Considering Tax Software

With this year’s tax deadline looming, our mailboxes are getting flooded with tax forms. Thanks to a complicated tax code and tedious forms, the task of calculating and filing taxes is less than appealing, and a number of folks opt to hire a professional to help sort through the red tape. Sure, your Uncle Fred might be happy to prepare your tax return for you, but think twice before accepting his help. The price might be right, but he might cost you more than you know in the long run if he misses tax credits or deductions that you could have taken advantage of.

Tax code is incredibly dense and complicated, and changes frequently. It's often worth enlisting the help of a skilled pro. However, a really excellent software program can save you some time and money if you are up to managing it on your own. For the majority of people, software or the Internal Revenue Service’s Free File is more than sufficient. While tax software is easy to use, that's not always the case when choosing between all the software that's available these days. Here are some things to keep in mind. It’s best to know and understand all your options.

Can I Do It for Free? If you have a very simple, basic tax return, investigate free tax software. You'll find many free offerings online, and some of it works for even more complex returns. The trade-off for free is that the software will nudge you to upgrade to a paid version, and the frequency of these reminders varies by the software. Also, free software might require more time and input from you.

Basic, Deluxe, or Premium? It can be confusing to decide which version of tax software will work for your tax preparation needs because one company's basic or deluxe version does not necessarily have the same features as another company's product. If you have a straightforward return with few W2s and no deductions, the basic package will almost always do. The Deluxe versions are for those with charitable and other deductions (e.g., mortgage interest). Premium is for those with more diversified assets such as those with small businesses and/or investments. When in doubt, buying the highest version costs more but ensures that you have all the features you will need to prepare your tax return.

How Much Support Do You Require? Every software offers its own level of support. It’s important to understand the level of support the software you’re using provides. Is there a toll-free number, email address, chat and/or an online forum available to get answers to your questions about the tax software? Is there help for both using the tax software and for income tax-related questions? Is there a fee for asking a tax professional for help? If tax preparation is not your strong suit, be sure to choose software that offers both helpful and accurate tax information and audit support.

Can I Try Before I Buy? Most tax software companies offer free trials or “pay when you file” features, so why not give them a try and see which suits you and your needs best? A particular software may seem to have all the features you require—and then some—but are difficult to use and just downright confusing. Take advantage of free tax software trials to determine which is best for you.

Finding the right software can help take the stress out of tax time. Do you have a favorite you already use? Let us know. We’d love to hear what works best for you.