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Wednesday, January 29, 2014

Best Tax Software for 2014

All the best tax preparation software companies have released their 2014 versions. After reviewing 15 online tax software programs and using the top products, I chose three products worth recommending this year.

The three best tax software products for 2014 are :

In a previous post, I wrote about why you should file your taxes online . Now I’m going to compare the best online tax software and explain which one will work for you.

For full disclosure, the other 2 products that made my top five are :

These products are all solid and continue to improve each year. However, they don’t have the complete feature sets or longstanding reputation of products likeTurboTax and H&R Block .

TaxACT, TurboTax or H&R Block: What is the Best Tax Software?

Simply put, all three of these products are thorough and easy to use.Additionally, these products offer more features to complete your taxes efficiently and effectively. TurboTax and H&R Block have a proven history and longstanding reputation in the industry, giving them an edge over TaxACT .


Of all the tax software on the market, none are more intuitive and reliable than TurboTax. I’ve used this product for years to file simple and complex returns. It has never let me down, and I can usually file my taxes in less than two hours.

H&R Block 

H&R Block is right there too, though. The main reason you’d go with H&R Block over TurboTax is because you value the in-person support at one of their locations.


TaxACT shouldn’t be viewed as an inferior product in comparison to the other two. The competition is just incredibly tough. TaxACT does compete with both TurboTax and H&R Block when it comes to features, but the biggest reason people go with TaxACT is because it’s the overall cheapest tax software on the market.

What Tools Make TurboTax, H&R Block, and TaxACT the Best?

The best tax preparation software have a combination of tools that other online tax programs do not. While several tax software products have a few of these features, only the best tax software offer all of them.

Some of these top features include :

  • Accuracy guarantee
  • Audit-risk identification and recommendations
  • A variety of ways to claim your refund (check, direct deposit, prepaid debit card, or even savings bonds)
  • Simple facilitation
  • Ability to import all your forms and data

Tax Software Comparison: TaxACT vs TurboTax vs H&R Block 

Since I can’t say for sure which product is best for you, I’ll present a side-by-side comparison of each tax prep software and you can decide for yourself.
The comparison below highlights the similarities and differences of key featuresfor the three products — not every single feature that exists.
TurboTaxH&R BlockTaxACT
Federal Price Range$0 – $74.99$0 – $49.99$0 – $9.95
State Price Range$27.99 – $36.99$27.99 – $36.99$8 – $14.95
EditionsFree Federal, Basic, Deluxe, Premier, Home & BusinessFree Federal, Basic, Deluxe, PremiumFree Federal Edition, Deluxe
Office LocationsNoYesNo
Accuracy GuaranteeYesYesYes
Audit-Risk IdentifierYesYesNo
Any DeductionYesYesYes
Receive Payments by Multiple MethodsYesYesYes
Prior-Year ReturnsYesYesYes
Step-By-Step GuidanceYesYesYes
All Tax Filing OptionsYesYesYes
Automatic ImportYesYesNo
Audit SupportYesYesYes
Extensive EducationYesNoNo

Online Tax Software Reviews: A Deeper Look at the Top 3 

TurboTax: The Best Tax Preparation Software 

As mentioned, I personally use TurboTax because it’s had the longest online presence and all of my information is stored there. I also think their software, tools, and ease of use are the best on the market.
  • The easiest tax software to learn, even for first-timers
  • Simple, intuitive, and logical design
  • If you get a larger refund or smaller tax due from another tax preparation method, TurboTax will refund the applicable federal and/or state purchase price paid
  • Impressive educational resources — if you need direct help, you can call them (although they have no retail locations)
  • Great deduction tools
  • Comprehensive disbursement options
  • TurboTax lets you know if you’re at higher risk for that dreaded audit and helps you make corrections as you file
  • Tools that help discover a variety of deductions associated with your home, family, running a small business, owning rental properties, education, charitable donations, and more
  • With the Federal Free Edition, you can access 1040EZ, 1040A, and 1040 forms and live chat support for no cost

H&R Block: The Best Customer Support and Service 

Although H&R Block parallels TurboTax in many respects, I rank H&R Blockslightly behind because their website isn’t as easy to navigate in certain ways.Their pricing is also a bit higher. However, all their tools are excellent and, unlike TurboTax , they provide in-person support offices where you can walk in and get help – a major plus!
  • Having physical office locations is a major differentiator (you can also get help via phone, live chat or teleconference)
  • Standout tools to help with more complex tax needs, including deductions
  • Helpful page-by-page overviews and step-by-step workflow
  • Peppered with links throughout each page to answer any questions you might have, such as “What qualifies?
  • The bookmarking system enables you to tag anything you want to go back to
  • File federal taxes for free with the At Home Free Edition, which provides many tax forms other competitors don’t, plus free audit support and representation

TaxACT: The Best Cheap Tax Software 

TaxACT offers competitive pricing and all the tools you need, including strong learning materials – as long as your taxes aren’t too complex. Many people with very simple returns are turning to TaxACT to file their taxes.
  • TaxACT offers top value, as it’s affordable without sacrificing quality
  • TaxACT provides a pre-built spreadsheet where you enter information like reporting category, sales proceeds, gains/losses, and other relevant stock information
  • Mini-alerts identify errors, along with robust learning resources that make sure you get all the help you need
  • With the Free Edition, you can file federal taxes forms for simple and complex tax returns for different statuses and life situations

Online Tax Software That Missed the Cut 

The top three tax software programs lead a pack of very well-designed and dependable products. Although these programs listed below have many great tools and definitely cover the basics, they lack a few key features.


