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Best tax software in 2021: manage and file federal and state taxes

Best tax software
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REASONS TO BUY
REASONS TO AVOID
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Choosing the best tax software is vital especially as tax filing time somehow always seems to be on the horizon. Filing federal taxes with the IRS, and your state taxes too are crucial tasks for most people, and deadlines are deadlines. So it’s wise to get a tax software solution to help you get the job done sooner rather than later. Tax software programs let you complete your tax returns online, so it’s pretty straightforward.

Key players in the best tax software field include Intuit TurboTax, H&R Block, TaxAct, TaxSlayer, Credit Karma Tax, FreeTaxUSA and Jackson Hewitt Online, but there are others. Tax software programs help you navigate official forms and, because they’re always being updated, conform to any changes in legislation. Our buying guide below will help you get a good idea of what the market leaders offer and their core features and functions.

You’ll need to be even more aware of federal income tax deadlines for 2021 too - see our FAQs at the bottom of this page. Keeping track of these essential dates for filing your 2020 tax return and making payments is just as crucial as having the best tax software to help you get the job done. 

The coronavirus pandemic has affected everyone, and there have been changes that take this into consideration. Again, these affect many if not all of us. All options are on offer below.

Here then are the best tax software platforms currently available.

(Image credit: H&R Block )

1. H&R Block

A versatile and good value tax filing option

Reasons to buy
+Easy to use+Great interface +Excellent free edition 
Reasons to avoid
-Tax pro advice for a fee

What’s new for H&R Block in 2021?
Perhaps it’s as a result of the coronavirus pandemic but H&R Block promises more help for this season, with a Have a Pro Do It option. You can send an enrolled agent or CPA your documents and let pick through what you’ve supplied. They can subsequently complete your tax filing forms on your behalf. H&R Block is also continuing with its keenly priced package options.

H&R Block is all about good value but supplements that with lots of support for all kinds of tax filing requirements thanks to features like Online Assist and Tax Pro Review.

Most useful to less confident users is the option of dealing with real tax experts at many outlets across the US. There’s a brilliant free edition, H&R Block Free, which offers Form 1040 filing, along with sorting child tax credits, earned income tax credit and credit for the elderly or disabled.

Adding on filing options for schedules 1, 2 and 3 means H&R Block lets you cover a host of other tax bases too. Those with more complicated needs, such as landlords or freelancers should head towards the paid versions.

This tax tool is cloud-based, though there is a desktop edition, while the interface and general workspace is clean and easy to use. It’s possible to import W-2 and 1099 forms and H&R Block also integrates with other packages.

Help is plentiful and being cloud-based means you can log-in from other devices. Add-ons such as Online Assist for CPA help and Tax Pro Review come with extra costs involved, but this is one of the best tax filing options currently available in the US.

If you do your own taxes then get started with Online, which allows you to file easily and securely from either a computer or a smartphone. Choose Free Online if you have a W-2, kids and education costs. There’s a $0 charge per State filed too.

Deluxe Online is for maximizing credits and deductions, plus HSA contributions and currently costs $49.99, plus $44.99 per State filed. You can initially start for free.

Premium Online is aimed at freelancers, contractors and investors and is currently $69.99 plus $44.99 per State filed. It also allows you to start for free.

Self-employed Online, meanwhile, normally costs $104.99 plus $44.99 per State filed. It's aimed at small business owners as well as the self-employed. That too allows you to start for free.

H&R Block’s Online Assist packages on the other hand, allow you to file online with on-demand help from a tax expert, enrolled agent or CPA. Basic Online Assist costs $69.99 plus $39.99 per state filed and suits if you have a W-2, kids and education costs.

Deluxe Online Assist is $109.99 plus $44.99 per State filed and is for maximizing credits and deductions, plus HAS contributions. You can start for free. Premium Online Assist is aimed at freelancers, contractors and investors and is $159.99 plus $49.99 per State filed. That too allows you to start for free. Self-employed Online Assist, finally, is just that with help when you need it and costs $189.99 plus $49.99 per State filed, with a start for free option available.

