Tax Preparation Software Review 2022

Tax time is here and if you had withholdings on your pay or made over $12,950 you have to file taxes. The easiest way is online with tax website and you have a lot of choices. You can file taxes easily without any upgrades offered to you. If your Adjusted Gross Income (AGI) is under $73,000 and you use the standard deduction, filing your federal taxes are free. 

 Reviewed tax programs based on ~20 years of filing tax returns online while running businesses or an employee. Prepared tax returns for family members and friends since 1978. Encountered several challenging situations was able to solve and file using different programs. Finished my taxes in 2.5 hours despite state filing and complexity of situation. Takes time to look up all the forms required.

 

Don’t overpay to have taxes done. Approximately 90% of filers only need standard 1040A. Discounts for filing are everywhere from banks, credit cards, credit unions, financial websites, group and employee discounts. Saved $50 this year alone on federal and state filing taxes.

 

AGI is your gross income less 401K/HSA deductions plus interest & investment income. If your income is over $73,000 you can shop several programs below. Standard deductions of $12,950 for singles and $25,900 for married couples are what most people need. Itemizing is possible if you have higher expenses for business, medical, mortgages and charitable deductions.

 

On the IRS.GOV home page click the box “Do Your Taxes for Free”. Click the box “Choose a Free File Online Product”. Then you can read which programs you qualify for. IRS.GOV provides “Lookup Tool” to prequalify you showing which programs work for you.

https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

 

Tax terminology is confusing. Publication 17 “Your Federal Income Tax (for Individuals)” provides a Free reference (PDF) explaining in plain language more detail what you to do in each tax section and box no if you have questions. Is my bible from preparing my taxes on paper. Between Publication 17 and Google have figured out several complicated situations correctly.

 

Recommend all these programs:

 

FreeTaxUSA.com - did my sister’s taxes in about half hour. One year she needed to cash in a savings bond requiring filing Schedule B Interest form. FreeTaxUSA has simple navigation between sections and help explanations were short and easy to read. Comfortable to use. If you have any experience with a 1040A, provides basic support. State return costs $14.99.

 

CreditKarma.com - expanded into tax preparation. Federal and state returns are free provided you sign up for an account. May not be able to use if you need a few special forms. No personal support like more expensive programs. A good choice if you made over $73,000.

 

TaxSlayer.com - Not used but gets great reviews. $0 Simple tax return including state tax return. If you don’t qualify for free starts at $17 plus additional for state return. Premium is $37 and Self Employed is $47. Works for most people comfortable filling out forms with basic support.

 

TaxACT.com - used for sister’s returns many years. Program for those who are comfortable filling out forms with basic support. Highly recommend. Lot of discounts available.

 

TurboTax.com Online & Phone App - Using almost 20 years now and is my favorite. Software suggests deductions you may have missed. Excellent online and community support if you have questions. Professional support is available too. eFile is painless. If you have business, investments, side hustles and itemize worth the money. Upsell offers get annoying! Highly recommend TurboTax. Lots of discounts available.

 

H&R Block Online & Phone App - One of the largest nationwide tax preparer organizations. Their training is the standard CPAs take annually to know tax law updates. Have not used myself, but Dad and Mom worked for H&R Block after retiring. Reviews are good too. Online provides Free, Deluxe, Premium and Self Employed levels that are higher priced. If your situation is more complicated well worth the money.

 

CPA/Tax Preparers - If you have multiple businesses, investments or rental properties well worth the investment for advice, professional contacts and guidance. Recommend my former CPA in CA any day. Wish had income and those investments to use one.

 

Online tax programs are updated daily, very accurate, and catch errors or typos. E-filing and direct deposit is the way to go to get your refund in weeks. Most of us a simple process of 1 to 2 hours. Start with all your forms to fill out data. Know you can do your taxes easily at minimal cost.

Rebuilding Our Economy

When businesses go back to work, they will not need all former employees depending on the industry. Possibly 1 in 5 people will be out of work.

Before the pandemic the middle class was already suffering. 44% of workers are low wage with median incomes of $10.22/hour ($18,000/year) and 3 of 5 are the only earner in their families. They are scrapping by or working multiple jobs to support their families.

