Struggling to file your taxes without spending all your money?
Decades ago tax filing meant handing your returns off to an accountant and letting them keep whatever they wanted.
Fortunately, there’s now something called affordable online tax software. Millions have switched to these products and you should too. Here’s how to choose the right one for you.
Why Affordable Online Tax Software?
You shouldn’t spend hundreds (or even thousands) of dollars filing your taxes.
The tax preparation software industry was worth $17.6 billion in 2024. Roughly translated that means billions of people are choosing affordable online options over pricey accountants.
Makes sense too when you think about it…
Most tax returns are pretty darn basic. W-2 income from your job. Some interest income from your savings account. Maybe a couple deductions. That’s it!
There’s no reason you should spend hundreds to have someone else do simple math.
That’s why inexpensive online tax filing can be such a great solution. It automates all of the calculations for you. Double-checks your work. Then e-files everything directly with the IRS.
Clever, right?
How Much Does Affordable Tax Software Cost?
Ok. Time to break out the spreadsheets.
The average tax software prices range from $0 to $179. Compare that to hiring an accountant. Average professional fees range from $273 to $323 depending on your tax scenarios complexity.
That right there is $100 to $300 you could be saving each year.
Think about what you could do with an extra $300. Go out to eat for your family. Take a weekend vacation. Maybe even sock a little more away in savings.
The best part is these don’t just save you money on upfront fees. You save on time too. Most filings can be completed in a matter of hours. There’s no need to schedule an appointment, sit in a waiting room or pick up the phone to ask questions.
A report from Market Reports World discovered that over 78% of taxpayers in the United States used digital tax preparation solutions to both prepare AND file their taxes. In 2020 that number was 71%.
Taxpayers are realizing that affordable online tax options can get the job done.
What to Look For in Affordable Tax Software?
Ok. So we’ve covered that affordable online tax options save you both time and money.
But how do you know which one will work best for you? Just like any software you intend to pay for, there are a handful of features you should expect.
Look for these attributes when researching which affordable tax software to pick:
- Import capabilities: Can the software automatically grab data from your W-2’s and 1099’s?
- Error checking: Does the program have built in tools to identify issues prior to filing?
- Deduction Finder: Are there smart tools that help identify tax breaks you might not otherwise know about?
- File Support: Can you e-file directly to the IRS through this software?
- Audit Support: Do they offer help if the IRS audits you?
If a tax program has all or most of these features, its markishing that it provides quality service without breaking the bank.
Psst… don’t forget, most tax programs today are cloud based. You no longer need to hunt down a desktop disc or worry about software updates.
Online tax software continues to become more advanced as well. Many tax programs use AI based algorithms to scan your docs, identify errors, and suggest tax breaks based on your unique situation.
Oh and customer support is usually included too. Don’t worry yourself thinking you won’t have access to real, live humans when you need help. In most cases you will.
Pick the Right Tax Software for You
This is where things start to get a little more specific.
If you only have W-2 income and take the standard deduction, you may not even have to pay for tax filing. Many companies offer free versions of their software that handle simple federal tax returns. This is perfect for single kids making their first 9-5 salary.
What if you’re not that simple?
Self-employed taxpayers will need software that supports a Schedule C. If you’re freelance, doing gig work or own your own business you’ll want tax software that allows you to track expenses. Ideally with the ability to accurately calculate quarterly estimates as well.
Homeowners who itemize deductions should look for software that makes it easy to input mortgage interest, real estate taxes, and other homeowner deductions.
Investors should seek out software that allows you to import 1099-B forms from your brokerage statement. Make sure the program can accurately calculate capital gains.
Remember
Pick tax software that fits your particular tax scenarios. Don’t overspend on bulky programs with features you’ll never use. Don’t underspend and miss out on tax deductions you’ve earned.
Mistakes to Avoid When Choosing Tax Software
Let’s face it. MISTAKES happen.
Tax mistakes that could cost you money. Delayed processing. Audits even. The awesome thing is most mistakes made with tax software are 100% preventable.
Take a look at some of the most common tax software mistakes made each year:
- Taxpayers rush through the questions and enter information incorrectly
- Taxpayers skip deductions they don’t understand
- Taxpayers file their federal return but forget about state
- Taxpayers don’t hang onto a copy of their tax return
- Taxpayers don’t review their return before hitting “FILE”
There’s one mistake we mentioned above that’s often overlooked…
Picking a tax program based off of price tag alone. Sure that $0 option is enticing. But it might not give you access to all of the features you need. An extra $30 program may find you an extra $500 in deductions. Now that’s a return on investment you can feel good about.
Tax Tip: Don’t wait until the last minute to start. Waiting increases the chance you’ll make one of these mistakes.
Don’t Forget…
Online tax software made filing your taxes easier for millions of people.
Not only do they save you money, they continue to save you time. And the technology gets better with each passing year.
Before we wrap this up, here’s a quick rundown:
- Tax Software Cost $0 to $179 dollars. Hiring someone can cost you $273+
- Software sales have increased. 78% of Americans now file taxes digitally
- Important features include import, error checking, deduction finding, IRS e-file support, and audit support
- Make sure you pick tax software that fits your tax situations needs
- Take your time. Don’t rush the process and make mistakes.
Affordable online tax software put the power in your hands.
The power to save you money. Time. And ensure your taxes are done correctly.
There’s never been a better time to file you own taxes. Your future self will thank you.
