The Best Tax Software For Your Filing Status In 2021

The year 2020 was a strange one for everyone. The pandemic shut down the economy for much of March and April forcing millions of Americans to rely on stimulus money and unemployment checks to cover the bills. And the slow recovery has forced many people into the gig economy or self-employment to make ends meet.

While these changes helped many people through the worst of the economic turmoil, they may yield some tough surprises come tax filing time. Fewer people than ever will have “simple” tax returns. That could lead to difficult tax filing and unexpected “upgrades” that require filers to pay extra. This year, more than ever, there is no “one-size-fits-all” for the best tax software.

Well, we’ve been reviewing all the major options this season, including TurboTax, H&R Block, TaxAct, TaxSlayer, Credit Karma Tax, Tax Hawk, and more. If there’s something you think we’ve missed, or don’t quite know which is best for you, let us know in the comments! We’ve seen them all (including some random ones you’ve probably never heard of), so we’ll try to point you in the right direction.

Note: The tax prep offers that appear on this site are from companies from which The College Investor receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). The College Investor does not include all tax prep companies or all tax prep offers available in the marketplace, although we are always striving to keep our content updated.

Best Overall: H&R Block is our choice for the best overall tax software. It’s either “best” or “runner-up” in most categories. And while other select products may niche down, most tax filers will find the combination of robust offerings, price, and the ability to go in-store if needed as a huge win. Check out H&R Block here >>

Best Free Tax Software

If you qualify for a free file, you need to be taking advantage of it. Unfortunately, free filing software is something of a unicorn. Only one company, Credit Karma Tax, offers free filing for all users in 2021. With that in mind, these are the two most robust free filing programs in 2021.

If you think you “should” qualify for free filing in 2021, be careful. Read the section on maximizing credits and deductions as well. While many tax programs advertise free filing, many don’t deliver. You don’t want to start filing with one software only to be forced into an upgrade.

Winner: Credit Karma Tax

Why: Why: Credit Karma Tax is the only major software program that provides free state and Federal filing for most tax situations. The semi-guided navigation and “freebies” like Audit Defense make Credit Karma Tax software that’s tough to overlook. If you qualify, consider using it.

Runner Up: H&R Block Free Online Tax Filing

Why: H&R Block Online Free Online Tax Filing has one of the easiest to use software services, and it has expanded what filers qualify for free. In 2021, you can claim W-2 income, Unemployment Income, and Retirement Income. The free filing offer includes the Child Tax Credit, education credits, and student loan interest deductions. It also expands to the Earned Income Tax Credit (EITC).

Unfortunately, not everyone will qualify for free filing with H&R Block. For example, those with daycare expenses or HSA contributions will need to upgrade.

Best Tax Software For Maximizing Credits And Deductions

Historically, we’ve called this category the best software for itemizers. However, the Tax Cuts and Jobs Act led to fewer people needing to itemize. Despite the changes, many people still need to maximize credits and deductions. You may need to maximize your credits and deductions under the following circumstances:

  • You paid student loan interest.
  • You paid for higher education expenses.
  • You contributed to a Retirement Account.
  • You paid child or dependent care expenses.
  • You contributed up to $300 in charitable expenses, and you don’t plan to itemize.
  • You contributed to an HSA.
  • And more…

You should not have to pay extra to take advantage of all these credits and deductions. These are the two software packages we recommend for maximizing your return.

Winner: Credit Karma Tax

Why: Credit Karma Tax offers an easy-to-use service that’s free for all filers (who qualify). If you need to claim student loan interest, Credit Karma Tax makes it easy. Plus, you can claim any side-hustle or self-employment income for free too! That’s a great bonus for folks who are hustling to get rid of student loan debt quickly.

Runner Up: TaxHawk

Why: TaxHawk offers free Federal filing for all users but requires users to pay $12.95 per state. Despite the $12.95 price tag, TaxHawk is a bargain for all users. It also offers an upgrade for Pro Support. That means filers can ask a tax expert their tax questions before filing.

TaxHawk can be a bit more difficult to navigate compared with top-flight software (H&R Block, TurboTax, and TaxSlayer), but the price is right. And the user experience is superior to many mid-tier software packages.

Best Tax Software For Student Loan Borrowers 

In the United States, student loan interest is an adjustment to income. That means you don’t need to itemize to qualify for the student loan interest deduction.

