Which Tax Prep Program Is Right for You?

Doing your own taxes can be simple—with the right software. Check out our comparison of popular tax programs.

Which Tax Prep Program Is Right for You?

by NEA Member Benefits

Jan 25, 2021

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Nothing about taxes seems simple, but do-it-yourself tax preparation software can help speed up and simplify this dreaded annual task. This is especially important during the COVID-19 pandemic because some free services are not available and it is a viable alternative to in-person assistance.

Each year, tax prep software and online option allows millions of U.S. taxpayers to file accurate tax returns at their convenience and for a low cost. But before you do anything, first you must decide whether self-preparation is appropriate for your own situation. 

Allison Boisson, an independent tax preparer in Washington, D.C., suggests the following rule of thumb to determine when you require assistance from a real, live tax professional: “Whenever you have decisions to make that the machine can’t make for you.”

Generally speaking, if you’re divorced, own a primary/side business or have significant investment assets, you most likely should employ a professional firm or Certified Public Accountant to prepare your taxes for you.

If your situation is relatively simple—meaning you have a salaried job that reports withholding in a standard W-2, and perhaps you have some interest and dividend income, a mortgage deduction and other standard tax relief deductions, such as the classroom supplies deduction for educators—then doing your own taxes can be the easiest, most economical choice. Your Form 1040 ideally shouldn’t go beyond Schedule A (for itemized deductions) and Schedule B (for investment income).

But with so many tax prep software and online programs out there, figuring out which one to use can seem almost as complicated as deciphering the tax law.

Software that’s installed on a desktop computer has its advantages, namely in data security and storage. Online programs can be accessed anywhere there’s an Internet connection, and updates are performed automatically.

Most tax-prep programs will import data from previous returns, and some will import data from other software programs. As far as user interface goes, some offer a very basic setup, meaning you’ll fill in the numbers in empty fields. Others programs (usually the more expensive ones) will lead you through the task by asking you questions to help you complete your return.

Most programs allow you to e-file a simple (e.g., 1040EZ) federal tax return for free. Some include both the federal return and state return for the same price, while others charge extra for a state return.

We’ve compared a sampling of 12 online- and software-based tax preparation programs1 (listed alphabetically) at various price points to show the wide range of options. Most of these companies have multiple levels of online tax prep, including free versions for simple returns, to fit just about any need.

Note that as an NEA member, you get special cash-back offers on tax software and services, such as TurboTax, H&R Block and more, through NEA Discount Marketplace. Look under “Office Supplies,” then click on “Tax Preparation” to find related offers. 

 
Name         Cost       Source     Tax Help    Federal/State Return

Credit Karma Tax

$0

Online

Email and chat

Federal and state included

eSmart Tax Basic2

$44.95

Online

Email, chat, social and in-person support

Federal included; $36.95 for state return

Express Tax Refund Basic

$29.95

Online

Phone

Federal included; $25.00 for state return; additional costs for itemized deductions, credits and more

H&R Block Deluxe Online

$23.99

Online

Phone and Live chat

Federal included; $36.99 for state return

Jackson Hewitt Online

$49

Online

Phone, live chat, in-person

Federal and state included

Liberty Tax Basic

$44.95

Online

Email and Live chat

Federal included; $39.95 for state return

OnLine Taxes – Free Edition 
(for AGI between $14,000 and $69,000)

$0

Online

Email

Federal included; $9.95 for state return

TaxACT Online Free

$0

Online

Tech support via chat, email, phone

Federal included; $4.95 for state return

TaxACT Online Deluxe

$24.95

Online

Tech support via chat, email, phone

Federal included; $44.95 for state return

TaxSlayer Classic

$17

Online

Email and phone

Federal included; $32 for state return

TurboTax Deluxe

$30

Online

Phone, on-screen, online community, videos

Federal included; $40 for state return

TurboTax Deluxe Software Download

$70

Desktop, tablet

Phone

5 Federal included; 1 state download included

TechMedia Network, a technology and science media company, evaluated many of the tax preparation programs in this chart and rated them according to use. FreeTaxUSA was rated best for free returns. TurboTax was rated the best for overall advice and options. The free version is good only for basic returns, while the Deluxe Edition has tools to maximize tax credits and an even more expensive version helps self-employed and small business owners find industry-specific deductions. H&R Block was rated best for customer support.

The IRS has partnered with many companies to provide free web-based tax preparation services, but only if the taxpayer’s adjusted gross income is less than $69,000 (individual or joint filings). Read more about ways you could file your taxes for free. Be sure to apply to these free services only through the IRS website as scammers pretending to be members of the Free File Alliance may offer their “services” directly. Visit the IRS website for more information.

Given the upsurge in ID theft on tax returns, the IRS has made using a special identity protection (IP) PIN number mandatory.


1 As of 1/25/21. Other fees may apply depending on your tax situation. Check each product’s website for the most up-to-date pricing information and current promotions.
2 eSmart Tax is a division of Liberty Tax Service.
NOTE: All of the information in this article is accurate as of January 25, 2021.

Earn cash back on tax preparation