Learn 10 Questions To Ask When Choosing Tax Software

While tax software is simple to use, it is not always simple to choose amongst today’s software options.


For example, some software is designed for state income tax returns, while others assist you in preparing your federal tax return.

It is critical to contemplate before determining which path to choose. Before you hire someone to assist you in filing your taxes, consider the following questions about your tax software options.

Do You Prefer Online or Desktop Tax Software?

There is a good range of reputable tax software that you can install on your computer and online tax software accessed via an internet browser. Both internet and desktop tax applications have distinct advantages and downsides. For people who like to switch between devices, online software is ideal—they can begin their returns on their desktop computer at home, do a little more work on their laptop, and then finish them on their smartphones. The disadvantage is that users will have to remember login information and adjust to minor layout alterations as they transition between devices.

Whether you use online or desktop tax software, always save a hard copy of your tax return in a safe place.


What Tax Software Version Do You Need: Basic, Deluxe, or Premium?

It can be difficult to choose which version of tax software will meet your needs because one company’s basic or deluxe version does not always include the same capabilities as another company’s product. Many of the basic functions are shared by premium versions, although some have additional benefits that others do not.

When in doubt, acquire the most expensive version, including all of the capabilities you’ll need to file your tax return. Better yet, use online tax software—you can begin your return with the most basic version. Then, if the software determines that your tax position is more complicated, you recommend upgrading to a higher-tier version.

Is the price inclusive of state tax returns?

Some tax software includes a state return in the price, while others charge a separate fee for a state return. If you need to pay for a state return, be sure you understand how much it will cost.

If you lived in more than one state because you moved in the middle of the year and both jurisdictions collect income tax, you must file two different state tax forms. Even if your tax software includes a free state return, it is usually limited to one state, and you may have to pay for the second state’s tax return. Likewise, you will have to pay for two-state returns if your tax software does not contain one.

Of course, you can file state returns manually or see if your state offers free online income tax filing.

Do You Need Assistance Organizing Tax Deductions?

Suppose the tax software does not include intelligible explanations of tax rules or quick connections to Internal Revenue Provider (IRS) publications. In that case, it is usually advisable to discontinue using it and find another service. Check that the software provides the option for a tax interview, which will walk you through the process of completing a return.

Effective tax software should include a tax deduction finder tool that asks you questions to uncover deductions you may not know if you itemize your deductions. If you already use tax deduction monitoring software and have made numerous non-cash gifts, you should be certain that the tax software will import your tax deduction data.

If you work for yourself, make sure your tax software has Schedule C. If you’re a frequent investor, seek a tool that computes capital gains and losses.

Is It Advisable to Use Free Tax Software?

If you have a simple tax return, you should look into the free tax software. Most online tax software provides numerous free options, which work for even more complex returns. The disadvantage of free software is that it will nudge you to upgrade to a premium version, and the frequency of these reminders varies depending on the product. However, if you’re secure with your basic tax status, you should be able to decline all of these notifications.

Another alternative is to look into the IRS Free File program, available to all qualified taxpayers.