Unfortunately, most major tax software companies require an upgrade if you want to claim this deduction. Both of our software recommendations allow users to claim this valuable deduction for free.

Note: In 2020, due to the Covid-19 student loan forbearance, many borrowers paid little interest on their student loans (given loans were paused March-December). As such, you may be in for a surprise for how little your student loan interest deduction is this year.

Winner: H&R Block Free Edition

Why: In 2021, H&R Block offers free filing for anyone with Student Loan Interest or Education expenses. H&R Block has amazing usability and is ideal for many people with W-2 jobs.

However, you will want to watch out for gotchas. If you paid for dependent care expenses, contributed to a traditional IRA or a Health Savings Account, or had charitable contributions, you’ll want to skip H&R Block Free.

Runner Up: Credit Karma Tax

Why: Credit Karma Tax offers free state and Federal filing for all users. It’s not quite as usable as H&R Block Free Edition, but it offers more deductions for free.

Best Tax Software For Cryptocurrency Traders

The IRS released guidance for cryptocurrency investments in 2014, but it only clarified guidance starting in 2019. The tax software systems are still playing catch-up to help crypto traders, and few seem to offer integrations that make tax filing easier.

While every tax software we reviewed had some basic questions about cryptocurrency, most did not offer easy integrations with crypto wallets. Because of the lack of quality integrations, we declared one winner. We also reviewed a “helper” option that can help you file using any software

Winner: TurboTax Premier

Why: TurboTax makes it easy for Coinbase customers to import transactions into the tax software. Once you import your transactions, TurboTax does the math to help you declare profits and losses. You will need to upgrade to TurboTax’s Premier level to access this software.

Surprisingly, no other major software product offers integrations like these. It’s a sensible offering that we would like to see expanded next year.

Runner Up: CryptoTrader.Tax

Why: CryptoTrader.Tax isn’t a tax software, but it can help you figure out the tax implications of your virtual currency trades. If you’ve made fewer than 100 trades, you will pay just $49 to have a Form 8949 created (necessary for filing taxes). 

Once you have your Form 8949, you can use just about any software to file. The price for CryptoTrader.Tax increases steeply after 100 trades, so more enthusiastic traders may be better off using TurboTax to file.

Best Tax Software For Stock Market Investors

Filers who only place a few trades per year have several tax filing options. For example, TaxHawk or Credit Karma Tax can easily handle these situations. However, people who trade more than 100 positions per year will not want to manually enter their trades.

Our two preferred providers are the most expensive. However, they make tax filing simple for stock market investors. In this case, sometimes your time saved is worth the slightly higher cost.

Winner: H&R Block Premium

Why: H&R Block Premium allows users to upload Tax Forms from their brokerages. H&R Block will then use those forms to figure out the filer’s taxable income. It also imports up to 500 stock trade transactions per brokerage (1099-B Forms). Then H&R Block takes on the burden of calculating your capital gains taxes. H&R Block Premium isn’t cheap, but the time savings is well worth the price.

Runner Up: TurboTax Premium

Why: TurboTax offers similar functionality as H&R Block. It integrates with tons of brokerages including robo-advisors like Betterment or Wealthfront. That’s a big deal as robo-advisor customers may have hundreds of transactions per year due to tax loss harvesting. 

TurboTax’s point and click interface offer superior usability compared to H&R Block. However, the enhanced usability fails to justify the higher price tag. Most users will save money by using H&R Block Premium.

Best Tax Software For Landlords

Landlords have some of the most complicated returns, along with business owners. Keeping track of income, expenses, and depreciation on a property can be tedious, but they are essential for tax time.

We look for software that makes calculating depreciation easy and allows for easy import of prior-year information to ensure continuity across returns.

Historically, we’ve recommended TurboTax as a superior software for landlords. However, the high price tag is leading us in other directions this year.

Winner: H&R Block Premium

Why: Figuring out depreciation and other rental expenses is a real pain. Even after half a decade of rental property ownership, I struggle to explain how these deductions work. Thankfully, H&R Block makes it super easy to claim the appropriate deductions. The built-in calculators are easy to understand. Plus, the guidance is written in plain English. As a result, filing taxes as a landlord is made simple.

Runner Up: TaxHawk Pro Support

Why: TaxHawk isn’t as slick or easy to use as H&R Block or TurboTax. However, it is competent software. And with the introduction of “Pro Support”, many landlords will be able to have personal tax questions answered by a pro.

