The Best Tax Software

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We tried five online tax-preparation services in early 2017 and prepared nearly three dozen returns for five fictional filers—plus a few staffers—with a variety of incomes, living situations, states, and deductions. This testing, along with more than 60 hours of filing and research in the past, confirmed that TurboTax is the best tax software for anyone who finds tax forms intimidating.

Last Updated: March 1, 2017
For the fourth year in a row, TurboTax continues to be our recommendation for the easiest online tax-prep software. We continue to recommend TaxAct as an alternative for confident filers who want lower fees and don’t need as much assistance.
Expand Most Recent Updates
April 27, 2016: FreeTaxUSA has created a security information page detailing some of the site’s security upgrades, which were not (at all) apparent to us during the 2015-tax-year season. Our picks remain as they are, but we have updated the guide to better reflect FreeTaxUSA’s offerings.
March 22, 2016: We added two more real-world tax filers to our test pool for the 2015 tax year, adding more depth to our assessments of the major tax software packages. TurboTax, which addressed some security problems it faced last year with a revamped authentication program, remains our top pick, while TaxAct has returned as our budget pick after also making some needed security updates.
March 8, 2016: We’ll update this guide fully before tax day, but we’re sure TurboTax will remain our pick for most people. Our runner-up pick for simpler filing situations will once again be TaxAct, as FreeTaxUSA hasn’t added some of the security features we’d like to see.
March 16, 2015: We noticed that TurboTax is now verifying your email address before allowing you to sign in after initially setting up an account. Our other online tax filing finalists—TaxAct, FreeTaxUSA, and H&R Block—are also at least sending an email to verify account creation. There is plenty more work to be done securing a very sensitive transaction, but it’s a notable change.
March 5, 2015: This tax season has been heavy with news about TurboTax fraudulent filings, and allegations by former employees that TurboTax turned a blind eye to these. Those claims are so far unproven, and other reports of hacks are, in some cases, misrepresentations of TurboTax’s part in the problem. TurboTax is by far the largest target for fraudulent filers who are armed with sensitive data obtained through other security breaches. In other words, avoiding the use of TurboTax to file your return this season will not protect you from potential fraud. Read below for more about why we're sticking with TurboTax as our pick.
February 24, 2015: Spurred by an Ars Technica report on H&R Block failing to verify email addresses, I signed up for new accounts at TurboTax, FreeTaxUSA, TaxAct, and H&R Block. All four allowed me to start entering sensitive data and move toward filing without verifying an email address (TaxAct claimed it would send a verification email, but none had arrived one hour later). That means a typo in your email could allow someone to receive your sensitive data, or reset your password. Until they do better, double-check your sign-up information.
February 10, 2015: We’ve updated this guide with new tests and impressions from the 2015 tax season, as well as the early February reports of fraudulent TurboTax state filings. TurboTax is still the best way to file your taxes online. It’s free, thorough, and straightforward if you work a steady job with regular income, and it’s the closest you can get to an interview with an expert without paying.
March 12, 2014: Updated with information regarding Intuit's business practices.
Our pick
TurboTax
TurboTax asks all the right questions and discards the unnecessary ones. It’s the easiest and most painless way to file your taxes online.

For the fourth year in a row, TurboTax is our top pick because it’s the closest you can get to an interview with an expert without having to pay by the hour. Its attractive interface, logical topic organization, and conversational tone make entering your data more comfortable than in any other software we tested. Other tax software can leave you wondering if you’ve missed a step, but TurboTax’s understandable explanations of complex tax terms and ample support resources assure that even novice users can do their taxes right. Like many tax-prep providers, Intuit made considerable improvements to security features last year to help prevent fraudulent returns. As for the cost, you can file the simplest returns for free, but TurboTax is quick to add fees for what should be basic features—its biggest downside. Overall we don’t have many negative things to say about the return-filing portion of TurboTax, but we aren’t impressed by its confusing sales interruptions and upsells, as well as some of Intuit’s broader business practices.

Budget pick
TaxAct
For those who know more about doing their taxes but want something easier than paper, TaxAct is smart and secure, and it can be free—both federal and state―for some users.

