Software Features And Add
To streamline the tax filing process even further, some tax return software makes additional features and add-ons available for a fee. These include features like auto-importing your info from the CRA, storing your returns for later use and so on.
With paid add-ons, you can have an actual tax professional look over your returns, enable audit protection, and even plan your last will and testament. These are more or less upsells and the option to choose them only pop up at the tail end of the tax filing process
Now that you know what to look out for when choosing the right tax return software for your tax needs, we have rounded up 7 of the best tax return software that is available to Canadians for filing their taxes.
Everyone Needs More Help Doing Their Taxes
Sometimes a friendly, understandable user experience and clarification of the content displayed on screens isn’t enough. So, tax websites offer online assistance. Some, including H& R Block, provide context-sensitive explanations in panes attached to the main working area.
In some cases, this guidance isn’t available until you click a Help link. And sometimes when you do that, you have access to a giant database of questions and answers. You may be directed to IRS instructions and publications on a few sites, but usually, the technical content has been rewritten to make it understandable.
What do you do if your efforts to find help on the site itself fail? You might have one of several types of questions: The first goes something like, “Where do I enter the information that’s on this paper form I got?” Or “The site won’t let me advance to the next page. What did I do wrong?” Or, simply, “I’m stuck. I can’t find my way back to the screen where I enter mortgage interest information.”
All sites offer at least one of three ways to contact the company’s technical support representatives: by email, phone, or chat. TaxSlayer, for example, offers all three. Some, like H& R Block, offer online communities where you can see if your problem has already been addressed by someone else.
H& r Block Best For Transferring Your Return To Live Preparation
H& R Block is probably the best-known of all tax-preparation organizations. And though its tax-preparation software is first-rate, its best known for its extremely large network of tax preparers. During the tax season, the company employs about 70,000 advisors in 10,000 offices throughout the country. The companys name is practically synonymous with tax-preparation.
Why it made the list: H& R Blocks tax-preparation software can give TurboTax a run for its money. And while TurboTax does offer TurboTax Live should you choose to turn your taxes over to a professional, H& R Block has tax pros available at any point in the process. And unlike TurboTax, you can visit an H& R Block office to get that help. H& R Block software also provides outstanding ease-of-use. Simply by snapping a photo of your W-2 forms from your mobile device, you can upload them to the software and the system will extract the necessary information. This is a major timesaver, especially if you held multiple jobs. The service also gives you the ability to shift from one plan level to another. That includes everything from the free edition for the simplest returns, right up to the self-employed version designed specifically for small businesses and independent contractors.
What holds it back: You often cant tell exactly which plan level you need when you start preparing your taxes. The discovery of an unexpected tax situation can require you to trade up to a higher-priced plan.
H& R Block Pricing Plans:
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When Should I Consider Hiring A Tax Professional
As a CPA and former IRS agent, there are certain filing situations that I believe should be left to the professionals. I have seen many do it yourself tax returns that landed in the hands of an IRS auditor. Here are some scenarios where you should consider hiring a tax pro:
- You just started a business in the 2020 tax year or have a complex business structure, such as an S-corporation, partnership or corporation
- You have employees or youre self-employed
- You experienced a recent change in your tax situation
- You sold a property in the 2020 tax year
- You worked in multiple states
Should You Itemize Your Deductions
One question that comes up each year when its time to file your taxes is whether you should itemize your deductions. To work out whether itemizing is worth it or not, you need to calculate if the allowable expenses you paid during the year – on items such as home mortgage interest and property taxes, state income or sales taxes, and medical expenses – are greater than the standard deduction for your filing status.
As the standard deduction for 2020 taxes is $12,400 for individuals filing by themselves or $24,800 for married couples filing jointly, these are the amounts that you need to exceed to make it worthwhile itemizing.
Your mortgage interest is a good starting point for itemizing your deductions. Your lender will send you a Form 1098, which lists the interest you paid on your mortgage as well as the amount you paid for points to reduce your rate. If this amount exceeds your standard deduction, itemizing is a good choice, and anything else you itemize will only add to your deductions.
