Tax preparation software streamlines the process of filing your taxes, even if your situation is complex or unusual. Most programs can handle complicated business filings without the assistance of an accountant, for a significantly lower cost. However, since there are so many variables that affect the final amount you owe – not to mention steep fines and audits for a tax return that's improperly filed – it's important that you select the right online tax software.
To help you select the best application for your business, Business News Daily studied and reviewed leading companies in the online tax software space. We came up with the best picks to suit entrepreneurs of all stripes, whether you're a small business or self-employed. Our buying guide will walk you through the selection process step by step so you end up with a solution that best suits your business.
Already prepared to choose your online tax software application? Here's a breakdown of the rest of our coverage:
- Best Tax Software for Business
- Best Overall Tax Software for Small Businesses: Intuit TurboTax
- Best Enterprise Tax Software: ONESOURCE
- Best Tax Software for Self-Employed: H&R Block
- Best Free Tax Software: TaxAct
- Best Software for Tax Professionals: Drake Tax
How to choose online tax software
There are some important questions to keep in mind, like which forms the software can file, whether state returns cost extra, how many deductions and credits the software searches for, and how it will disburse the money from your tax returns. Most importantly, how accurate is the software? Does it double-check every field, and will it correct any human errors? These aspects and more are imperative to consider when choosing online tax software.
Most online tax software vendors have several tiers of pricing plans, depending on your needs. Every company is different, so be sure to examine pricing structures and the features you have access to at each level. Sometimes less is more, but you typically get what you pay for with tax software.
You can easily find cheaper solutions, but usually they cut corners or lack essential features. On the other hand, sometimes cheaper services prove highly effective. It all depends on your needs, but be wary of the variations in pricing 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 before you spend any money. You don't want find out the software you purchased is a nightmare to navigate and makes the process of completing your filing forms confusing.
Many tax software companies offer free demos. If they don't, 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 the forms you need are supported. Most leading software programs on the market support an avalanche of forms, so odds are good you'll be able to find what you need.
But 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? These are key questions to ask before moving forward with any product.
It's also important to consider how you'll be paid any money that you're owed on your tax returns. Some software makes this super easy, with direct deposits, PayPal options or even just the traditional check by mail. Others support only specific delivery methods. 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 where you can reduce your tax burden.
Speak at length with company reps about how the software deals with deductions and credits, and about how you can be assured of its accuracy. Most online tax software run an accuracy check to ensure precision; press the reps for details on this information.
"Avoid assuming that you can just do it all yourself. Know the limits of the software and make sure you have some sort of support available from the company," said Shea Drake, B2B business analyst at Frontier.
How can you access the software, and how do you intend to use it? Some programs are accessible entirely online, while others are downloadable. Some online tax software is both online and downloadable. If you intend to use the program on the go – whether you want to check on your financials or it occurs to you that you've forgotten some key piece of information – mobile access is essential. Be sure you know what the software can do.
You can still run into snags with even the best online tax software, so it's useful to have human support. Many companies offer on-call tax preparers that you can rely on in a pinch. In some cases, they are included with the price of the software package; in others, they cost extra. Be sure you understand the parameters of your plan and whether you need added support.
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 value here.
"Look for unlimited tax and technical help, especially when shopping for free products – phone support is often excluded from 'free' DIY software products," said Mark Jaeger, director of tax development at TaxAct. "Look for software companies that include phone and email support for free."
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.
Ready to choose an online tax software? Check out our best picks list here.