If you feel confident in your filing abilities and can do without TurboTax’s hand-holding, or if you have a simpler return, you can save some money and avoid annoying upsell interruptions by going with the more bare-bones TaxAct. The Web app offers plenty of information but isn’t as helpful or as easy to follow as TurboTax. For example, the first screen in TaxAct lets you learn about how major life events and circumstances affect your taxes, but clicking them won’t actually customize what comes next—and that experience is representative of TaxAct as a whole. However, every version of TaxAct costs less than TurboTax (assuming you can’t use the free versions of either): TaxAct Premium, the most expensive version (focused on freelancers and business owners), costs $70 and includes a single state return, while the equivalent version of TurboTax costs nearly $130. And though TaxAct will interrupt you twice for upsells, it includes some basics for free—such as online access to your return for seven years—that TurboTax and other competitors offer only as expensive add-ons.

Keep one thing in mind: If you have any doubts that there are parts of your financial life you’re not covering in your tax return, or if you find yourself going beyond the simplest income forms, you should consider using a professional tax preparer. Our tax pro and our staffers who have run through online tax suites agree that forcing your way through blindly is worth neither the hassle nor the potential for error. In addition to saving you time, a good professional will walk you through the complexities of your situation in easy-to-grasp fashion, show you things you overlooked, and remain a useful contact throughout the year, not just at the tax deadline—you won’t treat a person like a user agreement you need to click through to finish. Whether you file with an enrolled agent (EA), a certified public accountant (CPA), or a lawyer with an established tax practice, you’ll save time, headaches, and possibly some money.

Table of contents

Why you should trust us

In 2014 and 2015, to find the best tax software, we enlisted the help of Mark Francis, EA, a professional tax preparer with Lapidos, Leung & Francis in San Francisco. During 18 years of practice, Francis has filed hundreds of business, corporate, and individual taxes. He knows what to look for when it comes to saving money on your taxes.

Wirecutter writer Kevin Purdy has run his personal taxes through tax software each year from 2014 through 2016. He spent five years as a freelance writer, co-owns an LLC business, organizes an annual not-for-profit event, and is married with a mortgaged house and some investments. He has a few years of experience in maximizing his own deductions, keeping revenues straight, writing off relevant expenses, and working with professional accountants to cover every contingency.

Mark Smirniotis is no stranger to tax forms, having previously done his taxes by hand “because it was more fun that way,” worked as a freelance bookkeeper, and served as CFO of a growing manufacturing and e-commerce business. His favorite form is the Schedule K-1 Form 1120S, and he finds it funny that the IRS specifies that tugboats have a 10-year MACRS recovery period in depreciation calculations, but only five if they saw use in marine construction. (That’s asset class 00.28 if you’re interested, though he knows you’re probably not.)

How we picked and tested

Any tax software worth recommending has to compile and file your taxes correctly and find you the biggest refund to which you’re entitled. The best results can have as much to do with your outlook and experience as with your income and deductions. If filing your taxes intimidates you, April 15 can be the worst day of the year, no matter if you have just two tax forms or a stack thicker than a Tolkien novel. And if that’s the case, you should value software that provides a lot of guidance and won’t allow you to skip a step accidentally. If, on the other hand, tax prep is just another chore that you’re comfortable with, you may prefer to save a few bucks on software and get to the point as quickly as possible.

Super-fun tax tip!
You don’t have to enter cents when filling out tax forms. Round all amounts ending in 49 cents or less down to the nearest dollar, and round amounts ending in 50 to 99 cents up to the next dollar. (Source; PDF)

While the fees vary dramatically, even the most expensive tax software is still cheaper than most in-person preparation services, and is definitely cheaper than a major error on your taxes. That fact made us focus on finding the best option rather than the cheapest.

We searched for online tax suites that were known entities, and we focused on Web options because they’re less expensive and more accessible to everyone. The majority of downloadable or packaged tax suites are made for professionals or serious money managers, and are often pricier than their online counterparts.

This year we returned to our top performers from years past, TurboTax, TaxAct, and H&R Block. We also reconsidered TaxSlayer, which had undergone major updating since we last used it in 2014, as well as Credit Karma, which launched a completely free tax-preparation service this year. (Credit Karma services, including tax filing, are funded by referral fees from customized offers for financial products.) Through the IRS Free File partnership, at least 13 sites let people who qualify file their federal taxes for free; as in previous years, we didn’t test smaller, less feature-packed offerings, since our picks are also available free through that program.

