If you struggled to get your taxes submitted before July 15, which was the prolonged deadline for this year, or October 15, which was the extension deadline, you probably looked into online tax services at some point. As one of the fastest-growing virtual industries, tax preparation services that are done via the internet have slowly become the new norm. In fact, if you look at the latest report that the Internal Revenue Service, or the IRS, has released, north of 143 million Americans e-filed this year alone. So, what are some of the best online tax services that you should look into as we approach yet another tax season?
One of the most popular software options is Turbo Tax. It is an online service that is free for users who are filing simple returns without any additional schedules to their form 1040. Nonetheless, if you have a more complex return that may include 1099 income or a sole-proprietorship, Turbo Tax can still be an outstanding alternative. The website is extremely easy to navigate and the process of filing your taxes is a questionnaire-based survey that sends you questions about your income, expenses as well as common and uncommon tax situations that you might have incurred.
Outside of the automated tax filing process that you will be able to take advantage of through Turbo Tax, the company also offers additional aid to those who require it. This is done through a Certified Public Accountant, or a CPA, who you can ask questions about your return as you go. You can also request a CPA review of your completed tax return before filing it to ensure that you did not omit any income or expenses that should be shown.
Other perks that Turbo Tax offers are snap-shot uploads of your income where you do not have to manually enter any information, but simply take a photo of your W-2 or 1099 forms. Independent contractors or business owners who use Turbo Tax can also benefit from a one-year subscription to QuickBooks that is included in the price of the software. Expectedly, however, the cost for someone who has a rather complex tax return will be relatively high. Turbo Tax charges anywhere between $60 and $120 for returns that include additional schedules as well as an additional $50 to $200 for those who want a CPA review or state filing.
Since the most obvious downside of Turbo Tax is the pricing, a lot of filers switch to more affordable software. One great example would be Tax Slayer. Whilst it is relatively similar in terms of automation, one can decide what level of support they are willing to pay for. For example, if you have been filing your taxes for a few years, there is a good chance that you are familiar with everything that may or may not be relevant to your return. Thus, you do not need a detailed breakdown of all categories of expenses or income that may pertain to you. With Turbo Tax, this is something that comes as a part of the package that you pay for, and opting out of it is not an option.
With Tax Slayer, however, paying less means that you are making a trade-off between affordability and support. In other words, if you do not need any support to complete your return, Tax Slayer will let you pay less and simply not offer you any added tools that first-time users may require. Packages start at $17 and go up to a maximum of $47 which is still considerably lower than even the most affordable option that Turbo Tax provides. In addition to those charges, there is a one-time charge of $39 when you file a state return.
If you are a tax filer that requires a bit more assistance than Tax Slayer provides but less than what Turbo Tax makes you pay for, a great alternative would be Tax Act. This software bridges the gap between these two as somewhat of a middle ground. That means that it is not the most expensive or the most affordable option but falls in the mid-range. Expectedly, the support that you will receive here is not as extensive as what Turbo Tax offers but is more far-reaching than Tax Slayer.
The most notable difference between Tax Act and a lot of other online tax services is the live support you can receive from trained professionals. Unlike Turbo Tax, these won’t always be CPAs as the company hires individuals who have tax preparation experience regardless of their certification status. So, the person helping you could simply be someone who completed a few tax courses and received between 80 to 100 hours of training provided by the company. Nonetheless, every support agent is supervised by an enrolled agent, which guarantees the accuracy of the information that you receive. The prices of Tax Act’s packages start at $54.95 and go up to $109.95 while an additional state return carries a one-time fee of $54.95.
Making a list of top online tax preparation services would not be possible without including H&R Block. As one of the pioneers of the online tax prep industry, they have been around longer than most of their competitors. Besides, they offer packages and prices that can usually fit anyone’s budget. This is because of their popular free edition that allows you to file simple returns for both state and federal while paying nothing.
H&R Block free edition also comes with a slew of tools such as reports that determine credit eligibility, business income deductions, education benefits, and much more. Unfortunately, given that it is a free version of their software, the reports do not show the actual calculations but simply point the taxpayer in the right direction. Finally, the free edition further sets itself apart by letting you attach between one and three schedules with your form 1040.
If you decide to use H&R Block but then realize that you need additional guidance, you can always upgrade your access to the “Online Assist” that grants you full access to chat, phone, and screen-sharing sessions with certified professionals such as CPAs and enrolled agents. The price of this upgrade ranges between $69.99 and $189.99 depending on the level of assistance that you need, and filing a state return will bring another one-time charge of $49.99 per state.
Finally, if you are looking to file your taxes without worrying about any potential issues, you will most likely need to work with an actual CPA from start to finish. Although the four software options mentioned thus far offer trained professionals and CPAs through live chat sessions, they do not match tax filers with a support agent. Instead, you will receive help from whoever answers your question first. With Tax Hub, on the other hand, the entire process is based on an initial match between you and a CPA.
Instead of doing your tax return and relying on a CPA to do a final review, Tax Hub pairs you up with a CPA from the beginning and allows you to work with that same person year after year. That way, the professional that you get paired with will have on-going knowledge of your income and expenses, as well as any important tax situations, and they will be able to predict potential tax scenarios. In simple terms, it is the online version of having your local CPA file your taxes every year.
Some of the perks that Tax Hub offers to make the process as smooth as possible include easy document upload, which you can even text to your CPA, online blogs to expand your tax knowledge, and timely support by both your CPA as well as other experts. To properly gauge if this service is something that would work for you, Tax Hub also offers free, 5-minute consultations where you will chat with one of the company’s professionals. The cost of the package is $159 and that includes one state return, a $10,000 IRS Penalty Insurance Guarantee, a one-year retainer for your CPA, a refund guarantee, and much more. You also do not pay until the return is filed.
Understand Your Expectations of Online Tax Services
Before you decide to use any of the aforementioned online tax services, you should begin the filing process by analyzing your situation and managing expectations. For instance, if you have a very complex tax scenario at your hands, is it feasible to expect that you will be able to complete the tax return on your own? If not, you should consider an alternative that offers guidance from trained professionals.
You should also look into all tax returns that you may need to file. For instance, even if you think your situation is relatively simple, you may have to submit a lot of schedules to show support. A great example would be a sole-proprietor who only ran one business during the year. Although that one business will only result in one source of income, you may need to submit hundreds of receipts and additional paperwork to avoid getting audited. This is where free consultations can come in very handy, so consider scheduling a five-minute chat with one of our agents and we will help you determine what’s the best course of action.