Here’s the first part of Money Under 30’s “No-Stress Guide to Filing Your Taxes”, a six-article series first published in 2012. We cover:
- Your tax document checklist: A guide to get you started
- Choosing the best method to file your return
- Tax software: When to use and how to choose
- Tax schedules (itemizing, capital gains, business income, etc.)
- Don’t miss…a credit and deduction checklist
- Special situations (audit avoidance, extentions, payment plans, and estimated payments)
The good news for those who haven’t filed their 2013 taxes yet is that there’s still plenty of time—about a month and a half—to meet or beat the April 15 deadline. But with taxes, it’s too often a matter of procrastination: Wait long enough, and that nice cushion will to turn into a nail biter.
Now you could always file for a tax extension via IRS Form 4868. But that will only delay the issue by six months, and your pile of receipts won’t shrink in the meantime. But there’s one piece of consolation in all this: Young adults have tools at their disposal to crunch the numbers that were unheard of just a generation ago. While we think of e-filing as commonplace, in 1990 it was brand new, and just 1 in 25 individuals filed 1040s in this way.
Compare that to the estimated 140 million returns e-filed in 2012—accounting for more than 80 percent of individual and business taxpayers, according to IRS statistics. As those numbers keep going up, it makes sense to examine the software tools that can make tax time a bit less of chore, if such a thing is possible. Here’s our roundup of software options for the upcoming tax season.
Free to $74.99, and on most plans you can get a 5 percent bonus on your federal tax return by purchasing an Amazon gift card with it.
Pros and Cons
TurboTax is truly the gold standard in tax preparation software. You can use it in either an online version (which is slightly cheaper), or via CD-ROM and downloadable software. TopTenReviews.com rates it number one among the tax software programs, giving it a 10 out 10 score for accuracy, ease of use, and support: “TurboTax continues to be the most user-friendly tax software, especially for those who have little or no tax preparation experience.” The only con they cite is its lack of tools to import your data from other tax services. They also don’t keep the endless streams of coffee going while you’re up working those numbers, but that’s your job.
The TurboTax SnapTax app will work from your smartphone and allows you to snap a photo of your W-2 and file. But it only works for simple tax returns for individuals earning less than $80,000 and married couples earning less than $100,000 in 2013.
Ideal for all levels of taxpayers, from those with a 1040EZ (who can use the free version) to those with rental properties and other tax complexities. (TurboTax Premier runs $49.99.) For all versions of its software, filing a state return will cost between $29.99 and $39.99 (before any discounts) depending on the complexity of your return.
Free to $64.95
Pros and Cons
Do these guys know their taxes or what? H&R Block is the nation’s largest tax company and a trusted name in taxes, dating back to the time when Henry Block starred in the “17 Reasons” TV commercials on behalf of his number-crunching operation. You can save significantly using the online options; H&R Block Premium, for example, runs $49.99 for online, compared to $64.95 for the software version, available in both Windows and Mac.
H&R Block also offers free audit support for all levels of its software, including the free version. State e-filing still runs $19.95, unchanged from last year, though you can always print out and mail your returns in, which would cost you just the postage and the envelope.
H&R Block’s free mobile app allows you to estimate your taxes and track your refund, but you can’t use it to file.
Arguably as good as TurboTax, at least from the accuracy standpoint, and cheaper, too. “H&R Block is significantly less expensive for investors while TurboTax is a more pleasant user experience” says NerdWallet.
Free to $32.95
Pros and Cons
If you’re in the active duty military, TaxSlayer offers free e-filing of federal and state returns. They also offer free live phone support with most of their products, except for the free version. State returns can be filed through TaxSlayer for $12.95, and tax audit assistance is included with its paid versions.
TaxSlayer’s mobile app allows you to create an account, login to your existing account, and estimate your tax refund via the Refund Calculator App.
While a little less sophisticated than TurboTax, TaxSlayer still scores well with TopTen Reviews (8.8 out of 10), and is a great option for anyone who wants to file accurate tax returns, but save a little money in the process.
Free to $17.99
Pros and Cons
TaxACT actually includes state filing if you select its “Ultimate Bundle” for $17.99, which is in essence its Deluxe Package with an extra $5 tacked on for state e-filing. If you choose its free product, you’ll get one of the few products that actually handles complex tax returns beyond the 1040EZ stage, a big plus. State returns for the free package will cost you $14.99, making the Deluxe a great deal for $3 more, especially if you have to deal with charitable donations, and want free telephone or email support.
TaxACT DocVault is a free companion app for organizing and storing tax documents.
TaxACT is especially well suited for people whose tax situations are straightforward, and don’t need all the bells and whistles some of the higher-priced products provide. TaxACT also finished second on the TopTenReviews list behind TurboTax, and was the only other tax software provider to earn a perfect 10 for accuracy.
Free to $44.95
Pros and Cons
One drawback here is that you have to do your work with Jackson Hewitt online, as they don’t offer a software version. As with other tax preparers, filing state returns will cost you extra. Free online chat and and email support comes with all packages, but free phone support is only available with the Premium ($44.95). Jackson Hewitt gives out refund anticipation loans, and they’ve also got this affinity for wrestling fans (seriously). Last year, JH gave away a trip to the WWE’s Royal Rumble PPV.
The JH Mobile app allows you to check the status of your return, estimate your taxes and schedule an appointment at a Jackson Hewitt office.
Jackson Hewitt has had some rocky times, emerging from bankruptcy in 2012. But they’re fighting back; they’ve got locations at close to 3,000 Walmart stores now, and earn 8.75 scores from TopTenReviews for accuracy and support. We’re betting that JH, much like the best wrestlers out there, can pin your taxes down via its online service.
Choosing the best tax prep option for you
If your taxes are simple — let’s say you’re single and file the 1040EZ — TaxAct offers the lowest cost route to both federal and state filing. As your taxes grow more complex, you have some decisions to make.
The difference between cheap tax software and an accountant is the level of personalized support you get both in preparing your return and — more importantly — in the event of an audit. (The pricier tax software programs include audit support.)
If you have the money to spend, nothing beats working with an accountant who gets to know you and your tax situation over time — much the way a personal trainer can help you fine tune your physical conditioning. That said, accountants can get sloppy, too, especially if they’re squeezing you in on April 14. There’s nothing like taking charge of your own finances, and never have the tools to complete and file your taxes been easier to find and use.
You can also make the best of both worlds, using the tax software to get you to the finish line, and an accountant’s trained eye to make sure you don’t overlook anything. No matter which route you choose, make sure to get it all done by April 15 … even if that means filing for your extension.
Next in the “No-Stress Guide To Filing Your Taxes”:Tax schedules (itemizing, capital gains, business income, etc.)