Best Online Tax Filing Software for 2020
Filing state and federal income taxes is an annual chore that many people fear, but 2020 brings at least one spark of good news: this year’s federal income tax filing deadline has been extended to July 15, 2020, according to the Internal Revenue Service. The new date applies to all returns, trusts and sole proprietorships and will apply automatically, so there is nothing you can do to take advantage of it. However, if you live in the District of Columbia or one of the 42 states that collect income tax, the original deadline may still apply for your state taxes. Visit the Federation of Tax Administrators website to find out when your income tax is due.
Now that you have more time to prepare your federal returns, you also have an additional grace period to find the best way to do it. Online income tax software has become more popular over the years, according to a study by the technology firm Exponential. Among Gen Xers and baby boomers, 59.5% and 55.9% are likely to use it. But it is much more popular with Generation Y and Generation Z. Respondents aged 21 to 24 are 82.4% more likely to file online, followed by 24% of those aged 25 to 29.
But even if you’ve decided not to consult an accountant to do your taxes, choosing the best method for your work situation can be daunting. We’ve reviewed the most popular options for advice, depending on the complexity of your forms.
Ideal for simple returns: H&R block
If you claim standard deductions using a W-2 tax form, the free version of H&R Block will work for you. You can also use it to report business income, support payments, deductible interest on student loans, certain contributions to retirement, alternative minimum tax, dependent care credit, credit for saver and credit for lifelong learning. H&R Block also has helpful explanations throughout the process and the site is easy to navigate and use.
However, if you need to make detailed deductions or report business income, you will need to upgrade to a paid version. You can also access live support via chat or phone, but you will have to pay for this privilege. If you don’t want to go through the whole process by yourself, you can also download your documents and pay to have an H&R Block professional do it for you, without leaving your home.
Another great option: credit karma
For those with simple tax returns and who don’t need a lot of help, the credit karma tax is completely free for national and federal returns. You won’t encounter any sneaky extra fees with Credit Karma, which can happen with other filing software. It can handle the W-2 and 1099-INT forms, the 1099-DIV to declare the interest on your bank, as well as the 1098-E to declare the interest on student loans. Like H&R Block, it will guide you through the forms you will need. It also comes with an audit defense guarantee, which provides great peace of mind.
However, if you have to file in multiple states, have a lot of complex forms, or want more handling, the basic Credit Karma system may not be for you.
Best paid software: TurboTax
Some things are worth getting paid for. If you need to detail your returns, have rental property or investment income, or if you want a more simplified process, TurboTax is there for you. There is a free version that works with the IRS for active duty members with an adjusted gross income of less than $ 69,000, those who qualify for the income tax credit and those whose AGI is less than $ 36,000.
But if it is not you, TurboTax still offers robust support, with the help of a real person along the way. It starts at $ 60, but guarantees that you will receive your maximum return. For many people, the cost is worth knowing that you have done your taxes properly. And if they make a mistake, TurboTax will pay the penalties to the IRS. That’s the service.
Ideal for new circumstances: TaxAct
If you have had a major event in your life since the last time you applied, such as losing or getting a new job, buying or selling a house, or having a baby, TaxAct will help you determine how it will affect on your taxes. It will also help you determine the deductions if you are self-employed, a handy feature for those who don’t know all the little things they can take a break from. Although TaxAct is also fairly simple, it is a good economical option. You will pay extra to file state taxes with all but the simplest option, so be aware of this.
For those who felt burned by their choice of tax return last year, TaxAct can also help you. It easily imports returns from other preparers, so you can get by without too much headache.
Ideal for budget: TaxSlayer
For taxfilers with a limited budget, TaxSlayer offers several different levels linked to the amount of assistance you need, not to the declarations it can produce. So, if you feel confident enough to file your taxes and don’t want to pay for the help that you won’t be using, TaxSlayer should work well. It also offers a quick file option, in which you simply search for a keyword that matches your situation rather than searching for what you need.
Because it is web-based, TaxSlayer also works on just about any device. So if you don’t want to sit on a desk doing your taxes, this simple interface can help you on the go. If you need help, you will have to pay. TaxSlayer does not have the same type of live chat as other services, but a tax specialist will respond to you within one business day.
When to hire a CPA instead
Certain tax circumstances simply require a professional. If you are a small business owner, have a lot of investment engines or properties, or if you are a freelancer who has to file in multiple states and circumstances, you may want to shell out for a pro. And if you’ve recently bought or sold a home, or if you have other capital gains or losses, getting the returns you owe may also warrant professional consultation.
Finally, if you do not feel comfortable entering the information yourself, if you are afraid of missing deductions or if you want the security of knowing that they are in the hands of a professional, bring them to the experts. It is better to leave certain things to those who know.