It’s that time again… like a bad penny, April 15 keeps turning up, year after year. But while for many of us investors the tax filing deadline is enough to induce a headache, it doesn’t have to be that way. Especially since there is plenty of tax software to make this annual chore a whole lot easier.
But with a bevy of programs on the market, what’s the best option for investors? The answer to this question can be subjective, but we’ve used our experience to pick the top three tax software packages. They’re tried and true… and could help you get the most tax deductions possible.
TurboTax is the most popular tax software program currently available, and after more than 25 years, the “Grandaddy of Them All” has withstood the test of time.
Owned by Intuit, TurboTax offers a whole range of tax-filing products, from a watered-down freebie great for students or first-time filers to an in-depth but decidedly not free version for small business owners. However, 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)
TurboTax Premier Features
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 not only is 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 do your taxes only 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. This 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. This can save you hours of research.
Personalized help if you need it. TurboTax offers its proprietary SmartLook customer service feature if you need a little more guidance. This technology allows a live expert to not only answer your questions but help you along by remotely drawing on your computer screen.
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 TurboTax 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.
TurboTax Premier Pricing
TaxACT bills itself as “The system to beat the system,” and it does pack quite a wallop in relation to its low price. Less than half the price of TurboTax, TaxACT guarantees the price it lists at the time you begin your return, no matter when you get around to filing. And the TaxACT Plus edition is especially geared toward investors.
TaxACT Plus Features
Easy for investors. The program’s Stock Assistant feature enables you to enter stock data in a spreadsheet format quickly while receiving a summary of your investment income.
Effortless importing. TaxACT Import allows you to transfer your 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. This can greatly help you cut down on errors. The software’s Stock Import lets you pull transactions directly from a selection of popular online investment services (including Betterment, TD Ameritrade and Raymond James). But don’t forget TaxACT’s K-1 importing. 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.
A great tool for organizing documents. 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!
Valuable TaxACT Alerts tool. This is a companion app that 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.
Help if the IRS audits you. The TaxACT Audit Assistant Guide offers general advice in dealing with an audit or IRS request for additional information. But TaxACT has also partnered with Protection Plus to offer you additional full-service, personal assistance for an additional charge of $44.99. Protection Plus will cover both your federal and state tax returns for three full years. If your tax situation is especially complicated, this may be excellent insurance to have.
TaxACT Plus Pricing
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 Deluxe Features
Unlimited real-time tax advice from certified experts. 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.
Worry-Free Audit Support. This is included in the Deluxe package at no additional cost. In the event the IRS audits you, H&R Block will provide 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 offers:
- 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.
H&R Block Deluxe Pricing
What Will You Use This Year?
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 else.
Which accounting program do you use to file your taxes? Do you prefer to DIY or hire a professional to help?