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(Image credit: Intuit)

2. TurboTax

A high-quality tax filing experience with a premium price

Reasons to buy
+Well-honed over the years  +Lots of functionality +Good live support 
Reasons to avoid
-Can prove costly

What’s new for TurboTax 2021?
Users will benefit from an even easier software experience this season thanks to several new features. Central to this is the ability to connect directly to your accounts from within TurboTax. This means that any relevant tax documents can be quickly uploaded and integrated into your form-filling duties. Lookout also for the interest free refund advance loan option along with a beefed up level of support from supporting tax experts.

TurboTax is not cheap to use, but it does offer a quality experience via any one of its editions. There is actually a free edition, which allows Form 1040 filing but excludes schedules 1, 2 or 3.

Therefore, most users with anything more than very basic filing requirements should head in the direction of the Deluxe, Premier or Self-Employed packages. TurboTax is an online filing service, which delivers a simple interface that is no-frills but definitely bang on target for getting the job done.

You can import W-2 information from an employer and also upload a picture of it instead, which makes light work of basic filing tasks as does being able to import 1099s. The paid for editions also feature a practical ItsDeductible feature that works in tandem with a dedicated app.

Self-employed folks can use a similarly impressive expense tracking option via QuickBooks. TurboTax works on all platforms, either via a desktop web browser or using an app-based variation on a phone or tablet.

Support is plentiful and an added bonus is TurboTax Live that lets you speak with a CPA or enrolled agent year round. TurboTax can also help you with the dreaded audit situation.

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(Image credit: TaxAct)

3. TaxAct

A simpler tax package for the budget-conscious filer

Reasons to buy
+Accuracy guarantee  +Affordable+Reasonable support
Reasons to avoid
-Quite a basic design -Extras come at a cost 

What’s new for TaxAct 2021?
TaxAct has announced new features for its latest edition, with the most prominent addition being TaxAct Xpert Help. This is an add-on service, which provides users with unlimited, on-demand, one-on-one support. The help comes from professionals CPAs and tax experts and is available seven days a week.

TaxAct has been around for long enough now to know how to help its users take on tax filing in no-nonsense fashion. While it’s often seen as a leaner, less flashy online package it does still let you get the job done easily.

There are four versions with a free edition allowing Form 1040 filing but not schedules 1, 2 or 3. So anyone with anything other than super-basic needs should investigate the Deluxe+, Premier + or Self-Employed+ editions.

The latter two come with advanced levels of support for obvious reasons. Filing duties are easily handled using the basic but intuitive site structure, plus there are some useful tools such as being able to import last year’s returns along with W-2 and 1099 forms.

TaxAct is another cloud-based online package, which can be accessed using a web browser as well as via a mobile app. A healthy level of support is on offer, but you’ll need to stump up for the better paid for versions to enjoy live assistance.

A Deluxe+ package costs $54.95, with an additional fee per State filed, and delivers everything in the free edition plus more besides. It’s ideally suited to homeowners plus those with deductions, credits and adjustments to file. 

The Premier+ model comes in at $79.95, with an additional fee per State filed, which includes everything in Deluxe+ with added features for investments, rental property and prioritized support. Top of the tree is the Self-Employed+ package, which for $109.95, with an additional fee per State filed, adds on Deduction Maximizer and year-round tax resources.

There are other options too, such as a business specific area of the TaxAct website. In here you’ll find a further four product options, such as for Sole Proprietor covering Form 1040, Schedule C, or Partnership Form 1065, or C Corporation Form 1120 and finally S Corporation Form 1120 S.

Tax Act does a nice line in bundle deals, where you can combine your individual and business tax software. You can also select downloadable editions of its Basic, Deluxe, Premier and Self-Employed packages too.

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(Image credit: TaxSlayer)

4. TaxSlayer

A more flexible solution for variable tax filing needs

Reasons to buy
+Flexible options+Very cost-effective  +Straightforward workspace
Reasons to avoid
-Support costs add up 

What’s new for TaxSlayer 2021?
TaxSlayer has been around for a long time, so it’s been carefully honed over the years. The latest edition promises even more refinement, with an enhanced user experience and adjustments to its setup to reflect the current circumstances.

TaxSlayer is a little bit different to other cloud-based tax filing software services. Most notably, it’s got a pricing strategy that lets users get full value from its many and varied features while conversely making its support level costs more flexible.

