Today, all major IRS forms and schedules are supported, and preparing your taxes using the best of these services is no more difficult than working your way through any giant software wizard except for the part where you have a strict legal obligation to be sure that all of your answers are accurate, of course. Every screen contains a statement or question in understandable English. You supply answers by clicking buttons or entering your response in blank fields or selecting an option from drop-down lists.
Once you organize your tax documents, that should be just about the last time you need to look at an official document. The developers of these tax preparation services have taken apart Form 1040 and all of its supporting forms and schedules and turned them into lengthy interview sessions. You provide responses, and they work in the background, taking those answers and dropping them onto the correct document lines.
File Your Schedule C:
Last year, we reviewed the deluxe versions of the major tax preparation websites because they tend to be the most popular. This year, however we looked at top-of-the-line sites that support the Schedule C, given the growing freelance and independent contractor market.
All but one of sites we evaluated come in multiple versions with different price points Credit Karma Tax being the one (free) exception. Every application in a given family looks and works like the others, but the more expensive they are, the more IRS forms and schedules they support. High-level editions also come with special features that are usually enhanced support options. You will need to check to make sure any particular features you are interested in are included in a less expensive version, if you don't need the top-tier software, but the ratings should reasonably well to the entire families of products, as they tend to share help systems, interfaces, support, and so on.
This Year's Tax-Prep Lineup:
Most of the names of this year's offerings will be familiar if you've used tax applications before, but there's a new one this year. Credit Karma Tax is from parent company Credit Karma, a service that monitors your credit reports and gives you weekly updates. It's the only tax site that supports federal and state filing of complex returns at no cost, but it's new enough that it still needs to grow a lot to compete with the other sites reviewed here.
TaxAct stopped offering free filing years ago, but it's still the most affordable option among the paid sites: $30 for federal and $25 for state if you buy TaxAct Online Premium. Prices have been creeping up on this Iowa company's offerings in recent years, but the site offers something that no one else does: a price lock guarantee. Everyone else charges one price until usually sometime in March, when they raise it by $20 or more.
TaxAct Online Premium is not just affordable. It's an exceptional personal tax preparation website, and we recommend it for taxpayers on a budget that just can't swing TurboTax Self-Employed's high price. Both win Editors' Choice awards this year. TurboTax costs $114.99 for federal returns and $39.99 for state.
TaxSlayer Premium is not far behind TaxAct in price: It's $35 for federal returns and $22 for state. And it's improved since last year, edging up a half-point in our star rankings.
H&R Block Premium ($54.99 federal, $36.99 state) and Jackson Hewitt Premium $79.95 federal, $36.95 state) are our two midrange offerings, price-wise. H&R Block Premium is an all-around excellent offering, but Jackson Hewitt Premium suffers from spotty and a mediocre user experience. It looks quite overpriced in roundup that includes TaxAct and Credit Karma Tax.
Keep in mind that the only people who need to purchase the most expense personal tax preparation solutions are those who have self-employment income and expenses (either full- or part-time) that must be reported on a Schedule C. If not, you can go one step down, save money, and still have access to the forms and schedules you need to report income, deductions, and credits.
In fact, for e-filers with very simple returns (the 1040EZ in particular) most of these service offer free mobile apps that can get the job done in a snap...of your smartphone's camera, which is often the way you get the data into the app. We're busy reviewing those apps right now and will update this roundup once we've finished.
E-File Your Taxes Today:
Assuming, however, that you have a reasonably complex return this year, good old-fashioned browser-based premium tax preparation services like the ones rounded up here are your best bet. Check out the table above, read the capsule review below, and click through the links to the full reviews. Do you have a suggestion for e-filers or an opinion (good or bad) about these services? Let us know in the comments.
When you finish e-filing, you may have some sensitive documents that you want to safely dispose of; don't worry, we have plenty of selections when it comes to the top shredders for tax time and beyond. And once you have your your taxes in order, you might also want to get a handle on your money for next year.
1. Intuit TurboTax Deluxe 2016 (Tax Year 2015):
Intuit's TurboTax family of tax preparation software has won more Editors' Choice awards than any of its competitors, thanks to its thorough coverage, its comprehensive help system and, above all, its best-in-class user interface. This year is no different, although it's worth noting that TurboTax users pay a considerable premium for that excellence. This year, TurboTax shares the Editors' Choice with the more reasonably priced TaxAct Premium Online.
A Familiar Format:
Personal tax preparation websites still use the format Intuit introduced for its desktop software products in 1993. And with good reason: It works beautifully, saving time, easing frustration, and dramatically reducing errors. Instead of shifting your attention among the Form 1040, related forms and schedules, IRS instructions, and third-party reference books, you go through the tax preparation screens one at a time, in a logical order.