The way to grow the US economy is focusing on helping the middle and lower classes. Big businesses cannot employ everyone out of work. State and Local governments are low on funds. Most new jobs will be created by small and one person entrepreneurial businesses. Incentives, aid and opportunities must be aimed here to grow wealth and consumer spending.

Remove Red Tape

Simplify creating, registering and licensing businesses. Takes significant time just to get started. That time is needed to find customers and do work.

Collect Income Taxes and Social Security Weekly

Self employed income varies wildly when and how much you earn. Currently payments are made quarterly. When self employed had to guess withholding high every quarter to avoid penalties. Difficult for people with little savings. Collect weekly and calculate how much. 90%+ of people file standard deduction taxes. Modern computer networks can calculate this easily.

Give Incentives to Work

If you work part time on unemployment, you lose 100% of your benefits for every dollar earned. Social Security only cuts 50% above $1,470 per month. The more often someone work, the more motivation and skills to earn more.

Incentives for Hiring Full Time

Businesses prefer part time because they don’t have to pay benefits. Find a way to fix that.

Health Care for Self Employed

Very expensive middle and older workers. Typical is $500-$1,000 per month. Find a public-private partnership to insure blocks of workers. Medical illness causes ~2 of 3 bankruptcies. Everyone needs to be covered.

How to Pay

Income taxes will have to increase. Capital gains should increase and the definition should go back to investments over 3 years.  Neither of those is enough. A consumption (VAT) tax will be necessary like most other countries do. BTW ‘Tax the Rich’ is a fantasy, however they should get less deductions under current tax rates.

Rebuilding the economy is complex task. Too much spending or debt may break the system or value of the dollar. Compromise and stepping up to challenges is what is needed. Write your congressmen and senators.

Last Minute Tax Advice / Software Review

 

Taxes are due Monday April 18^th 2016. If you haven’t filed, at least file an extension by Monday. Suggest you send an estimated payment with the extension request to avoid interest and penalties. Did that successfully when self employed and records were misplaced during our move.

All is not lost if you haven’t started. Did my own taxes and my sister’s taxes last weekend. Online tax software is wonderful and free if you earn less than $62,000. Very affordable for everyone else as well.

SCAM ALERT - the IRS will only contact you by mail. Ignore any scammer who calls, texts or emails you. The IRS will not arrest you without giving you time to repay first. Anyone who wants a prepaid card or Bitcoin is trying to Steal from you. Hang up and don’t answer them. See more on irs.gov website.

The big 3 tax software companies are TurboTax, HR Block and TaxAct. Used 2 out of 3 online software over the weekend to file taxes.

TurboTax used over ten years, except when had a CPA for my business. Very simple yet detailed questions to get you every deduction you deserve. Support, descriptions, and researching tax / system questions has improved every year. Millions love TurboTax. There are different levels and prices depending on the complexity of your return. As an employee with a home mortgage & charities was simple. Even had a discount through credit union & Costco this year.

Only annoyance this year was the upselling as you answer questions. Patiently had to say no upgrades and did not need audit protection. Did have one technical issue, which has happened before. Imported a form from my bank to save time. During the review before filing that form caused an issue. Had to delete the imported form and type the data in by hand to resolve it.

Overall give TurboTax a 9 out of 10 and highly recommend it.

My sister earns below the poverty line, but is self-employed and rents out a room. She has the most complicated taxes. Last year used TurboTax to file her taxes, but this year could only do the EZ/A form for free. Would have had to upgrade to a higher level. Had to use another software for her taxes.

She had used TaxAct before, so tried that instead of paying. TaxAct has a great feature, importing a PDF of last year’s taxes. That saved a lot of data entry and time. The questions were basic and easy to understand. Referred to last year’s tax forms, and was able to complete & E-file her taxes on the first try (for free).

Highly recommend TaxAct for preparing your taxes, especially if you are below $62,000 income. Give TaxAct 8 out of 10.

HR Block has online tax software with a great reputation. Do not have personal experience, but expect it is as good as TurboTax and TaxAct. E-filing your taxes online is the way to go. The other benefit of online software is always having the latest software and security updates versus buying a disk.

Don’t panic. Get your W-2’s, bank statements, and charitable deductions together. Then sign in to one of the big 3 online services. If you get stuck on a question, search inside your software. Next Google the question, including your software name. Someone has figured it out before you. You can be done with taxes in a few hours.

Hope you even get a tax return this year.