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Reviewed / Tara Jacoby
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Reviewed / Tara Jacoby
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Choose from plenty of easy-to-use products, though you'll need a different tax software if you want to use the IRS Free File program. Read More
It's free to deduct student loan interest and report unemployment income, though you'll need to complete the sections in order. Read More
It's simple to track your progress. Heads-up: The free version doesn't include state returns. Read More
The platform offers an easy-to-navigate experience, but with fewer bells and whistles compared to its competitors. Read More
Taxes can be complicated. And with so many changes to federal taxes over the last two years, a tax software that can handle your individual scenario is as important as ever. Luckily, major online providers are on top of updated income brackets and COVID-19 relief programs to help you navigate your 2021 returns. (They can even help you organize tax documents.)
You may qualify for free tax filing with some software options, though the level you need depends on your financial details and what each company includes with each level of support.
We’ve walked fictional personas through the online filing process of four tax software programs. In our experience, TurboTax (available at Intuit) is easy to use whether you’re new to filing taxes or you’ve done it time and time again.
Use these hypothetical scenarios to gauge the best option for your specific situation. We looked at topics like special tax credits and deductions for children dependents, self-employment income, student loans, and retirement income.
Here is the best tax software we tested, ranked in order:
This review is an evaluation of the consumer experience using various online tax prep services. We’re here to share what we learned, but this is in no way a substitute for financial advice. Please consult a financial professional if you have questions about how to file your taxes.
TurboTax is easy to navigate no matter your tax situation.
I’m Lauren Ward, a finance writer with nearly a decade of experience covering personal finance, taxes, and other topics on the best ways to manage money. Plus, I’ve handled my own family’s taxes for years, using both online tax software and CPAs, depending on the level of effort I feel like giving from year to year! I’ve handled things like W-2s, self-employment income, and rental property income, giving me a solid foundation for testing multiple tax personas on the most popular tax preparation software out there.
Cost is definitely a factor in tax software, but it’s not the only thing to consider when choosing the right one. It’s equally important to have access to all of the credits, deductions, and income reporting you need to maximize that tax refund (or minimize your final bill).
We tested four online tax filing software programs for the 2021 tax year: TurboTax, H&R Block, TaxAct, and TaxSlayer. Each performs a little bit differently and has its own pricing structure for various upgrades. We evaluated multiple features, including:
User experience: How easy is it to navigate the software? Do answers save easily and is there the capability to import information rather than having to enter it manually?
Customer support and guarantees: Is it easy to get answers to your tax questions? And how does the software guarantee its results?
Adaptability: How detailed can certain types of tax filers get before being prompted to upgrade to a paid version?
best-right-now 
We created four hypothetical tax filers to determine how well each software performs for common tax scenarios.
Devon Developer is a single, recent college graduate earning an average starting salary of $55,000 as an app developer. He has $37,000 in federal student loan debt, but his payments have been deferred since 2020. He also has some private student loan debt, which allows him to deduct interest from his taxable income. Through his employer, Devon has health insurance and a retirement plan, contributing 3% of his salary to a 401(k).
Vanessa and Shawn Dotington have two young children. Their son goes to daycare and their daughter who’s in elementary school goes to summer camp while her parents work. Vanessa is a sales manager who earns $85,000 a year while Shawn is a seasoned teacher earning $60,000. They’ve paid off their student loans but have a mortgage.
Ricky Retiree is single and fully retired. He turned 72 last year and started taking required minimum distributions (RMDs) on his traditional IRA and 401(k). He’s enrolled in Medicare and receives Social Security benefits.
Franny Freelancer is a social media manager working as an independent contractor. Her business operates as a sole proprietorship. Franny gets her health insurance through the marketplace. She is single with no children and doesn’t have a mortgage or student loans.
The “bare minimum” most people need, according to Amy Northard, a CPA and owner of The Accountants For Creatives, are things like W-2s, 1098s, 1099s, and health insurance 1095 forms. You should receive these in your mailbox by late January, although Northard says two forms often don’t get mailed out: student loan interest forms and brokerage account 1099 statements. (The good news: You'll likely find these by logging into your online accounts.)
If that all looks like a jumble of numbers to you, here's a basic breakdown of these common tax forms:
W-2: Your employer uses this form to report your wages and various taxes withheld from your paycheck throughout the year, and also notes things like your retirement contributions and tips. It mails you and the IRS copies to determine whether you owe additional taxes or should receive a refund.
1095: As a health insurance holder, you’ll receive one (or more) of three forms. These detail the type and length of coverage you received under the plan.
1098: There are a handful of 1098 forms, but the most common involve interest lenders received from loan payments. Specifically, be on the lookout for these if you’ve got student loans or a mortgage. You can also expect a 1098 if you paid college tuition bills during 2021.
1099: There are more than a dozen types of 1099s. Essentially, these account for any income you earned that did not come from your employer. For example, if you worked as a freelancer or independent contractor, you may receive a 1099-NEC from clients. Anyone who received state unemployment benefits can expect a 1099-G to arrive in their mailbox. Money received from pensions, IRAs, and life insurance policies also falls under this category.
Sleek interface
Tax professionals can file on your behalf
Free version includes unemployment income
Difficult to skip around
Doesn't participate in the IRS Free File program
Straightforward navigation
Notable accuracy guarantee
Limited free forms
Free tier doesn't include state returns
Walks tax newbies through forms
Unpaid tier includes phone and email support
Fewer bells and whistles
Cannot directly import details such as retirement distributions
You should strongly consider hiring a CPA or tax professional in certain situations, especially if you expect to owe taxes. Here are some scenarios in which you may want to outsource your taxes to ensure accurate filing—and piece of mind.
You sold stocks, securities, or bonds: Whenever you sell one of these assets, the IRS considers it a capital asset transaction. The tax rate is different for these types of transactions, and it can be complicated to correctly combine it with your main source of income.
You’re claiming multiple or shared dependents: Dependents can make taxes complicated (especially with the Child Tax Credit). Unfortunately, it gets even more complicated if there's a divorce. Even if you provide financial support to someone, that doesn't necessarily mean you can claim them on your taxes.
You want to itemize instead of taking the standard deduction: If you spent more money on deductible expenses than the standard deduction allows, you'll want to itemize your deductions. It sounds simple, but it can be a lot of paperwork.
You own complex investments: Cryptocurrency is now subject to the capital gains tax if you sell it within a given tax year. If you're not careful, you could pay more than necessary or under-report if you’re not careful.
You’re self-employed and want to maximize your deductions: Anyone who is self-employed (meaning business owners, freelancers, and consultants) has to pay self-employment taxes. This is hard enough as it is, and it's far too easy to pay too much if you don't know about all of the write-offs and deductions you should be taking advantage of.
You’ve sold a major asset, like a large investment or a home: Selling a major asset changes how you pay taxes that year. For instance, you may have to pay capital gains tax. A CPA can help you determine what type tax you’ll need to pay, as well as any deductions you may be able to take to help offset everything.
Lauren Ward
Contributor
Lauren is a personal finance writer covering topics like taxes, investing, and real estate. Her work has appeared on Bankrate, Money Under 30, This Old House, and more. She lives with her family in Virginia and loves gardening and playing board games.
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