Even the most expensive tax software is still cheaper than most in-person preparation services, and is definitely cheaper than a major error on your taxes.

In addition, we revisited some of the people we created as “fake filers” in previous years. For 2017, we created five detailed taxpayer profiles to run through four of our candidate services. (Credit Karma checks taxpayer ID numbers against credit-bureau databases, so it was impossible for us to use our fake filers there. A few Wirecutter staff members offered themselves as sacrifices guinea pigs instead.) Our filers presented different levels of complexity, ranging from a single man with a job and an apartment to an independent contractor with a home, stocks, rental property, and federal-marketplace health insurance. In the middle were an indebted student, a 20-something with a low-paying job and a side hustle, and a married couple with two children and a mortgage.

No tax suite knows something the others don’t know. If you were to enter the same information correctly in each one, the result should always be the same. The difference is in how each app guesses at and phrases the questions it needs to ask you in the “interview,” and how effective those questions are at eliciting the right answers. Since the apps all use the same tax forms under the hood, the companies behind these tools compete aggressively on pricing, offerings, support, and other differentiators. Each one, for example, offers some version of a “Maximum Refund Pledge,” where it waives your fee if you end up with a larger calculated tax refund from entering the same data in any other tax-prep tool.

Jim was the only fake filer to receive a refund this year. Without hunting for our errors, we noticed that many of our results varied this year. They shouldn’t—all software is based on the same forms, so variation in the results means something went wrong.

No tax suite knows something the others don’t know.

“Jim,” our simplest return, was able to file for free on all five platforms and received the same refund on each one. “Richard,” who had a complicated return with income from a contracting business and a rental property, saw totals that swung by nearly $1,500 because of a hard-to-find error, and had fees that ranged from $39 to $127.

Finally, due to the problem with rampant false filing in 2015, we expected to see some improvements in identity and account verification, password systems, and fraud prevention in the tax suites we considered. Two-factor authentication is common now, and in some cases, anytime you leave your account for more than a week you’ll be asked to reset your password completely. Still, some password rules limit the length to 15 characters or exclude certain symbols, an annoyance if you’re using a secure password manager.

Our pick: TurboTax

Our pick
TurboTax
TurboTax asks all the right questions and discards the unnecessary ones. It’s the easiest and most painless way to file your taxes online.

TurboTax makes the process of entering your tax data easier than anything else we tested.

In our tests, some competitors oversimplified their prompts and left us unsure about what to do next, while others made our eyes glaze over with jargony walls of text that had more detail than was useful. TurboTax consistently stays in the Goldilocks zone, providing context and tips that are helpful instead of ignorable. Topics are categorized in a way that makes sense, and the questions move along in a sensible sequence—you won’t get mental whiplash while you shuffle through a stack of forms you thought you were done with just to find some detail you didn’t expect to need. The interface is mostly unobtrusive (obnoxious sales interruptions aside), which is exactly what we want in our software. Security steps for the login screen, state-saving whenever you leave, and easy switching back and forth through categories make the process as painless and intuitive as possible.

Although we grew tired of Intuit’s nickel-and-diming of basic features, TurboTax does let you easily import tax data from a wide variety of employers, banks, and investment firms, so you don’t have to enter them all manually. Help is prompt and professional through chat or forum posts. The mobile apps, while not essential, assist with importing documents without a traditional scanner, and alert you to your refund’s progress once you’ve filed.

Providing the right amount of detail at each step in the process is the key reason that TurboTax has remained our top pick for four years running. A majority of people in all age groups have concerns about filing their taxes, and the US tax code runs for more pages than War and Peace, so tax software has a big job to do for most people. Not only does TurboTax do that job well, simplifying without oversimplifying, but it also points out where you don’t need to give answers, namely in situations that are uncommon. It’s reassuring to be told that if a certain section looks foreign to you, then no, you don’t need to select anything from this list of esoteric topics. The TurboTax team has done a good job striking a balance between conversational and confident:

  • “Don’t worry, this information doesn’t affect your tax outcome.”
  • ”Your Standard Deduction of $6,300 is still your biggest deduction. Entering details or exact amounts for donations won’t affect your refund.”
  • “If you put money into a retirement account, such as a 401(k), without taking any money out, you don’t need to go through this area.” (with a Learn More link that pops out a text box)