In other words, you can get great value from its four different packages including Simply Free, Classic, Premium and Self-Employed and then only pay for additional help if you actually need it. A level playing field on the features front means that any of the packages can handle the same forms, though the Free edition does exclude schedules 1, 2 or 3.

Indeed, other limitations such as a taxable income under $100,000 will likely drive you towards the paid versions, but they’re all very useful. The TaxSlayer interface is up there with the best of the competition, but it’s leaner on the features front, such as lacking more sophisticated import of forms.

Nevertheless, it ticks over nicely in either a web browser format or through a mobile app edition. Help and support is at hand on all levels, though you’ll only get use of Ask A Tax Pro expert help from the Premium and Self-Employed packages.

If you’re starting out, have relatively simple tax affairs and are single, married and filing a joint return or a student then the basic Simply Free option is a good one. It allows you to file for no outlay with $0 State included. 

TaxSlayer’s stated ‘most popular’ package is the next one; Classic which is suited to all tax situations, can be started for free and costs $17. Meanwhile, Premium offers up a swift way to prepare and e-file, with the added bonus of priority support as and when you need it and costs $37. Finally, TaxSlayer’s Self-Employed product will set you back $47. There is an additional state fee for each package.

Even at these affordable prices, a notable feature is the included phone and email support (24 to 48 hour response) on the lower tiers, and live chat on the higher tiers. There is also an online guide to assist users in choosing the best version of the program for their needs.     

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(Image credit: Jackson Hewitt Online)

5. Jackson Hewitt Online

Online tax filing with the back-up of nationwide store support

Reasons to buy
+A universal solution+Help from a professional+High accuracy guarantee
Reasons to avoid
-Can prove pricey

What’s new for Jackson Hewitt Online 2021?
Jackson Hewitt Online has made amendments to its pricing structure this season, with $49 being the universal charge for state tax filing, or $25 for federal. Lookout for improvements to the user experience too. It’s no surprise to see that Jackson Hewitt Online is now incorporating cryptocurrency transactions into its form-filling credentials.

Jackson Hewitt Online is as much about having support from real people as it is getting you from the beginning to the end of your tax return. Currently, there are three differently priced tiered packages, with a free edition costing nothing for both Federal and State Returns.

To use the free model you’ll need to have less than $100,000 annual income and only basic W-2 financial affairs. It’s pretty basic in other words. The price tiering on this option still requires you to have less than £100,000 annual income and to not be using Schedule A, but it’s useful if you have dependents and you have to factor in tax breaks.

While Jackson Hewitt Online can be accessed from anywhere with an internet connection and across platforms, it’s not as well focused for mobile users as the competition.

However, the real selling point for many will be the ability to visit a Jackson Hewitt Online outlet when and if it’s needed.

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(Image credit: Credit Karma Tax)

6. Credit Karma Tax

Tackle basic tax filing without any pricey overheads

Reasons to buy
+No charge+Easy enough to use+Simple layout
Reasons to avoid
-You’ll need a Credit Karma account

What’s new for Credit Karma Tax 2021?
Expect a better user experience with the latest incarnation of Credit Karma Tax. The new edition sports a revised navigation system that helps guide you through the various sections offering as much assistance as possible. Credit Karma Tax also got purchased by Square, the payment processing company, which could produce interesting developments further down the line.

Credit Karma will most likely be a familiar name as it’s been around for a number of years now, most notably supplying free credit scores. Its range of services now includes Credit Karma Tax, which is another online service for filing personal taxes. One of the most appealing aspects of Credit Karma Tax is that it’s free to use, although the trade-off to that is the fact you’ll need to sign up for a Credit Karma account.

If you’ve already got an account with them though it’s even easier to get started with the step-by-step filing process. Credit Karma Tax also benefits from the addition of support staff who are also on hand to help get you out of tricky tax spots.

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(Image credit: FreeTaxUSA)

7. FreeTaxUSA

Free Federal tax software that delivers a powerful set of features

Reasons to buy
+File Federal taxes for free  +State tax filing affordable  +Guaranteed to be accurate 
Reasons to avoid
-Deluxe tier for priority support 

What’s new for FreeTaxUSA 2021?
While its free credentials make FreeTaxUSA appealing it hasn’t always offered the best user experience. This year, however, there have been minor tweaks. It’s hardly a radical overhaul, but users might appreciate the warning nudges that help flag up potential issues along the way.