TurboTax started this trend of tax preparation services as giant wizards. Intuit's service (and all its imitators) ask you a lengthy series of questions about your personal situation on a variety of tax-related topics. You answer and then click a button to advance to the next screen, and you keep answering and clicking until the service says you're done. Then it combs through your return, helps you fix any problems, and helps you file or print the finished product after you've finally paid for your federal and however many state returns you need to file.
A Clean, Lean Look:
TurboTax's user interface has been pared down to the bone over the years. It uses a layout similar to its competitors', but its look is sparser and cleaner. A horizontal toolbar at the top divides the site into its primary sections, such as Personal Info, Business, and Personal. There's nothing outside of the data entry screen other than a running, real-time tally of your refund or taxes due and links to your account, the search box, and the contact page.
The site tackles what is probably the most complex element of a self-employed taxpayer's return right at the start: business income and expenses. It first asks whether you want to select the topic areas that pertain to you (business, rental and royalties, farm, etc.) or whether you want TurboTax to walk you through every possible scenario. Competitors offer these options, too. If you're new to tax preparation, you have a complicated financial situation, or you've been through multiple major changes during the past year, it's advisable to let TurboTax quiz you about every possibility. If something doesn't pertain to you, you can easily click through it using the navigation buttons at the bottom of the screen. Otherwise, you can just visit the pertinent sections.
A Strong Finish:
TurboTax Self-Employed's final review process is as good as anyone's and better than most. It checks your return for accuracy and audit risks, and provides fields for your changes and additions, unlike TaxSlayer, whose review is not as streamlined. Then TurboTax moves pertinent data into your state return and helps you complete that.
TurboTax Self-Employed is significantly more expensive than the other tax services I reviewed this year, and they're all capable of preparing and filing complex returns—even the totally free Credit Karma Tax. If you used another site last year and liked it, I wouldn't necessarily suggest switching to TurboTax; stick with what you know. Still, TurboTax is a clear Editors' Choice this year because of its solid tax topic coverage, excellent help options, and the best user experience there is. TaxAct Premium Online also wins an Editors' Choice nod, for the best tax preparation option if you're on a budget, thanks to its combination of exceptional preparation tools and guidance at a reasonable price.
2. TaxACT Online Plus 2016 (Tax Year 2015):
TaxAct (formerly Personal TaxEdge) broke the price barrier when it introduced completely free online personal tax preparation and e-filing several years ago. These days, Credit Karma Tax is the only service that supports all the major forms and schedules for free, but TaxAct remains both affordable and easy to use. If you're looking for an inexpensive service for doing your 2016 taxes (which are due by April 18 of this year), TaxAct is tops.
Wizard Wizardry:
TaxAct, like its competitors, is an online version of all those paper documents you would otherwise have to assemble to do your tax preparation. If you have a complicated financial life and you've ever tried to complete your return on paper, you know how frustrating and time-consuming it is to keep flipping back and forth among forms and schedules, doing all your calculations, and transferring the correct numbers to your 1040.
TaxAct makes this grueling process more organized and manageable. Like a human being in a tax service office would do, it interviews you to get all the information needed to complete your return, taking you through a lengthy step-by-step wizard. All you have to do is answer the questions on each page and then advance to the next by clicking a button. Sometimes you have to fill in a number or a few words, whereas other pages ask you to select responses from lists of options.
As you enter information, TaxAct does the necessary calculations and puts your answers onto the appropriate lines on the right forms or schedules. At every step of the way, there's support of one kind or another. When you've visited every topic applicable to your situation, TaxAct goes through your return and alerts you to potential problems before allowing you to e-file or print out paper returns to mail. You aren't asked to pay until this point, as is usual with these services.
Two Tax Paths:
So far in the process, using TaxAct only requires clicking the Continue and Back buttons, entering data, and selecting from lists of options. It's easy even in these early stages to know where you are in TaxAct (this will become increasingly more important the deeper in you go). The next step, however, involves a navigational choice.
First, a little explanation: All personal tax preparation websites use similar navigation tools. In TaxAct, the main horizontal toolbar at the top is divided into the site's main sections, including Basic Info, Federal, and Review. When you are working in one of those areas, the toolbar changes to reflect the subsections found there. So, for example, you will see tabs for Income, Deductions, Credits, Taxes, Miscellaneous, and Summary under Federal.
Tax programs also generally offer two options (here's the choice I mentioned earlier) for moving through the interview process. If your return is simple or you are experienced at tax preparation, you can simply select the topics in each area that apply to you from the lists provided.