TurboTax looks and acts like like a modern Web app: Buttons are where you expect to find them, page transitions are smooth and pleasantly animated, and the interface is consistent from start to finish. This is important, because while easier questions and prompts make it more likely that you’ll file correctly, a bad interface (or even just a few poor design choices) can ruin the experience and introduce accidental errors. Even in TaxAct, our runner-up, we often found that having multiple buttons, sometimes grayed out, or frames within frames made us pause to figure out what was next. H&R Block comes closest to emulating Intuit’s successful design, but its software is almost as expensive as TurboTax, and we don’t think the minor savings are enough of an incentive to step down to that offering. In an effort to have friendly prompts, H&R Block often oversimplifies topics, leaving you wondering if you did something right, and the navigation and interface feel a bit clunkier than in TurboTax.

In most of our fake filings, we manually entered our forms, but a lot of people don’t have to enter form data into TurboTax at all. TurboTax has a long list of payroll processors, nonprofits and charities, and banks from which it can automatically import your employer information, charitable donations, and interest or dividend information, respectively. If you use the financial-management app Mint, you can simply grab those account statements without having to authenticate them again (Intuit acquired Mint in 2009). Most people get such statements in the mail fairly early in the year, but automatic import is convenient and prevents errors.

turbotax's onscreen list of partners

TurboTax can automatically pull in interest statements, investment cost basis, and charitable gifts from many agencies and organizations. The full list is available here.

If you do get stumped during a TurboTax run-through, you can ask questions of TurboTax tax experts via text, even if you’re using its Absolute Zero free version. The assistance is easier to find than last year: Click Contact in the upper-right corner, and then click Contact Us on the right side. Enter the text of your question, and you can either see similar questions or post it and wait for a response. Last year, a question we asked about “simplified” home-office deductions received a short, succinct answer within about an hour. This year, users of any paid tier of the software can also request the SmartLook feature—a rep will call you back and walk through your question while sharing your browser window to see the problem in real time. We didn’t try this feature out, but the wait time was listed as five minutes during our testing.

question about itemized deductions onscreen in turbotax

If you pose a question to the online community, you’ll typically get a quick response from a TurboTax tax expert.

We’ve seen TurboTax’s final review catch a variety of errors and omissions over the years, noticing everything from simple mistakes (such as missing fields) to more interesting situations, like asking about moving costs because a house was owned for only one year. Most software will catch the former, but the latter example is a somewhat unusual intuition we didn’t see from other filing apps.

Both Intuit and H&R Block offer mobile apps for importing forms and tracking your refund. The TurboTax app (for iPhone/iPad or Android) can import your W-2 through a camera capture, offers a screensharing-style help option, and lets you complete your entire return right on your phone, or just finish a section that you started on your computer. You can also use Intuit’s ItsDeductible app (for iPhone/iPad only) to enter your charitable-giving data all year long; the data then syncs to next year’s TurboTax return.

The cost of TurboTax online filing depends on your specific needs—and on whether you give in to its sometimes-confusing upsells. If you qualify for the Absolute Zero offer (income of $100,000 or less, and no itemized deductions or attached schedules), federal and state filing cost nothing. Using the IRS Free File program, you can file federal and state returns for free through TurboTax if you make less than $33,000 and meet other criteria, and every common form is available for reporting incomes and deductions. If you’re not sure which version you need, you can start with the free version of any tax software, and it will tell you when you need to upgrade based on income or deductions that you enter (don’t worry, none will skip the opportunity to sell you something). We have more to say about these upsells, and the problem with nickel-and-diming, below in Flaws but not dealbreakers.

How much it costs to file a federal return and one state return

TurboTax H&R Block TaxAct TaxSlayer
W-2 and standard deduction
$0 $0 $0 $0
W-2s and itemized deductions
(mortgage interest, gifts to charity, or excessive medical expenses)
$72 $0
(Only common itemized deductions included)
$60 $39
W-2s, itemized deductions, investment income from non-retirement accounts (Schedule D)
$92 $92 $60 $39
Any 1099-MISC income
$127 $72 $70 $39
1099-MISC or self-employment income and expenses
$127 $92 $70 $39

Depending on what you need, prices can vary a lot—or not at all. Prices are subject to change, and may not include other features such as premium support or audit assistance.