Getting your taxes done for free does sound like an attractive offer, and yes, the name of this product does indicate the truth. Federal taxes can indeed be done for free - for all returns including a full 1040, and even more complicated tax situations such as an Earned Income Credit, or a K-1. Adding a State return tacks on an additional fee.  

Compared to the competition, FreeTaxUSA does indeed represent the bargain here. There is a higher Deluxe tier offered, which adds Audit Assist, Priority Support and can handle amended returns.

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What are tax software programs?

You used to have to spend time collating your paperwork and filling in conventional paper forms. Now it can be done online using a tax software program. It’s often a far quicker and certainly more efficient way of staying on top of your tax affairs. The bonus is that tax software can help you build up historical data on your tax affairs, which helps complete future returns too.

Why do people need tax software programs?

Tax software programs are ideal for convenience. If you’ve got fairly typical tax matters to take care of and don’t need to see an accountant of CPA then they make great sense. Some tax programs actually combine online tax filing with advice from real advisors, either online or in person.

How much does a tax software program cost?

Now that there are many different tax software programs the competition is fierce. There are always tax software programs on special offer, along with other incentives to get you to commit to a certain brand. Some have one-off costs while others work on a subscription basis. There are even free tax software programs. Generally speaking, the more complex your tax affairs the more you’ll pay, which is much the same as if you were using a traditional accountant.

Which tax software is actually free?

It is possible to do your tax affairs for free, mainly if you have a simple tax return to file. H&R Block, TurboTax, TaxAct and TaxSlayer for example, have free editions. So, if your income comes from one job and you claim the standard deduction, that’s pretty straightforward. However, if things start getting more involved, such as if you need to itemize deductions, received income from other work or did anything else that complicates your tax picture then it’s probably best to bypass the free tax software and pick a paid-for package with features and functionality to meet your needs.

What is the tax deadline?

The IRS has extended the tax deadline for filing 2019 returns as a result of Covid-19. This means that the income tax filing and payment deadline has moved, from April 15 to July 15, which is an extension of three months. Federal taxpayers now have this date to pay any outstanding taxes due for the 2020 tax year, which would have originally been payable on the original April 15 date.

There is also the option to defer payments without incurring penalties of interest, irrespective of any amount outstanding. According to the IRS update, deferment applies to all taxpayers including individuals, trusts and estates, corporations and other non-corporate tax filers along with those who pay self-employment tax.

The IRS doesn’t require any additional forms to be filled out and there’s no need to call them in order to qualify for the relief. However, taxpayers who need extra time to file after the July 15 deadline will need to request a filing extension, using For 4868 via their tax advisor, tax software or the Free File link on the IRS.gov website. In addition, businesses needing extra time are required to file Form 7004.

This latest move is another in several government relief measures made in response to the coronavirus pandemic along with stimulus checks and boosted unemployment insurance.

What’s new for 2021?

The IRS has published guidance on what is new for 2021 and its website should be your first port of call for clarification on dates and the latest updates at source. The IRS recently announced that the tax season will start on February 12 for individual tax return filers. This will allow it to carry out additional programming and testing of IRS systems in light of December 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.

What if I miss the deadline?

It’s not a good idea to miss deadlines issued by the IRS as financial penalties could hit your pocket where it hurts. Extra interest charges for late filing could be charged and the same goes for paying any tax that’s due too. There are occasionally exceptions to the rules, where the public has been affected by the likes of the wildfires in California and others by Hurricane Delta. The obvious place to bookmark for precise guidance on this and other matters is, once again, the IRS website itself.

Are there any new tax forms for 2021?

When it comes to forms there are important issues to look out for as regards tax filing this year too, with the IRS taking the covers off two new forms. There’s a new Form 1040, which features a shakeup of the old layout and amendments to the way it is worded. 

There’s a useful option to include the signature of a third-party who can be authorised by you to liaise with the IRS to get your tax return completed correctly. You’ll even find provision for digital or virtual currency this time too, reflecting the growth in popularity of cryptocurrency.

