By T.J. Porter, WCI Contributor
There aren’t many people who truly enjoy preparing and paying their taxes, but that doesn’t mean that you can skip out on the process. Every April, you need to sit down and deal with filing your own taxes, pay someone to do it for you, or figure out the best tax software for you to use.
If you’re old school, you can do your taxes on paper, filling out all the forms yourself with a pen, but that might quickly become too complicated. Most people who want to pay their own taxes turn to computer software that makes preparing your taxes easy.
These programs guide you through preparing your taxes by asking you the essential questions that will give the software all the information it needs to prepare the forms. Each program works slightly differently, making each ideal for different types of filers.
Here's a chart that can help break it down for you and help you determine which tax software would be best for you to use.
Best Tax Software for Simple Returns: Cash App Taxes
Formerly Credit Karma Tax, Cash App Taxes is relatively unique in that it is 100% free to use, no matter your financial situation or filing needs. Where other programs charge for things like filing as a small business or filling out certain forms, Cash App Taxes is free for anyone.
The drawback of this free service is that the software doesn’t provide as much of a helping hand as other programs. It would help if you have some familiarity with doing your taxes before you try to use Cash App Taxes.
The service also doesn’t support more complex situations, including multiple state filings, part-year state filings, non-resident state filings, foreign earned income, married filing separately in community-property states, and sick leave for certain self-employed individuals.
Best Tax Software for Easy Filing: TurboTax
TurboTax is one of the best-known tax preparation programs out there. It offers multiple versions of its service, including a self-driven program, an option to get guidance from tax experts, or the option to have someone handle all of the tax preparation for you.
The program has one of the best user experiences in the world of tax preparation. The software is easy to use and asks simple, clear questions to get the information it needs.
However, you pay for this convenience. TurboTax charges for anything beyond the most basic service and adds additional fees if you want to file certain forms and for each state in which you file.
Be aware, though, that TurboTax has been criticized for its lobbying efforts to, in the words of ProPublica, wage “a sophisticated, sometimes covert war to prevent the government” from making “tax filing simple and free for most citizens.”
Best Tax Software for Small Business: H&R Block
H&R Block is another big name in the tax preparation industry. Taxpayers can choose to prepare their taxes on their own online or work with a tax professional virtually or in person. This makes it a great choice for people who want to sit down with someone and talk over their taxes.
The company also offers useful small business services that may appeal to physicians with their own practice. H&R Block can help with things like bookkeeping and payroll, which will make it even easier to deal with filing your taxes at the end of the year.
Of course, small business services and in-person services come at an additional cost, so be ready to pay the price for the assistance.
Best Tax Software for Low Cost: TaxSlayer
TaxSlayer takes a different pricing route than many of its competitors. Where other tax websites base their pricing on the complexity of your financial situation and the forms you need to file, TaxSlayer prices are based on the level of support that you desire. The one exception is small business owners and the self-employed, who must pay additional fees.
The basic package costs $17.95 for federal returns and $36.95 for state returns. For an additional $20, you can get live chat assistance from a tax pro and audit assistance. If you’re confident when it comes to doing your taxes, you can save some money by using TaxSlayer.
Best Tax Software for Self-Employed: eSmart Tax
eSmart Tax from Liberty Tax is another low-cost filing option. One thing that makes the tax software appealing is that it makes it easy to import information from other tax preparers. Importing last year’s taxes can make it easier to do this year’s taxes, so that can really speed up the process.
The service offers one of the lowest prices for filing the forms required by the self-employed, and you can always reach out to one of eSmart Tax’s advisors if you need a hand with filling out the forms.
eSmart Tax also offers multiple avenues for support, including email, live chat, social media, and the option to meet with a professional at more than 2,500 offices across the US.
Best Tax Software for People in States With No Income Tax: FreeTaxUSA
FreeTaxUSA has a simple premise. It lets you file your federal income tax return for free. Whether you have a basic situation or a complicated one involving real estate, investments, and self-employment, there’s no charge for filing federal returns.
The company does charge $14.99 for state income tax returns, but if you live somewhere with no state income tax, then you can truly file for free. Beyond charging for state tax returns, the site makes money by charging for other services—including unlimited amended returns, audit assistance, priority support, and printed or bound copies of your taxes.
FreeTaxUSA makes it easy to import data from your previous tax returns, even if you used different software. That makes it easier to try it out even if you’ve relied on other tax preparation software in the past.
Should You Be Doing Your Own Taxes?
Deciding whether to do your own taxes can be difficult. There’s no question that taxes, especially for physicians, can get complex very quickly.
It really comes down to a few things: how complex your finances are and whether you see value in doing taxes on your own.
If you have relatively simple taxes—you work for one employer in a single state, don’t have your own practice, and don’t have unusual investments—doing your own taxes isn’t too hard. It might be worth doing it on your own just to save some money.
If you’re running your own business, are self-employed, are owning rental properties, or are working for multiple employers in multiple different states, your taxes will take much longer to figure out. There is still some value in doing it yourself—you get a good look at all of your finances while you’re filling out your tax forms.
For most physicians, though, it makes more sense to pay someone else to do your taxes than to do them yourself.
The typical white coat investor could have taxes that are more complicated, and they could also have more assets than the average person. This means that doing your taxes on your own could take a long time and that you could make more mistakes when preparing and filing them. But if you still want to file your own taxes, the good news is that your tax situation probably won't change much from year to year.
If you need help with tax preparation or you’re looking for tips on the best tax strategies, hire a WCI-vetted professional to help you figure it out.
Which Tax Software Is Right for You?
The best online tax filing software will vary based on your situation and your familiarity with filing your taxes. Some of these services will do it all for you which can be a huge time saver, especially if you have complex taxes. Others are more self-directed, which can save you money but means more effort on your part.
In the end, choosing which tax software is best depends on your goals. If you just want to get your taxes done in the easiest way possible, paying a bit more for a streamlined experience is worth it. If you want to save some money and take the opportunity to review your entire financial situation, a more self-driven tax program will be a better fit.
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