TurboTax and H&R Block offer similar Audit Support Guarantees for all levels of their online filing tools, while TaxSlayer offers that only for the Premium tier. This service is not the same as audit “defense” or “protection,” the TurboTax version of which is available for $40 at the final, review stage of a return (and is essentially a resold contract with TaxResources). The Support Guarantee offers to make tax experts available to answer questions if you get audited, but you’ll still be the one dealing with the IRS.

Do some research, and you’ll find that people filing simple income tax returns without quirky business or deduction schedules are very, very unlikely to be audited.

But do some research, and you’ll find that people filing simple income tax returns without quirky business or deduction schedules are very, very unlikely to be audited—just over 1 percent of individuals in 2011, with the odds increasing with higher incomes and self-employment deductions. More than that, audit protection is almost always a third-party service that tax-prep firms oversell as a cure-all. Online forums and reviews are full of stories of audit-protection representatives refusing to protect customers, citing errors on the customers’ part, or being slow to respond to simple IRS questions and making the whole process longer and more painful. Generally, the conclusion points once again to common sense: If your taxes are so complicated that you’re considering protection, you should find a professional.

Since a wave of fraudulent filings and returns hit in 2015, all of the tax-software competitors we’ve tried have implemented reasonable account-security features. You should sign up for multifactor authentication, in which a code is texted or randomly generated on your phone for logging in. On newer iPhones and iPads, you can lock your TurboTax account to your TouchID fingerprint. TurboTax also now verifies your email address before you can file, and it notifies account owners of significant changes such as new payment methods or new device sign-ins.

Who else likes TurboTax

Many reviewers praise TurboTax’s interface and criticize its fees. NerdWallet writes that “TurboTax is in many ways the standard for the do-it-yourself tax-prep industry,” but “confident filers who don’t need all the bells and whistles may get a better value elsewhere.” PCMag says TurboTax Self-Employed offers an “exceptional user experience,” but knocks it for how expensive it is. Though Consumer Reports hasn’t updated its tax-software ratings for 2017, its 2016 praise for TurboTax’s “uncluttered design” and simple wording in explanations still rings true. Sean Williams at The Motley Fool has been returning to TurboTax for seven years and prefers it over H&R Block and TaxAct, noting that it “can walk taxpayers through complicated situations on their taxes, as well as address a vast majority of their concerns ahead of time.”

Flaws but not dealbreakers

The biggest drawbacks to using TurboTax aren’t in the software itself but in Intuit’s presentation of sales opportunities—and, more broadly, in some of the business practices the company has engaged in since it started selling accounting software in 1983. TurboTax’s brand-name domination of the tax-return category has led Intuit to make some not-so-customer-friendly moves.

The high price, especially for anyone with 1099-MISC income or their own business, is TurboTax’s most obvious downside. TurboTax can be entirely free, $36 for a free federal and one-state filing, or up to $127 at different upgrade levels. True, an audit or missed deduction opportunities from using less-accommodating software can be expensive, but you can find cheaper options if you’re confident in your simple taxes, or if you don’t mind a little less white-glove treatment.

Nickels and dimes in tax-software shopping

TurboTax H&R Block TaxAct TaxSlayer
Prior-year import from same software $30 with Plus
or
Deluxe version or higher
Deluxe version or higher $10, free in Plus version Classic version or higher
Prior-year import from other software/PDF Desktop version only $0 $10, free in Plus version $0
Real-time tax support (chat or phone) $30 with Plus
or
Deluxe version or higher
Deluxe version or higher $0 $22, or free with Premium
Future access to returns $30 with Plus
or
Deluxe version or higher
Deluxe version or higher $0 $0
Future access to supporting documents $30 with Plus
or
Deluxe version or higher
Deluxe version or higher $0 $0
Advice and support if audited $0 $0 Online support center only Online support center only
Full representation if audited $40 Max Assist and Defend $40 Peace of Mind $50 Protection Plus $29 Audit Assistance
Deduct software from refund $35 $35 $20

If you’ve used TurboTax in past years, be prepared to see a sales pitch shortly after signing in. For one of our test filers, TurboTax populated all of our prior-year information—addresses, employer IDs, forms used—only to demand $30 for the Plus feature to keep it in place. When you click no, the software takes that information away. Though we recognize that storing millions of customer records costs money, and the company has every right to charge for the service, it seems disingenuous to store that information but not allow access without the extra payment. The $30 Plus feature upsell is for free filing customers, while Deluxe customers get access to those features, plus added income and deduction reporting, for $35. Each company focuses on different features to include or charge for, and to be honest our heads were swirling after trying to prepare an accurate comparison.