Other deductions you can itemize include income taxes paid to your city and state. You can also deduct medical expenses if they exceed 7.5 percent of your adjusted gross income so if you earned $50,000, you wont be able to deduct the first $3,500 of your medical expenses.
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Best Overall: H& r Block
H& R Block
H& R Block is our pick for best overall tax preparation service due to its large network of branches that offer several tax preparation options with reasonable pricing.
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Drop-off, in-person, or virtual tax preparation services available
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Choose from 11,000 locations
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Pricing starts at $128 for a basic federal return and one state return
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Additional costs per form can lead to high prices for some filers with complex taxes
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Not all preparers are CPAs
H& R Block is a well-known name in tax preparation with the size and reliability to help it win our top spot. In addition to doing your taxes yourself with H& R Blocks software, the company offers three full-service tax preparation plans. For tax year 2019, H& R Block assisted in preparing 23 million tax returns, or about one in every seven tax returns in the United States. You can have your taxes done either at one of 11,000 H& R Block retail locations or through a new online service launching in January 2021.
For tax prep performed at an H& R Block office, you have two options. The first is an in-person tax prep service where you sit in the office with a tax pro from a local office while your return is completed. The second option is a drop-off service where you leave your pile of tax papers, everything is calculated on the correct forms, then you come back to sign the final paperwork. In both cases, pricing starts at $69 for basic returns plus $59 per state.
Best Online Experience: Turbotax Live
TurboTax Live
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Self-employed taxes with one or more state can become expensive
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No option for in-person support
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Not all professional preparers are CPAs
TurboTax is perhaps best known as the largest provider of online tax preparation software and regularly ranks at the top of do-it-yourself tax program lists, but it also has a service where a tax professional takes care of everything for you online. It doesn’t matter where you are in the online process, if you’ve begun your return and find you need help, TurboTax Live can be elected and you can hand the return off at any time.
For the full-service TurboTax Live option, pricing ranges from $130 for basic returns to $290 for complex returns, with an additional fee for state taxes and multiple forms. To upgrade from the software, the cost starts at $100 and goes up to $260 for complex returns. This is in addition to the software costs, which range from $0 to $120.
Because its completely online, TurboTax is best for tax filers who are more comfortable with computers and technology. That also means there is no drop-off option. However, if you are a digital native, TurboTax offers the most seamless, easy-to-navigate digital experience with pricing competitive to other tax preparation services.
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What Is A Tax Preparation Service
Tax preparation services are full-service offerings to complete your annual tax filing forms for the IRS and, if needed, state tax agencies. Unlike online and desktop tax preparation software where you do your own taxes, a tax preparation service will review your tax forms and complete your taxes for you.
Some tax preparation services are available through local offices in-person. Others give you access to a preparer or team of preparers online through a mobile app or website.
What Are Tax Software Programs
Tax software programs are essentially online, automated tax-preparation applications. Theyre designed to accommodate income tax situations up to the assigned limit of each respective plan. Assuming you choose the right plan, the software will perform a question-and-answer feature, in which questions relating to your tax situation will be requested by the software, which you will then be required to provide the necessary information.
In a best-of-all-worlds scenario, a simple return can be completed in as little as a few minutes, while a more complicated one may be done within no more than two hours.
The major advantage of tax software programs is the ability to prepare your own income tax returnsboth federal and state without paying the higher cost of a live tax preparer.
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Taxact Best Price Point For Complicated Returns
TaxAct is a worthy competitor to both TurboTax and H& R Block. It doesnt have quite the functionality of those two headliners, nor is it as well known. But it can accommodate returns with all degrees of difficulty, and generally at a lower cost than what you will pay for the Big Two.
Why it made the list: TaxAct offers an accuracy guarantee of $100,000. That is, it will reimburse you for up to $100,000 for fines or other losses you sustain as a result of a mistake on your returns caused by TaxAct. Theyll even refund the fee you paid for the software for the same mistake. Youve gotta love a company that puts their money where their mouth is. We should also disclose that both TurboTax and H& R Block, as well as other tax software programs, also offer reimbursement for errors that are clearly at fault. They just dont put an impressive dollar figure on it. Its worth repeating that TaxAct generally costs less than TurboTax and H& R Block for comparable plan levels. From our perspective, thats the single most compelling feature.