TaxHawk’s built-in calculators are easy to use. Its Schedule E (rental income section) is one of the best parts of the software. Of course, the software isn’t seamless. But given the bargain price tag, it’s well worth the consideration.

Best Tax Software For Side Hustlers

This year, we’re separating side hustlers from small business owners because there is a difference we’ve been noticing in how returns can be handled for each. Side hustlers, in our tax definition, are people who are working in the gig economy on the side, or have small income on the side from selling stuff on eBay, etc.

The interesting thing about side hustlers is that they use different expense tracking apps (like Everlance), and they may be eligible to file a Schedule C Section1 only. 

Winner: TaxSlayer Classic

Why: TaxSlayer gives users access to all tax forms at its Classic level. Given the low price point, and the extremely robust software, this is a great deal. Unfortunately, the Classic level doesn’t include Pro Support or Audit Defense. But it’s a great deal for filers who want a great user interface but don’t need the extras.

Runner Up: Credit Karma Tax

Why: Credit Karma Tax allows side-hustlers to prepare their tax returns for free. Credit Karma does a great job serving up information bubbles throughout the software to allay your fears about filing your Schedule C. The free price tag and usability make Credit Karma Tax a great choice for people who don’t have to deal with too many expenses. 

Runner Up: H&R Block Premium

Why: H&R Block Premium allows users to report self-employed income and basic expenses (no depreciation). It’s an easy-to-use software that even allows users to import expenses from several bookkeeping apps. The price tag is higher than some alternatives, but it is likely worthwhile if you’re unsure about how to file.

Don’t Forget About Bookkeeping Apps

No discussion about tax-filing is complete without discussing bookkeeping apps. If you keep good records, it’s easy to file a Schedule C for your side business. The two apps that I use are Tiller Money (for expense tracking) and Everlance (for mileage tracking). If you don’t have a bookkeeping option, I strongly recommend these two apps.

This year, I also tried out Keeper Tax for the first time. The text-message based interface is perfect for people who hate bookkeeping. The $11 per month subscription includes access to a bookkeeper who manually reviews expenses for you. At tax time, you can pay $39 for a summarized expense report.

Best Tax Software For Small Business Owners

Small business owners have a lot to think about when it comes to their tax returns. Beyond just entering income and expenses, there are considerations around business structure, asset depreciation, individual retirement plans, and more.

While many small business owners would likely benefit from an accountant, those that want to DIY it need to have software that is up for the challenge. 

Winner: TaxSlayer Self-Employed

Why: TaxSlayer is an often-overlooked software. It’s far less expensive than H&R Block and TurboTax, but nearly as usable. In 2021, TaxSlayer is finally winning an award. It is hands down the best Tax Software for Self-Employed Small Business Owners. 

It’s got excellent functionality, plenty of info bubbles designed for Small Business Owners, and expert Tax Support. TaxSlayer is about two-thirds the price of our Runner-Up and offers more valuable perks.

Runner Up: TurboTax Self-Employed

Why: TurboTax held the title of best tax software for small business owners for several years. This year, it was knocked down to runner-up. TurboTax boasts of an easy-to-use interface and connectivity with Quickbooks.

It also allows self-employed people to figure out the maximum contribution you can make to a solo 401k. Unfortunately, one of our favorite freebies (free access to Quickbooks) is gone. Without this freebie, TurboTax Self-Employed isn’t quite as compelling as TaxSlayer this year.

Best Value For Experienced Filers

Experienced filers don’t necessarily need guidance to get through their taxes. These filers may just need the forms and some calculators to help them through the tough parts. These are bargain software options for people who know what they’re doing.

Winner: TaxHawk

Why: TaxHawk doesn’t have the guidance that TurboTax and H&R Block have. But it’s easy to use and offers access to all major tax forms. With free Federal filing and $12.95 for state filing, you’ll be hard-pressed to find a better deal. 

Now that TaxHawk offers “Pro Support” as an upgrade, experienced filers can pay to have their personal tax questions answered. The low price combined with usability makes TaxHawk a steal that experienced filers shouldn’t miss.

Runner Up: Credit Karma Tax

Why: Credit Karma Tax is completely free, and is an amazing software product for experienced filers and beginning filers alike. The one drawback to Credit Karma Tax is that it doesn’t cover all tax situations. If you moved in the middle of the year, or you have a K-1 form, or you have foreign investments, you’ll need to consider other options. But outside of those scenarios, we’re impressed by Credit Karma Tax this year.