Given what has happened behind the scenes, it’s no surprise that the costs can be confusing. The software makers have worked hard to protect their ability to charge for services. Intuit spent $11.5 million on federal lobbying from 2008 through 2012. As nonprofit investigative organization ProPublica reported, Intuit fought against two bills that would have allowed US taxpayers to file prefilled tax returns for free. ProPublica found that H&R Block also lobbied against a similar bill.

In 2015, TurboTax moved all of the schedule forms from its desktop TurboTax Deluxe software to higher-priced packages without notice; customer anger followed. It later backed down and offered free upgrades, but the incident signaled the company’s willingness to switch things around and introduce fees when you’re already deep in the process. And back in 2003, TurboTax for Windows automatically installed SafeCast spyware. The online TurboTax software is seemingly clear of such fake-outs and tracking tools, but it’s bad precedent, and Intuit has enough of a history of this behavior that it warrants consideration.

For simple taxes or experienced filers

Budget pick
TaxAct
For those who know more about doing their taxes but want something easier than paper, TaxAct is smart and secure, and it can be free—both federal and state―for some users.

We almost didn’t make a second pick for tax software this year, but if you’ve filed your own taxes before, know the tax forms pretty well, or are trying to dodge some of the high fees Intuit charges for TurboTax, you should use TaxAct. All the alternatives we considered had some glaring flaws, but TaxAct’s strengths are near opposites of the things we dislike about TurboTax. Instead of high fees and upsells to added services, TaxAct includes more features at a lower cost. Whereas TurboTax has friendly interview questions, TaxAct shines by providing detailed, meaty explanations of almost every topic you click on. If TurboTax is a friendly paperback novel, TaxAct is a technical manual.

If TurboTax is a friendly paperback novel, TaxAct is a technical manual.

At the start, TaxAct offers a free PDF-import option that loads information from previous tax returns, whether you did them through other Web services, desktop software, or a human preparer. But you can’t automatically import W-2s or other tax forms as you can with TurboTax, and you can’t add them using your phone’s camera or a mobile app. TaxAct lets you import investment and brokerage details by directly logging in to those accounts, or by using a spreadsheet or CSV file. The direct import failed at login for us, but TaxAct flawlessly imported a CSV file with thousands of small transactions (from an automated retirement-investing account). TurboTax choked on a similar attempt to prefill a 1099-B form (PDF), but it now offers direct import from most major financial institutions.

tax act stock trade import screen

TaxAct did better than TurboTax at importing a dense CSV file of stock trades.

TaxAct does a good job of making the flow of tax entry straightforward: income, deductions, credits, miscellaneous, state issues, file, done. It offers a step-by-step, guided path through the questions and forms, or you can manually skip around to fill in numbers as you arrive at them. Item-specific help is available in the Answer Center, and broader guidance on how to approach forms and tally your deductions is in the TaxTutor. TaxAct has quite a few handy features in its margins that are not apparent until you look around a bit, including bookmarks that remind you to come back to a section before filing, options for viewing relevant IRS forms, a document image uploader, and donation value calculators.

TaxAct’s interface is not as slick or intuitive as TurboTax’s, but not as convoluted as the majority of its competition. H&R Block has TaxAct beat in approachability, but given that it costs almost as much as TurboTax, we would go with TurboTax instead. TaxAct at least saves you some money and doesn’t waste any time getting to the point. Filers who are confident in what they’re looking for will definitely prefer this software.

But TaxAct’s straightforwardness (and assumption that you already know what you’re doing, to some extent) has its failings, too. For example, in TaxAct we entered some of the information to receive a childcare credit and then continued through the process. But what we didn’t realize (until TurboTax reminded us when we entered the same info there) was that without adding details about the childcare provider, we wouldn’t be able to get the credit. That’s a rule TaxAct didn’t alert us to, one we didn’t know about, and it potentially could have resulted in an expensive mistake.