What holds it back: While TaxAct is a top-level tax software plan, it does fall somewhat short of TurboTax and H& R Block. Its main advantage is a lower price, but that comes at a cost of less live human assistance than the other two provide.
- Free: $0 for federal and state
- Deluxe: $23.96 plus $39.95 per state
- Premier: $31.96, plus $39.95 per state
- Self-employed: $59.96, plus $49.95 per state
How To File Your Taxes Online In Canada
There are two main ways to file your taxes online in Canada i.e. using NETFILE or EFILE.
NETFILE is an online transmission service provided by the Canada Revenue Agency for individual filers to send in their tax returns without needing paper tax forms.
In order to prepare your online tax return using NETFILE, you must use a CRA-certified tax preparation software such as TurboTax and several others.
Tax return submissions through NETFILE go directly to the CRA in a secure format.
EFILE is an electronic submission service used by tax preparers to transmit your income tax return information to the CRA.
If you are not comfortable with using NETFILE or have a complicated tax return and require professional help, an accountant or tax preparation firm can use EFILE to file your tax return for a fee.
Starting in 2018, CRA now offers a File My Return service that lower-income Canadians can use to file their income tax and benefit return for free.
Individuals who qualify for this service receive an invitation letter in February with instructions on how to proceed. For questions relating to using File My Return, call CRA at 1-800-959-8281.
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What Is Tax Preparation Software
Tax preparation software is an online, automated system for preparing individual and business income taxes. Its used by both tax preparation businesses, like CPAs, and individual taxpayers who prefer to do their own returns.
It eliminates the need for the taxpayer to complete his or her return using actual forms. Instead, the tax preparer or the taxpayer simply inputs the necessary information into the software, which then compiles the tax return.
The software also does all the arithmetic involved, which is what computers do best. This at least eliminates the possibility of arithmetic errors, which might result in notices from the IRS.
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Tax Software Offers A Question
The software works on a simple question-and-answer basis. For example, itll start by asking you general information, such as your name, address, Social Security number, and dependent information. It will then ask for income information, such as wages, investment income, retirement income, or income from self-employment. From there, youll be asked to supply information about certain expenses that might be tax-deductible.
Once you fully input the information, the software is then able to compile your tax return. Since the software is online, its regularly updated with the latest tax changes, at both the federal and state levels. That saves the user hours of research.
Once the return has been compiled, the taxpayer can review it for accuracy. But the software will also perform an accuracy check to make sure no information has been overlooked.
How To File If You Dont Get A W
Generally, if you work a job, taxes are withheld from each paycheck and you receive a W-2 at the end of the year. However, if youre a freelancer or undertake contract work, responsibility for your own taxes is squarely with you. While you should receive a form 1099-MISC that documents the income youve received, youll need to figure out the taxes yourself. Because income, Social Security and Medicare taxes arent taken out by the person who paid you, you have to deduct them yourself. In some cases, the IRS may expect you to make quarterly income tax payments.
Fortunately, there are also many deductions for which you may be eligible, which can potentially reduce the amount you pay. For example, you can deduct your home office, travel and other expenses, and if you work for a ride share, you can deduct your mileage, car insurance and other expenses.
One drawback of having to file taxes as a self-employed person is your returns will be more complex, which is why most online tax programs dont support free filing for self-employed workers. As such, youll have to pay to use those services.
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Why Would You Use Tax Preparation Software
- Your tax situation is fairly simple and theres no point paying for the services of a professional.
- You have a solid understanding of your tax situation and feel comfortable preparing your own return.
- You dont want to spend hundreds or thousands of dollars paying a professional.
- If you normally file your taxes late in the season, you may have difficulty finding a paid preparer. By using tax software, youre free to file your return anytime you want.
- You like being in charge of your own tax situation, which tax software makes very easy to do.
- Youre expecting a big refund and you want it as soon as possible.
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