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Instead of paying a professional to do their taxes, an increasing number of U.S. taxpayers are doing it themselves. The IRS reports that 9.8 million tax returns were self-prepared and e-filed last year, a 14.2 percent increase over the previous year.
Though the look and feel of user interfaces vary some across brands, the key differentiator between tax preparation software is price. Products range from free to more than $100, but most taxpayers should find the lower-priced products more than adequate. Several brands even offer free federal products, though most only include forms for "simple" taxes, meaning forms for Form 1040EZ and non-itemized returns. TaxACT is the only free federal product that includes all e-fileable forms for simple and complex returns. If you're not sure what forms you need, start with the free product. You can upgrade if you need or want to later. State returns usually cost extra.
Besides product fees, look at any fees for tax help and electronic filing of your return. Fees for one-on-one tax and technical help vary widely. While some brands offer "free" help, their software costs more. You pay for help whether you use it or not. Take a close look at product websites and consider checking out expert reviews in top technology and software publications.
Whether you're new to tax preparation software or switching brands, don't be afraid to take a couple products for a test drive. Paid products typically don't require payment until you print or e-file, and many brands allow you to try the products without creating an account. Downloaded software often comes with a money-back, no-questions-asked guarantee. If you have time to spare, you could enter your data in two products and compare results.