TaxAct offers free (federal and state) filing for anyone who makes $52,000 or less and does not require more complicated forms, as well as for anyone eligible for the Earned Income Tax Credit. Beyond that, most filers can expect to pay around $60 to $70 total for their federal and state returns. It adds up to a savings over TurboTax’s fees at every level, but saving $30 to $70 is worth it only if you’re certain enough about your taxes not to spend lots of time looking up answers.

Upsells and extras you should avoid

In general, most people can skip all of these fees easily. You’ll find some or all of these extras in our picks, as well as in most of the competition.

Do not—under any circumstances—deduct your software fees from your refund. This action will incur a charge of up to $35, and the only “convenience” you get is not reaching for your wallet. No other features are included. If you can’t afford to pay the cost of tax-prep software, there’s a good chance you can use the software for free through the IRS Free File program. For everyone else, take out your debit or credit card and pay for the software at the end of the process.

Don’t pay for document storage. You’ll likely scan all your supporting documents anyway, and the software will provide you with a finished copy of your return when you’re done. Save all the PDFs to your hard drive, and be sure to back them up.

Don’t pay for upgrades just for prior-year imports. This is a common trick among companies offering free versions of their software. Most companies are happy to import your information from a competitor, but both TurboTax and H&R Block won’t immediately let you import prior information that’s already in their own systems. For that, you need to upgrade to a deluxe tier and start paying fees of around $35 for your federal return. Prior-year import is convenient, but if you qualify for free filing that doesn’t offer that feature, your return is probably too simple to warrant the upcharge. This function carries forward only names, addresses, and taxpayer ID numbers from you, your employers, and your financial institutions. While it’s annoying to enter all of that, it probably won’t take you long. And if you’ve changed any of those things in the past year, importing it wouldn’t help anyway.

Don’t pay for audit services (probably). Around 1 percent of taxpayers get audited, and very few of them have standard returns with a W-2 and a couple of simple deductions. If you’re worried your return has something on it that may raise a flag—and this concern applies mostly to certain business owners, people claiming extraordinary itemized deductions, or those with abnormal incomes—you should probably be using a tax professional anyway.

If you have a checking account, don’t take a gift card for your refund. Some services offer little perks, like reduced filing fees or an extra $20, in exchange for loading your refund onto a gift card or debit card instead of directly depositing it into your bank account. This offer is almost always a bad deal, as the cards may have service fees or other terms on them. If you don’t have a checking account but could get one, you can have your refund mailed to you and bring the check to a local bank branch to open a new account.

Super-fun tax tip!
Having taxes due is no fun, but if you end up with a big refund, it means you basically gave an interest-free loan to the government, which got to hold your money all year. Make sure to correctly fill out your W-4 form (PDF) so that your employer withholds the right amount from each paycheck.

Why it’s important to have a human handy if you get lost

Some Wirecutter editors have capably filed their own taxes—with freelance income, itemized deductions, and attached schedules—through TurboTax for 10 years. So it certainly can be done. But if your tax situation is complicated, you may be in over your head using online tax software.

Last year we tried to do right by “Lisa,” the $35,000-earning nonprofit manager in Ohio. We tried to tell TurboTax that Lisa had driven her own car 1,000 miles for work without reimbursement. She also drove 750 miles to get to trade shows and conferences, where she sells handcrafted goods for a bit of extra cash. We managed to work through the particulars of her side business, namely the taxable revenues and the costs and basic inventory.

Mileage report page onscreen in Turbotax

The beginning of a long, long road to declaring unpaid mileage in TurboTax.

But trying to put in the mileage for Lisa sent us down a rabbit hole that we never escaped. TurboTax asked when Lisa bought her 2005 Honda Civic, whether she bought it new or used, what year she “put it into service” for business, and when she sold it in 2014 (we thought she still had the thing). It felt like TurboTax was mistaking do-gooder/dice-crafter Lisa for a produce-delivery magnate, and she suddenly owed another $1,400 on her taxes. We wiped her return and started over.

Tax preparer Mark Francis noted that the solitary, repetitive nature of tax software, making you click Yes or No to get to the end, engenders more hasty action than answering a human being. Tax suites ask you, “Do you have any of these expenses related to your work as a (masonry contractor)?” followed by blank fields for “Contract work,” “Licensing,” “Tools,” and the like. A professional might ask you how you get your work done, and note that, since you live in a snowy city, you probably spent some amount keeping your work truck from getting snowed in. And surely a tax pro would know that if two parents are working, the childcare tax credit we missed in TaxAct would be a juicy opportunity for savings.

