The tax filing deadline is approaching. So what’s the best tax software program for investors? While this topic may be somewhat subjective, there are three tax software packages that consistently show up among the top of nearly any list on the subject.
Before filing your taxes this year, make sure you’ve done your research in order to get the most tax deductions possible.
You don’t want to pay more taxes on your investments than you have to. Here are the top three most popular tax programs that work well for investors.
1. TurboTax Premier
TurboTax is the most popular tax software program currently available, and after 25 years it has withstood the test of time. It consistently appears at the top of most lists, regardless of the source.
TurboTax Premier is especially investor-friendly. It covers the following areas of special importance to investors:
- Sale of stocks, bonds or mutual funds (Schedule D)
- Automatic calculation of cost basis (Schedule D)
- Rental property income and tax deductions (Schedule E)
Import investment information. The program automatically imports investment information directly from the many thousands of participating financial institutions. If you do a lot of investment trades during the course of a typical year, you’ll really appreciate this feature. Entering dozens or hundreds of capital transactions is not only tedious but opens the possibility for errors that can cost you later.
Track capital gain losses. TurboTax provides help with reporting sales of investment securities and funds. This feature should not be underestimated. Since you only do your taxes once each year, it’s incredibly easy to make mistakes or miss important IRS changes. TurboTax Premier will also carry results over to future years, which is particularly important if you have capital losses that exceed $3,000 and must be calculated year-over-year to be deductible.
Set up rental investment properties. The Premier package also provides help in setting up new rental properties. This is a particularly difficult area for self-filers. Setting up new rental properties is really CPA territory, since you’ll be making choices that will affect your investment for decades to come. Depreciation can be especially tricky, but with TurboTax Premier you can set up the best depreciation method for your new rental property, saving you hours of research.
Personalized help if you need it. The service provides personalized answers to your questions, by either a phone call or live chat with an expert. This kind of access is a must for serious investors.
Coverage in case of an audit. TurboTax provides free one-on-one audit guidance from a TurboTax expert. They’ll help you prepare for the audit and answer any questions you have. They also have the Turbo Tax Audit Defense service, which will provide you with full audit representation for an additional fee. However this feature addresses what might be the biggest downside to self-filing — the possibility of facing an audit alone.
2. TaxACT Ultimate
TaxACT Ultimate offers many of the same features for investors as other tax software programs but adds a few twists.
Their Stock Assistant feature enables you to enter stock data quickly while receiving a summary of your investment income.
TaxACT Import allows transfer of important personal data from last year’s tax return, including AGI/PIN confirmation numbers and other info required to match IRS records in order to e-file. You can also perform a stock import, W2 import and K-1 import. We’ve already covered the benefits of Stock Import under TurboTax Premier, but K-1 importing is also important. There’s a lot of information on K-1 forms that doesn’t always match up easily with input screens. The K-1 import function will spare you this often difficult and always confusing step.
They also have a DocVault function, which can be particularly useful for investors. DocVault is TaxACT’s free companion app for securely organizing and saving tax documents and information. Simply snap a photo, edit if needed, then save. DocVault will keep an encrypted digital copy you can easily access when needed. Retaining source documents is a must for serious investors!
TaxACT Alerts is another valuable tool. It inspects your return for errors, omissions, and tax-saving opportunities you may have missed. And the depreciation and disposal summaries will be a great benefit for real estate investors.
The Audit Assistance guide offers general advice in dealing with an audit or IRS request for additional information. You can also purchase Tax Audit Defense representation for $39.95, and that will cover you for as long as the IRS can audit your return. If your tax situation is especially complicated, this may be excellent insurance to have.
3. H&R Block Deluxe
H&R Block Deluxe offers many of the same features as the other two tax software programs mentioned above. It’s one of the most popular programs available and works well for any tax profile, including investors.
H&R Block offers Free Advice From An Expert. If you have tax questions they provide access to an H&R Block tax expert so you can get free tax advice at any point along the way through real-time chat. If your return is especially complicated this feature is a must have. Investors in particular can come across any number of situations that will require expert advice, making this feature very valuable.
H&R Block provides Worry-Free Audit Support, which is included in the Deluxe package at no additional cost. In the event you are audited, H&R Block will provide an an Enrolled Agent (EA) to help you prep, get organized, file any reports, and represent you throughout the entire process.
Since IRS audits can take various forms, H&R Block will assist you with:
- IRS Correspondence Management — will assist with all communication initiated by the IRS or your state’s Department of Revenue.
- Audit Preparation — will provide detailed information regarding how to prepare for an audit and extend an offer for an H&R Block Enrolled Agent to represent you in the event of an audit.
- Audit Representation — An EA guides you through what to expect during the audit, attends the audit with you and helps you manage the entire audit experience.
This is similar to what H&R Block provides with its in-house tax preparation clients at physical locations, and they’re extending it to their software tax program clients.
As an investor, it is likely any of these tax software packages will serve you well. It may come down to personal preference more than anything.
Which accounting program do you use to file your taxes? Do you prefer to DIY or hire a professional to help?