Here are the best options to file your taxes ranging from free DIY software to letting a tax pro do everything for you.
100% Free for State and Federal: Cash App Taxes
Cash App Taxes offers 100% free state and federal tax filing for everyone. Unlike IRS Free File, there are no income requirements or restrictions on what forms you can use.
The only downside that many people don’t need or use is that there are no additional services. You can’t pay for audit protection or to have a tax expert help you. If you have a simple tax return, this usually won’t matter.
Cash App Taxes took over Credit Karma Tax for the 2021 tax filing season. Cash App is a money management app that you don’t need to use but the company is promoting by offering free tax filing.
Get Live Help for a Small Fee: TaxSlayer
TaxSlayer has several tiers of service ranging from a basic free tier to $59.95 for self-employed filers. State tax returns are $39.95 per state.
The biggest benefit of TaxSlayer is that even though it’s DIY software, you’re not alone. You can get live chat, phone, or email support any time you need it.
Let Someone Else Do the Work: H&R Block
H&R Block will do your taxes for you if you have a complex tax return or just don’t want to do it yourself. They offer multiple options including making an appointment at their office or talking to a tax professional by phone or video.
Other Tax Filing Software Providers
- Most tax filing software providers charge based on what forms you need.
- Many have a free tier if you only have a W-2 but charge if you have common deductions like mortgage interest, take common credits like the child tax credit, or have self-employment income including in the gig economy.
- Several services now offer live help from tax professionals to assist you while you file your return.
- A handful give you the option for full-service remote tax preparation (upload your forms, and they do the work).
|Provider||Price Range||State Returns||Live Support||Full-Service|
|Cash App Taxes||$0||$0||No||No|
|H&R Block||$0 to $$$||$44.99||Yes||Yes|
|Liberty Tax||Not Listed||Not Listed||Yes||Yes|
Cost to Hire a Tax Accountant
The cost to hire a tax accountant will vary by where you live and the complexity of your tax return. Even a basic Form 1040 starts at several hundred dollars in most markets.
There are two reasons for these costs.
- Tax accountants generally don’t do tax returns you can easily complete with tax filing software. They’re not as profitable unless they charge a minimum fee you may not find worth it.
- Tax accountants are also charging for the advice they give. So you might use a tax accountant for a simple tax return when what you really want is help coming up with a tax strategy for your investments, deductions, or other moves.
How to Choose Tax Filing Software
Key Things to Consider
- Cost: All the major online tax filing companies are very similar. If one is free or substantially cheaper, it’s probably a good choice.
- Live support: If you don’t want to be completely on your own, consider a service that offers live support. However, you may want to give the self-service version a try to see if you need that extra help.
- Guarantees: Most online providers will provide a guarantee that you will get the biggest refund and/or that they’ll defend you in an audit. However, this is usually limited to their errors. For example, they had a math error in a form or had incorrect guidance in their questions. You can also sometimes purchase audit defense services that cover you if you did something wrong.
- State returns: If you need to file a state tax return in one or more states, check that they support your state.
- Other tax forms: You may have other uncommon types of tax situations such as retirement account withdrawals, rental properties, or income from a partnership or corporation you own. You’ll also need to check if each provider offers those forms and whether they charge more to add them.
Other Important Things to Know
You’re on your own for your mistakes.
When tax filing software guarantees you won’t get audited, or they’ll pay for it, read the fine print. It almost always means that if they program the software incorrectly and it makes a math error, they’ll pay for that. They won’t pay for you checking the wrong box or forgetting to include something. If you want audit support for something you did wrong, you usually have to pay extra when you file your federal return.
Tax filing software is more of an easier way to do your taxes by hand than it is a complete replacement for a tax professional. If you don’t know what you’re doing and why and have anything complex on your tax return, there’s a good chance that you could make a mistake that you’ll end up paying for in interest and penalties.
You still have to keep a copy of your tax return.
Don’t rely on a tax filing service to keep a copy of your tax return. They may delete it if you don’t come back next year, they may go out of business, or you may even forget who you filed with. This could mean trouble if the IRS comes for an audit and you don’t have a copy of your return. Always print a copy or download one to your computer.
No one can guarantee you a bigger tax refund.
Your refund is based on what you did during the year plus maybe some last-minute moves like IRA contributions. Every software should give you the same refund unless there’s something wrong with it. Pick the one that’s easiest to use and has the best price.
You can still mail a tax return.
Some people get confused by electronic filing requirements for businesses or tax professionals. Individuals don’t have to file electronically. You can print the forms off of the IRS website or some other source, do them by hand, and send them in by mail if you choose to.
Your data may be the product.
Some free services openly sell your data. It’s usually not yours individually, but they aggregate it and sell statistics to marketing companies. For example, “X people in Y city filed a Schedule C last year.”
Tax software works best for simple returns.
Tax software companies target the masses who have simple tax returns. If you have the same tax situation as millions of other people, they’ve probably thoroughly tested everything and included good explanations of what you need to do. If only a few people have your situation, there’s a greater chance the software won’t support it, has undiscovered bugs, or only gives you the forms to figure out with no guidance.
The good news is that most people have simple tax returns even if you don’t know it. Tax software doesn’t just fill out forms. It asks you questions to guide you on what you need to do.