A Safe, Affordable Choice:
The main reason to spring for the Premium version of TaxAct is the need for tools to report self-employment income. TaxAct Plus is half the price and covers all the other major topics, including investing and home ownership. The whole family of websites offers a terrific combination of tax prep tools and guidance at reasonable prices. But, honestly, even at twice the price of Plus, TaxAct Premium is a killer deal, going for less than half the price of TurboTax for federal taxes. TurboTax Online Premium wins our Editors' Choice for affordable tax preparation software.
If ease of use trumps price in your book, however, consider our top pick, TurboTax Self-Employed, which is equally as capable, but also provides the most advanced, state-of-the-art user experience. But it will cost you well over $100 for federal and state taxes combined.
3.H&R Block Deluxe 2016 (Tax Year 2015):
H&R Block, like Jackson Hewitt got its start as a real-world tax preparation servicenway back in 1955, in H&R Block's case. Unlike Jackson Hewitt however, the company's tax software is thoroughly up to date. In fact, for the 2016 tax year (which is the one you need to deal with by April 18, 2017) it's a very good offering, sitting just below our two Editors' Choices, TaxAct and TurboTax.
H&R Block has more personal tax preparation options than any of its tax preparation competitors. It offers in-office services, DIY software and online services, and a hybrid of DIY and in-person prep called Best of Both (prices vary depending on complexity).
E-File for Free:
While most competitors offer free online preparation and filing of the 1040EZ and maybe 1040A, H&R Block is the only one that lets you itemize deductions (Schedule A) at no charge, but it doesn't offer support for all major forms and schedules for free, like Credit Karma Tax does.
Not only can you e-file via your browser without paying anything, but you can also do it right from your phone. Most of the major players have offered free mobile tax prep app for a few years, and H&R Block is no exception. In fact, this year, H&R Block More Zero (which is available on both Android and iPhone) is PCMag's top choice for free tax apps, thanks to its excellent interface and comprehensive help system. It's also the only free mobile tax app I reviewed this year that offers Schedule A deductions.
Income First:
By now you know that you advance from screen to screen by clicking the Back and Next buttons. You do this throughout the site, though there are other navigation options. You can, for example, click a tab in the horizontal toolbar at the top (Overview, Federal, and so on), and you see the subsections that comprise it (like Income, Deductions and Adjustments, and Credits). You can use these buttons to move into another section of the question-and-answer screens, but it makes more sense to move through this interview in the order it's presented. Links in the left vertical pane show you your real-time, ever-updating tax obligation or refund and other housekeeping pages.
When you start on the Income section, for example, the site displays a list of every income category supported by H&R Block Premium, including Interest, Dividends, and Capital Gains Distributions; Business and Partnerships; and Investments. Click one, such as Employment, 1099-G and Freelance/Contract Income, and a list of the subtopics there opens. In this case, they are options like W-2 Wages, Salaries, and Tips; 1099-G Unemployment Income; and Household Employee Income Not on Form W-2. Click Visit Topic to move into its interview screens.
Cleanup and E-Filing:
After you have completed the federal topics but before you move on to any required state returns, H&R Block Premium takes care of some housekeeping tasks and then reviews your return for anything that may be inaccurate or is missing. It also suggests forms you may have forgotten and lets you search for additional documents by form name or tax topic. I ran into some navigation irregularities here for the first time in the course of my H&R Block review.
I searched for a form and was taken directly to it, but after I had completed it, I wasn't taken back to the Additional Documents screen and had to find my own way back. Then the site's review warned me that I hadn't included a Social Security number for a dependent. It let me do so but told me it was incorrect even when I entered it again. When I clicked to go back to the review results, though, that issue had been marked as fixed. Both TurboTax and TaxAct isolate the issues on separate, dedicated screens and present them sequentially until you are done. The company says it has since remedied this situation.
That aside, my own particular journey through the 1040 using H&R Block Premium went smoothly. I would like to have had the option to be asked about every topic and subtopic instead of moving back and forth between a list and the data-gathering screens. Unlimited email and/or phone help would be nice. But H&R Block is a comprehensive, solid personal tax preparation website. If you used it last year, there's no real reason to switch. And if you have very simple taxes, you might also consider H&R Block More Zero, which is our Editors' Choice for free mobile tax prep apps.
But if you have complicated taxes and you want the best user experience, one that combines exceptional preparation tools and guidance, I had recommend TurboTax Self-Employed. Its rather high price may be too much for some taxpayers' budgets, so we are awarding a second Editors' Choice this year to TaxAct Online Premium for its all-around excellence and more reasonable price. Whichever one you choose, I had advise you to start early. it makes for a much less stressful experience.
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