Other areas are focused at improving the user experience, with the new Form 1040-SR aimed at making life easier for seniors with its easier-on-the-eye layout. 

Our buyer’s guide contains everything you need in terms of best tax software that can handle any changes to official forms. Most if not all tax software packages have either been updated or are undergoing overhauls to keep them fresh for 2021. You’ll see our reviews evolving as new editions get unveiled.

Tax software updates could mean anything from minor cosmetic or useability tweaks through to major amendments. Many of the more substantial updates to tax software packages take into account changes in legislation, official forms and, of course, coronavirus and the fallout from that.

You can find out more information on filing federal taxes at the IRS website.

Are there any tax software updates?

Equally, most of the best tax software applications are right on top of their game and make improvements as soon as they're deemed necessary. But you can be sure that, as and when updates, revisions or even shiny new editions of the best tax software happen, we’ll get them into this best tax software in 2021 buyer’s guide.

While the latest tax software is a huge help for tax filing purposes it might still be a good idea to talk to a tax advisor or CPA. You might find it useful to get their input if you’ve completed your return and want to be sure that everything is present and correct. However, if you’re reasonably confident about your financial affairs and they’re not too complex, then it might be that the best tax filing software will get you over the deadline without a hitch.

When will I get my tax refund?

The IRS has urged taxpayers to file electronically with direct deposit as soon as possible, using tax software products including IRS Free File partners. According to the IRS website, last year’s average tax refund was more than $2,500. 

While over 150 million tax returns are due to be filed this year, the IRS says any refunds cannot be issued before mid-February. This is to help prevent fraudulent claims and refund payments. 

What about federal taxes?

The coronavirus pandemic means that Federal income tax returns did not have to be returned until July 15 in 2020. That provided an extra three months in which to file your federal taxes. Additionally, a law signed in December 2019 means that tax breaks have been extended.

However, do note that the three-month extension for filing federal taxes did not apply to state and local taxes. You may not need to file a federal income tax return if your income is below a certain threshold, though you will need to file a return to claim a refund, such as for tax credits or withheld income tax.

You can find out more information on filing federal taxes at the IRS website.

What about state taxes?

Not every state has a state income tax. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, do not have an income tax. Others, such as New Hampshire and Tennessee tax dividend and interest income, but not earned income.

Instead, these states supplement state income in other ways, such as through property taxes, sales taxes, and a variety of other forms of small taxation.

Additionally, a number of states do not charge state income tax unless you earn over a certain threshold, so low-income workers may not have any state income tax to pay anyway.

However, there are nine states where a flat-rate state income tax is charged regardless of earnings, and these are: Colorado, Illinois, Indiana, Kentucky, Massachusetts, Michigan, North Carolina, Pennsylvania, and Utah.

It therefore remains important to be able to identify your tax liability according to the state you reside in, according to your earnings.

Which tax package should I choose?

The range of best tax software covers all bases, so it’s more than likely there’ll be a package to suit your needs. Of course, we’ve all got different financial affairs to take care of, so it’s well worth picking through the different tax software packages we’ve got listed below. 

Using a cloud-based tax software package has become hugely popular as all of your data is stored online. In many cases you can dip in and out of your tax filing, which can be handy if you need to go away and get more information. Tax software basically emulates IRS forms and procedures, so that you can easily navigate tax form filling with built-in help and guidance along the way. Some tax software programs offer mobile editions, so you can even work on the go.

How do I choose tax software?

A few factors are worth considering before you pick one to take on your tax matters. If you’re one of the many taxpayers who take the standard deduction and have a relatively straightforward return to file then one of the cloud-based solutions in this guide will certainly help you to get the job done. Credit Karma Tax is a great example, but there are variations on the theme. 

Those with more challenging tax returns to file will need a little more software muscle, which is where a cloud-based package like TurboTax Deluxe might fit the bill. Again, there are rivals that largely offer the same features and functions, as you’ll see in the overview of each product below. 

Finally, what sort of budget do you have for your tax software? There are free tax software packages, while others charge you based on the amount of features and functions you’re going to use. Meanwhile, tax software at the top of the pile lets you do everything and anything related to tax affairs, but you’ll probably pay more. Spend a bit more and you might even benefit from being able to combine cloud-based form filling with real-time tax advice from advisors.