Picking the Best Tax Software for YOU (2022)

Mar 24

Mar 24 Picking the Right Software for This Tax Season

As the air gets warmer and the sky gets sunnier, a familiar feeling of vague anxiety creeps in. That’s right, it’s almost time to do taxes. Ugh. The anxiety manifests in the same questions each year. How much am I going to owe this year? Will I get anything back? Why does the government take so much of my paycheck? If I donate my body to science, can I claim it as an itemized deduction?

I’m pretty sure the answer to that last question is no. Then again, I’m hardly a CPA. That’s why I use software to do my taxes. When it comes to picking a tax software, H&R Block and TurboTax quickly rise to the top. But what exactly do you get with their software? Read on to see how these companies differ, and how to choose the software package that’s perfect for your needs.

Why tax software?

Let’s start with the obvious question. Why do I need to buy software at all? TurboTax and H&R Block both offer free online filing on their websites. Why not just do that?

You certainly can forgo software for the free online version. This might even be ideal if you only have one employer and don’t want to bother with lowering the amount of taxes you owe through deductions. But hey, who doesn’t like paying less on their taxes? And chances are, you’ll save more by buying the software and getting a bigger tax return than you would using the free online version and owing more come April 15th.

The next question is why you would need to buy new software each year. The answer to that is simple, though thankfully it’s something we don’t have to think about much: Tax laws change each year.

A few years ago, I moved for work and deducted moving expenses. Right now, only military personnel can do that. If you do any driving for volunteer work, you can take a deduction for your mileage, but this usually changes by a few pennies every year. If you drive a lot for volunteer work, this adds up quickly.

The 2021 software versions (it’s 2022, but you’re filing for income in 2021) have all these changes already there, so you don’t need to read through 20 pages of form instructions to figure this all out. After all, wouldn’t you rather go hiking instead?

Let’s dive into each of these companies and see what they have to offer this year, starting with TurboTax.

TurboTax

TurboTax is owned by Intuit, the same company that owns Credit Karma, Mint, QuickBooks, and Mailchimp, so you know they know their stuff when it comes to handling finances. TurboTax software comes in a wide range, from basic federal returns to complex corporations. Most of their packages are compatible with both Mac and PC.

TurboTax Basic

This is the bare-bones tax software. Use TurboTax Basic if you have a relatively simple tax situation and you live in a place that doesn’t have state income taxes. At first glance, it looks the same as the free online version, but use this over the online version if you have money in investments or a mortgage.

TurboTax Deluxe

TurboTax Deluxe is the next level up. If all your income is from employer(s) and you want to itemize deductions like medical expenses, moving (for military only), or donations to charity, get this software. There’s a federal only version if you don’t file state income taxes. There’s also a federal + state version, but pay attention to the fine print. This and all the other TurboTax state software packages will file the federal return, but give you the state return as a PDF to send in yourself.

TurboTax Premier

TurboTax Premier is the one to get if you have income from rental properties, trust funds, or stock sales. It walks you through claiming deductions on these types of income to get the most on your tax return. It includes the Audit Risk Meter, which helps you avoid the ever-dreaded audit.

TurboTax Home & Business

Self-employed? Freelancer? Small business owner? TurboTax Home & Business is the right software for you. It has everything in the Premier version, plus it lets you enter income from 1099s. It also includes the Audit Risk Meter. Bonus, it generates the 1099 for you and W-2s for any employees you have.

TurboTax Business

Last but definitely not least, TurboTax Business is the go-to for larger businesses, including S-Corps, C-Corps, and multi-member LLCs. Use this for your corporation or partnership if you file business and personal taxes separately. It helps you get industry-specific deductions and determine asset depreciation. Bonus, you can save time by importing your records from QuickBooks.

H&R Block

Let’s switch gears and look at TurboTax’s biggest competitor, H&R Block.

The classic brick-and-mortar tax company also offers tax software. Just keep in mind that if you purchase the software, try to avoid going into a store if you need help. The local store will charge you for any forms they file for you, and it’ll be a lot more than what you already paid for the software.

This year, H&R Block is offering a bonus perk. If you buy one of their software packages through their Amazon store, you can increase your return by 3% when you get your return as an Amazon gift card. If you’re like me, this is enough to make your mind up by itself.

H&R Block Basic

H&R Block Basic gives you the most bang for your buck if you only have income from W-2s and 1099s and you don’t need to file state taxes. You can itemize deductions and even import last year’s return from TurboTax. If you do have state income taxes to file, you can do this for an additional fee.

H&R Block Deluxe

If the Basic version isn’t quite enough for what you need, H&R Block Deluxe is all that and a bag of chips. Or at least a bag of more features. It helps you itemize real estate and mortgage interest for a higher deductible. You can also report income from investments, retirement, and home sales. This comes in a federal only version and a federal + state version.

H&R Block Premium

H&R Block Premium is the way to go if you’re self-employed or own rental property. It helps you maximize deductions for business expenses. You can also use the tax calculator to figure out the cost basis of assets. Premium includes 1 state tax return for download, too.

H&R Block Premium + Business

Have a larger business with employees, vehicles, or business partners? Get H&R Block Premium & Business. It does all the stuff that Premium does, and so much more. You can create payroll forms and W-2s. You can calculate asset depreciation. You can even use this to file for your nonprofit.

When it comes to tax preparation, there are a lot of options out there. Hopefully now your tax-seasonal anxiety has calmed down enough to take that first step and choose the software that works best for your situation. All these software packages are designed to make filing your taxes easy, so from here on out it’ll be smooth sailing and sunny skies!