Best Support From Tax Pros

Tax filing time can be a challenge, especially if you’re facing new tax situations. Trying to figure out what you can legally deduct is important. You don’t want to overpay your taxes, but you also don’t want to end up on the wrong side of the IRS.

Several companies offer “ask a tax pro” options for their online filers. By appointment (or via chat or email), filers can get their tax questions answered.

Winner: TaxHawk Pro Support

Why? TaxHawk’s Pro Support tier costs just $24.99. It involves unlimited phone, live chat, or screen share support with a tax expert. If you’ve got questions, these experts can give you an answer. TaxHawk’s pricing and support options are tough to beat.

Runner Up: TaxSlayer Premium

Why? TaxSlayer Premium is a moderately priced software with massive value for filers looking for support. It comes with unlimited “Ask a tax pro” options where you can get support from a tax professional (either an enrolled agent or a CPA). It also comes with audit defense support and unlimited technical support. Given the price, TaxSlayer Premium offers an almost unbeatable value.

Best Virtual Tax Preparation

If you’ve barely left your house since March, the idea of making an appointment to do your taxes is not something you’re eager to do. Thankfully, companies are responding to the Pandemic and offering virtual tax prep. I suspect that this is one trend that will stick around.

This was rolled out a few years ago, and now has become increasingly popular!

Winner: TurboTax Full Service

Why? The TurboTax Full Service option gives users the ability to upload tax documents and have a tax expert take it from there. The pricing is as low as we’ve seen, and the service gets rave reviews. If you prefer not to file your own taxes, take advantage of TurboTax’s Full Service option.

Note: TurboTax is clear about your taxes being done by a “tax expert”, but they haven’t responded to our request to clarify if that means CPAs, EAs, or other internal “experts”.

Runner Up: H&R Block Virtual

Why? Upload your tax documents to a secure online portal, and a CPA or Enrolled Agent will handle the filing from there. The software will even provide an estimated time until completion when you select your tax professional.

You may need to answer a few questions via phone or email, but the process is simple compared with filing yourself. Historically, this offering has been more expensive than TurboTax’s comparable service, especially when you are self-employed. However, H&R Block is clear you get a CPA or EA to prepare your return.

Best For People Seeking A Tax Refund Anticipation Loan

Stimulus checks are on their way, but 2020 has been a tough year. If you need your tax refund to pay the bills, a tax refund anticipation loan may be on your radar.

Unfortunately, too many lenders will charge high-interest rates to give you an advance for a few weeks. We don’t recommend a tax refund anticipation loan, but there are a few interest-free options that may make sense this year.

TurboTax and H&R Block both allow eligible filers to get a tax refund anticipation loan when they file online. Filing in a branch typically costs over $300, but the online filing can be done for free or at a low cost.

Winner: H&R Block

Why: The H&R Block Tax Refund Advance is available up to $3,500, and is available for all filers, including those who file online. You don’t need to file in stores to get this loan.

Here’s what else you need to know about H&R Block’s Refund Advance Loan:

  • 0% Interest
  • No Fees
  • Five loan amounts ($250, $500, $750, $1250, $3,500)
  • Same-day approvals
  • Advance is issued on an Emerald Card

Runner Up: TurboTax

TurboTax is also issuing Tax Advances on prepaid debit cards this year. Filers can qualify for up to $3,000 in loans which will be available on a debit card within five to ten days of applying. Filers will be auto-approved assuming they file through TurboTax.

Here’s what you need to know about TurboTax’s advance:

  • 0% Interest
  • No Fees
  • Eight loan amounts ($250, $500, $750, $1,000, $1,500, $2,000, $2,500, and $3,000)
  • Approval is based on your refund amount.
  • Same-day approvals
  • Advance is issued on a Turbo Visa Debit Card

Final Thoughts

As you can see, there is no “blanket” best tax software. It all depends on what you have on your tax return. Each software program tries to pick a niche and own it.

Given the strange year we’ve had, it’s no surprise to see big shake-ups among the superlatives. We’re excited to see more bargain software companies take home the “best” options this year.

Also note: prices and deals change all tax season. We try our best to assess, but things do change as the tax season goes on. So, if you see any changes, please let us know in the comments below!

Related Post

Be the first to comment

Leave a Reply

Your email address will not be published.