, limited interest and dividend income, standard deductions and unemployment income.

Some free plans also include the earned income tax credit , child tax credits and student loan/education deductions .

If your finances are more complicated and you don’t qualify for a simple tax return, you’ll need to file a complex tax return, and most tax software programs will charge you fees to file. Complex tax situations typically include anyone with freelance income , small business owners and landlords, as well as anyone with earnings from investments and stock sales.

The tax program you use will notify you if you can’t file a free simple tax return and instead need to upgrade and pay to file a more complex return. And even if you can file a simple tax return, you may want to pay for the next-tier plan to benefit from more deductions.

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Best Tax Software For Expatriates In 2021

• Best for Extra Features: TurboTax by Intuit
• Best for Simple Returns: TaxSlayer

Why We Chose It: You get the most features for the price, including access to five of the most common tax forms that expatriates need.

• Offers three plans that are good for expats with a variety of circumstances.

• Federal return costs of $24.95 to $64.95 are reasonable.

• Paid plans include most of the basic tax forms that expatriates need .

• Support from a tax expert is available for an additional fee.

• A pattern of reviews from various sources suggests the company has a good reputation.

• Schedule C is only available with the self-employed plan

• Standard free version doesnt include the common forms that expats need.

• FBAR Form 114 must be e-filed separately by the expatriate with FinCEN.

TaxAct is a tax software company founded in 1998 and headquartered in Cedar Rapids, Iowa. It offers three different tax software plans that are good for expatriates, ranging from $24.95 to $64.95 for each federal tax return. Youll get access to five of the most common tax forms that expatriates need . Plus, for an additional fee, you can get support from a tax expert.

If you choose TaxAct, you can start filing your taxes using its cloud-based program online for free. If you arent satisfied with TaxAct, you can stop using the online software before completing the billing steps. TaxAct also offers a $100,000 accuracy guarantee that its calculations are correct.

Read the full TaxAct review.

Customer Support & Guidance

The quality of the customer support will often go hand in hand with pricing, with the most premium and comprehensive tax support only available for those who purchase the costlier tiers, while some companies offer additional support for an extra price.

Tax support is arguably one of the most important aspects of tax prep software, given that users might have a hard time with specific prompts or questions. Having readily available access to professional help provides you with the peace of mind that comes from knowing you wont fill out your return incorrectly and then have to spend additional cash amending it later on.

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Who Should Use Turbotax

One of the biggest selling points for TurboTax is its ease of use. If you get easily stressed by taxes and like the idea of answering simple questions then clicking the ânextâ button, you may like TurboTax. Features like uploading your W-2 by taking a picture also simplify the process. Depending on where you work, you may have the option to import tax forms directly from your human resources account into your TurboTax account.

TurboTax could also be the best option for you if you have a complicated tax situation, like if youâre going through a divorce, you have a lot of stock investments, or you have many sources of income. Other tax services can handle these situations too, but you may prefer the TurboTax experience if you donât have much tax knowledge. Business owners, self-employed people, and QuickBooks users may like that TurboTax integrates with QuickBooks to track work-related expenses.

TurboTax recently started offering live personal assistance, which is helpful if you want to virtually ask a tax pro any questions. Also new in 2021 is a Full Service option that is great if youâd prefer a tax expert to complete your return for you. This feature is similar to the experience of going to a CPA or tax accountant.

Which Tax Filing Software Is The Best

Through our review process, we determined that Intuit TurboTax is the best overall online tax filing software on the market. Its extensive features and easy-to-use interface, coupled with the ability to get remote help from a CPA, make it a strong solution for most individuals and small businesses. With excellent customer service to guide users through the tax filing process, TurboTax sets itself above its competitors.

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You Can Also Let A Pro Take Over

The personal tax preparation services we review here are capable of producing very complex tax returns. You’ll pay more if you need more forms and schedules to complete , but the tools are there for advanced topics like self-employment, depreciation, rental income, and capital gains.

If you’re not comfortable in your ability to complete a complicated tax return, but still want to give it a shot, you can go with a site like H& R Block. The company offers DIY preparation and filing, of course. But if you get partway through and realize you’re not sure of some tax issues, you can have an H& R Block tax professional review your return, complete it, and sign it. You can even just upload your documents and the pro will take over. TurboTax offers a similar service this year.

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What Is The Cost Of Tax Software

Tax software can range in cost from free to around $200, depending on the software you choose and your specific needs.

Most major tax apps offer a free version to lower-income filers or those who meet specific income or other eligibility criteria. Most filers will likely find their cost around $40 to $100 for federal taxes and another $40 to $50 for each state. However, those who are self-employed or with more complex returns could wind up paying more, depending on the software you choose.

The major exception is Credit Karma Tax, which offers a completely free tax filing program no matter what forms you need. Credit Karma Tax doesnt support every unique tax filer situation, however, so be sure to review its capabilities before you start completing forms.

How To Pick The Right Tax Return Software

Before you go ahead and make a choice, lets first consider four important parameters that will help you in identifying the best tax return software based on your needs:

• CRA Certification

• How Secured The Software Is Software Security

• Software Features and Any Ad-Ons

Lets begin with the CRA Certification.

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Key Features Of H& r Block

• Similar to TurboTax, you can upload your W-2 as a photo.

• For an extra cost, you can call or talk virtually with a tax expert.

• H& R Block has office locations across the country for in-person filing.

• Integration with Stride for help tracking business expenses and mileage reimbursement for self-employed individuals or business owners.

• H& R Block filers can receive their tax refund via check,direct deposit, or a prepaid MasterCard.

Our Selection Process Was Based On The Following Factors:

• The ability of a service to accommodate the most complicated returns
• Cost
• Availability of help, review, or completion of a return by a tax professional
• Ratings and reviews by third-party sources

As much as we use the above criteria in an attempt to be objective, your own evaluation of any software on this list will be based on which is most likely to work best in your particular tax situation. For example, while we feel TurboTax is the best tax software program overall, you may prefer a lower-priced software with more limited capabilities. Our evaluation is based primarily on the benefits we believe will appeal to the largest number of potential users.

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