TaxSlayer has all the fundamentals down and it’s also quite affordable. This product is especially great if you prefer to do things your own way, assuming you’re comfortable enough doing so.
  • You can choose to be guided or not, which is great if you want to bypass all the quizzes because you’re confident in your tax abilities
  • Prior-year tax form access makes it easy to prepopulate your forms and alter them to save time
  • The very helpful life events guide makes sure you correctly input information about births, a new home, etc.
Why It Didn’t Make the Cut
  • Deduction tools aren’t as strong as the top three — items like charity donations, rental properties, and industry-specific deductions aren’t identified
  • No live chat or user forum to get help instantly


Affordable and simple, eSmartTax works if you have very simple tax needs. The product did make a major update for 2014 so eSmartTax could be a competitor for a top spot next year if they continue to innovate.
  • The clean and modern interface makes the software extremely easy to use
  • Owned by Liberty Mutual, eSmartTax has office locations available for in-person help
  • You can import prior-year forms and prepopulate information to save time
Why It Didn’t Make the Cut
  • Missing some of the more common features like a life events adviser and tax calculator
  • Deduction discovery resources are very limited, which won’t suffice for more complicated taxes

How I Chose the Best Tax Software 

My Goal: To determine the top online tax software, I wanted to find the most reputable products that consistently provide:
  • a presentable, intuitive interface
  • a comprehensive suite of tools, including those for specific industries and special circumstances
  • accessible support to supplement all their filing tools

How I Selected the Top Tax Software 

  • I collected a list of 15 online products.
  • I then looked at different popularity metrics, such as web traffic and third-party reviews.
  • I came up with a top five based on their solid reputation, history of reliability, and their consistent delivery for every type of filer, from the novice to the business owner.
  • With the top five, I evaluated their performance in key areas: facilitation, disbursement, accuracy tools, and deduction discovery. The companies that excelled in all of these categories made the top three (TurboTax H&R Block, and TaxACT .
  • I also took into consideration the different editions offered by each company, including Free, Basic, Deluxe, and Premium. Free versions are almost always just for federal taxes, but they do offer state tax returns, though for a fee. The other versions simply offer more as you go up the tier.For example, Basic Editions typically include basic deduction identification tools, data importing, and more live support. When you get up to the Premium Edition, you can find tools for rental properties and other business-specific tax deductions along with advanced calculators and additional investment resources.

How to Choose the Best Tax Preparation Software for You 

First determine what your tax needs are. Do you have one salaried job and nothing else? If so, you can definitely go with a free, basic edition. On the other hand, do you own numerous stocks, freelance on the side, or own lots of property? Then a Deluxe or Premium Edition suits you better.

First-Timers: Start with TurboTax Free Edition 

Of course, knowing exactly which edition of which product you’ll need isn’t the easiest to identify right off the bat, so here’s what I suggest:
  • Try TurboTax , the best-selling and easiest-to-use tax software. It’s reliable, intuitive, comprehensive — you won’t be disappointed.
  • Sign up for their free edition.
  • You may be able to stick with their free edition if you have simple taxes.
  • If you discover your taxes are a bit more complex, simply upgrade to the next version.

Best Small Business Tax Software: Go with H&R Block 

People looking for business tax software should start with H&R Block because it’s easy to use and you can take your taxes into a local office and have them double-check it for free. H&R Block offers the best support and you’ll need that if you want a tax software for small business. You can get in touch with any questions you may have about any deductions.

Best Professional Tax Software for Experienced Tax Filers: Stick with TurboTax 

TurboTax is the best software for the independent or “professional” tax filers because the software can handle complex tax needs and it’s a breeze to use.With TurboTax , you can import your information and get started quickly. The product quickly calculates everything on the fly, including your audit risk and refund. You’d think you’re using the same professional tax preparation software used by an accountant. Again, the simplicity of the software is what makes it great for first-timers and advanced tax filers alike.

Different Versions of Tax Software 

The version you go with ultimately depends on your tax situation. You generally won’t have a say in what version you go with — your income stream and situation dictates that.

To have a better understanding of all available versions, I’ve provided you with a description of each below (keep in mind not all products offer these versions ):

  • Federal Free Edition — usually provides the resources to prepare and e-file both federal and state taxes and is generally utilized by those with the most basic tax needs. Federal filing is free, but state typically incurs a fee.
  • Basic Edition — includes all the features found in the Federal Free Edition with the inclusion of access to basic deduction identification tools and improved support.
  • Deluxe Edition — generally offers more to identify deductions through industry- or occupation-specific deduction searches. May also include more robust tools for life events, donations, stocks, and audit risk.
  • Premium Edition — generally grants access to the full functionality of the software with deduction assistance that expands to include rental properties and other business-specific tax deductions, along with advanced calculators and additional investment resources.
Written by Mike Jelinek
Best Tax Software for 2014 - The Simple Dollar

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