Simply put, the more questions and empty boxes you fill out, in any of the software suites, the more chances for errors and missed opportunities, which can compound from form to form. No matter how automated and friendly the interface, you need to pay attention to every screen you see.

The competition

H&R Block continues to fall close behind TurboTax and TaxAct. But not because it’s bad. On the contrary, the H&R Block software has slowly morphed into something very similar to TurboTax over the years, mimicking how TurboTax organizes information, and asking questions with a similar personality. But the fees are almost as high as TurboTax’s, and for the money, you might as well stick with TurboTax. In our tests, for some questions and topics, H&R Block dumbed things down too much and left us unsure about how to answer or proceed without following up in a help window. By comparison, TurboTax gave us just enough info on similar topics to keep us confident. And when we checked last year, TurboTax seemed to have a far larger database of employer IDs, local/school tax data, and things like business codes for small businesses. Because of H&R Block’s pricing strategy, one type of filer—a mortgage holder with W-2 income but not much else—might save around $70 with H&R Block instead of our pick, as TurboTax forces itemizers to use the Deluxe version ($35 plus $37 for a state), while H&R Block lets some deductions, like mortgage interest, through on its free version. But most people who itemize will have other complicated situations that make TurboTax’s $72 worth paying for better hand-holding and a more accurate result—that’s why TurboTax is still our top pick for most people.

After seeing notable updates to the design and features of TaxSlayer, we tried it for the first time this year. Though the service seemed promising and had a simple, inexpensive price list, the experience was death by a thousand digital paper cuts. When our browser was under 1,200 pixels wide, buttons and fields appeared in weird spots. When we had a question about medical deductions, the “Learn more” button gave us a help pane for tuition deductions. (We eventually found our answer, but only in a link to the PDF of the actual IRS documentation.) When we put in two 1099-R forms from the same retirement firm with the same vendor ID, it told us that we had duplicated W-2 forms. These small errors added up, and we ultimately decided that we weren’t comfortable with such trust-eroding oversights. Some of the questions and layouts in TaxSlayer—especially the QuickFile option, which lets you build your own to-do list of forms and topics—showed a lot of promise and were easier to use than those of TaxAct. But the quality issues were just a little too much to ignore.

This year we were excited to try Credit Karma’s new tax service, which promises free filing for nearly every form that individual filers might need. Considering all the prompts and upsells in other software suites, we thought the idea of a program with no upgrades and no feature offers was quite alluring. Unfortunately, the Wirecutter staffers who tried the Credit Karma tax service didn’t have great things to say. One muddled through but wasn’t sure what he was signing up for in exchange for the free software access. Many screens were confusing, interview questions were hard to parse, and even basic interface elements started to annoy our testers. After navigating opaque questions and fields for retirement funds, taxable refund options, and charitable giving, one tester remarked, “When you click in a field with a set format [like an EIN], it doesn’t automatically put the cursor at the start. If you clicked in the box but the middle or end, it won’t fill in properly and you have to start it again.” After getting a result over $6,000 different than TurboTax on his first attempt, this tester put Credit Karma aside, and we did too.

Since we’ve dismissed eSmart Tax and FreeTaxUSA in the past as being too basic for the price, we didn’t try this year’s versions. We’ll watch them next year to see if they offer features or prices worth considering.

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Sources

  1. Mark Francis, professional tax preparer with Lapidos, Leung & Francis in San Francisco, interview
  2. Tobie Stanger, Tax-Preparation Software Review: H&R Block Deluxe vs. TurboTax Deluxe, Consumer Reports, February 3, 2016
  3. Jonathan Ping, TurboTax vs. TaxACT vs. H&R Block at Home: 2012 Lightning Review, MyMoneyBlog.com, March 20, 2013
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  12. Anya Kamenetz, Is tax company's audit defense worth $39.95?, Herald-Tribune, April 6, 2013
  13. Matt T., TurboTax Audit Defense… is it worth it? Our Review, Let's Do Taxes, April 16, 2013
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Originally published: March 1, 2017

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