Tax preparation software should make filing taxes easier, regardless of your situation. Most programs can handle the various forms necessary to file small business taxes and are often less expensive than hiring a tax professional. That being said, if your taxes are complex and you want an additional set of eyes on them, you may want to consider paying your accountant or CPA to look them over, since errors and omissions can translate into fees and legal trouble with the IRS.
In an effort to help entrepreneurs of all levels select the best tax preparation software for their business this tax year, Business News Daily reviewed leading companies in the online tax software space. Whether you're a small business or self-employed, our buying guide will walk you through the selection process to help you find the solution that best suits your needs.
How to Choose Online Tax Software
Before looking at online tax software options, there are some details to keep in mind. If you know which forms you need to file, it's important to make sure whichever program you choose supports them. If you need to file state taxes, you should also see if that filing is included in the initial cost or if it will require an additional fee. If you're looking for the biggest federal return, being able to accurately find and apply various deductions and credits through the application's tools is a major timesaver.
Perhaps the most important factor of all is the accuracy of the tax software. It doesn't matter how fast it gets the job done or how easy it is to use – if you end up getting audited by the IRS and owe the government money because of errors or omissions, any money you initially saved will be moot.
Selecting tax software is more than looking at screenshots of an interface and going for the cheapest option. Functionality and accuracy are king.
Most online tax software vendors have several plans with tiered pricing, so the pricing range varies, depending on your needs. Every company has a different feature mix and pricing structure, so be sure to identify which features you need so that you can accurately compare products. Sometimes less expensive options will meet your needs, but if you need advanced features, the software will usually cost more.
There are many cheap tax software solutions on the market, but some cut corners or lack essential features. Others are highly effective at filing your taxes. It all depends on your specific needs, but avoid choosing software solely on price when browsing companies.
Ease of Use
Most systems are simple to learn and easy to use once you get acquainted with the user interface, but it never hurts to try them out before you spend any money. You don't want to find out the software you purchased is a nightmare to navigate and makes the process of completing your forms even more confusing.
Many tax software companies offer free demos. If a company doesn't advertise one on its website, ask for one. If the provider refuses, that should be a red flag. Most reputable companies will let you test-drive their software.
One of the most important features of any tax software application is the type of forms it can file. Make sure it supports the forms you need. Most leading software programs support an avalanche of forms, so odds are good you'll be able to find what you need if you select the right pricing tier.
You also need to consider state taxes, not just federal. Does the software offer all the state forms you require? Does it charge an additional fee for state returns? If so, how much?
Another consideration to make is how you'll get your money if you're owed a federal return. Some software makes this process easy with options for direct deposit and PayPal. Even a traditional check by mail is usually available if that's your preference. Others support only specific delivery methods, such as gift cards and pre-filled debit cards. Check that the software you're considering supports the disbursement method that is most convenient for you.
Deductions and Credits
Any tax software worth its salt maintains a database of hundreds of tax deductions and credits. Unless you know for sure how the company has built deductions into its system, it's hard to tell if your software will overlook opportunities for you to reduce your tax burden.
Speak at length with company representatives about how the software handles deductions and credits, and about how you can be assured of its accuracy. Most online tax software programs run an accuracy check to ensure precision – press the company reps for details on this function.
Many tax programs are web-based or have mobile apps, so you can pretty much do your taxes anywhere. Some programs, however, are not fully compatible with various platforms. Does the software work on Mac for home or office filing, or just PC? What about a mobile app for filing or checking your financial status – will it work on both Android and iOS phones? Flexibility and compatibility are the names of the game here, so make sure you're certain you can run the software on your preferred platforms before purchase.
Even with the most comprehensive software, accidents do happen. When errors occur, it's good to have a professional tax preparer in your corner. Some of the leading companies offer their tax preparers' services, which are either included in the total purchase or available as an add-on. If you think you're going to need help at some point along the way, this option is something to keep in mind.
Tech Support and Customer Service
The quality and availability of both technical support and customer service are important. If something goes wrong, you want reliable, helpful and forthcoming staff members responding to your requests. Become acquainted with the company before making a final decision; good tech support can turn a crisis into a minor inconvenience, so don't compromise on value here.
If you do your research, you can be confident that the tax software provider you choose will make the headache of tax season a little bit easier to handle. At best, you might even collect some money you didn't realize you were entitled to.
Additional reporting by Adam C. Uzialko.
Ready to choose your online tax software application? Here's a breakdown of the rest of our coverage: