It's that time again… like a bad penny, Tax Day keeps turning up, year after year. For many investors, the tax filing deadline is enough to induce a headache, but 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 tax preparation services 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 four tax software packages. They're tried and true and could help you get the most tax deductions possible. Here are our picks:
Quick Overview of our Picks for the Best Tax Software
- TurboTax Premier — Best Full-Featured Tax Software
- TaxAct Premier+ — Best Value-for-Money Tax Filing Service
- Credit Karma — Best Free Online Tax Filing Service
- H&R Block Premium — Best In-Person Support
- eSmart Tax Deluxe — Unlimited Real-Time Tax Advice
- TaxSlayer Premium — Speedy, Accurate Filing
- Liberty Tax Deluxe — Decent Service for Confident Filers
Further Reading: Tax-Efficient Investing 101
1. TurboTax Premier: Best Full-Featured Tax Preparation Service
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 make a lot of investment trades during a typical year, you'll 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 tax expert 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.
- 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. The company also offers 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.
- On-Demand Assistance From a Tax Expert — For an extra fee, TurboTax Live provides live, on-demand assistance from a tax expert. These professionals will review your tax return and answer any questions you may have.
TurboTax Premier Pricing
Price for federal: $79.99, plus $39.99 for state taxes (“start for free; pay when you file”).
TurboTax Free Filing
You must meet these requirements to qualify for TurboTax Free File:
- Your adjusted gross income is $34,000 or less and you are of any age, or
- You're eligible for the Earned Income Tax Credit, or
- You’re in active military duty and have an adjusted gross income of $66,000 or less.
While the income limit is a little lower here than with some others, TurboTax works for foreign addresses. That is something others may not offer. This is arguably the most polished and best user experience among online tax programs.
2. TaxAct Premier+: Best Value-for-Money Tax Filing ServiceTaxAct review.
TaxAct Premier+ 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 to e-file. This can significantly 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 don'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 an excellent 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.
TaxAct Premier+ Pricing
Price for federal: $57.95, plus $39.95 for state taxes (“start for free; pay when you file”).
TaxAct Free File Program
The TaxAct Free File program has the following requirements:
- Your adjusted gross income is $55,000 or less and your age is 56 or younger, or
- You are eligible for the Earned Income Tax Credit, or
- You're in the active military with an adjusted gross income of $66,000 or less.
TaxAct Free File is also available for foreign address filers.
State returns, however, are not included in the free file program and may incur extra charges. This company offers free phone and email customer support.
3. Credit Karma: Best Free Online Tax Filing Service
Credit Karma Tax gets a category of its own because it's actually free for all personal tax filing needs. It was known as a site to get a free credit score, but a few years ago, it added a free tax preparation service as well.
Credit Karma Tax is free for your personal tax filing at the state and federal level for all users. It doesn’t matter if you have a simple return with just a W-2 or a complex situation with investments, rental properties, and businesses. Credit Karma Tax will do it without charging you no matter what you make.
Yes, you read that right: Credit Karma Tax is completely free.
There are some limitations. Credit Karma can't handle returns for:
- People who moved from one state to another part way through the year.
- Those with nonresident state income taxes or foreign-earned income.
For most people, including investors, landlords, and small business owners, Credit Karma Tax can do everything you need just fine.
If your primary concern is the price, Credit Karma Tax is the best option.
4. H&R Block Premium: Best In-Person SupportH&R Block Premium 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. Click here to read our H&R Block Review.
H&R Block Premium 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.
- 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 Premium Pricing
Price for federal: $69.99, plus $39.99 for state taxes (“start for free; pay when you file”).
5. eSmart Tax Deluxe: Unlimited Real-Time Tax Advice
eSmart Tax Deluxe is a tax product created by Liberty Tax specifically for investors. Not only is it built to handle complex returns, but filers can seek help with tax professionals both over the phone and in one of Liberty's 4,000-plus offices. Click here to read our eSmart review.
eSmart Tax Deluxe Features
- Prior Year Import — There's no need to enter last year's data again. even if you used another service. eSmart Tax's system can still pull your records.
- Hassle-Free Schedule B — The eSmart system provides an easy way to report your income from stocks and investments.
- Free Audit Assistance — In the unfortunate case that you should get audited, you'll have free assistance from a tax professional at Liberty Tax Service.
eSmart Tax Deluxe Pricing
Price for federal: $55.95, plus $36.95 for state taxes (“start for free; pay when you file”).
6. TaxSlayer Premium: Speedy, Accurate FilingTaxSlayer is here to help if you want to… well… “slay” when it comes to filing your taxes. (Don't worry; this is a good thing.)
That's because TaxSlayer will look at all potential deductions, forms, and credits to make sure you get every tax break you deserve.
TaxSlayer prides itself on its quickness and ease of use. A market research survey showed that customers rate TaxSlayer No. 1 among the competition when it comes to the speed of filing. So if you're the sort of person who simply has no time to devote an entire afternoon to the tedious process of completing a tax return, this could be an excellent choice for you.
TaxSlayer Premium Features
- Ask a Tax Pro — TaxSlayer offers unlimited and personal guidance from a live tax professional so you can get answers to your pressing tax questions.
- IRS Audit Assistance — For up to three years after the IRS accepts your TaxSlayer e-file, the company's team of enrolled agents (EAs) and CPS will assist you in the case of an audit.
- Easy Upload — Upload last year's info to make the filing process even quicker. You can also upload your W-2 so TaxSlayer can autofill much of your return.
- Priority Support — Get tech support fast via phone, email, or live chat.
TaxSlayer Premium Pricing
7. Liberty Tax Deluxe: Decent Service for Confident Filers
With Liberty, accuracy is 100% guaranteed for your peace of mind. That's helped to make Liberty one of the most trusted names in tax preparation. Read the full Liberty Tax Review here.
Liberty Tax Deluxe is the perfect level of paid service for investors. Let's take a look at what it has to offer.
Liberty Tax Deluxe Features
- 100% Accuracy Guarantee — Liberty is so certain that its software will give you the most accurate return and largest refund possible that the company is staking money on it. If there is any error in the preparation of your return that results in penalties and interest, Liberty will reimburse you for them. And if you can get a larger refund through another company, the cost of your preparation will be refunded as well.
- 15-Minute Filing — File your taxes online in as little as 15 minutes.
- Multi-channel Support — Have a question? Simply seek help via live chat, email, or social media, or in any of the more than 3,000 Liberty Tax brick-and-mortar locations.
Liberty Tax Deluxe Pricing
Which Tax Preparation Service Will You Use This Year?
As an investor, any of these tax software packages will likely serve you well. It may come down to personal preference more than anything else. Anyone can sit down with a pen and calculator and do their taxes themselves free. But for most people, that isn’t practical. It takes a lot of time, and there’s too much room for error. Luckily, thanks to the rapid advancement of computers over the last few decades, we can now easily do our taxes ourselves either online or on our desktop computers.
Most tax software services charge a fee. After all, the companies that make these apps have to make their money somehow. One company, Credit Karma, decided to disrupt that model and offers completely free tax preparation software online. However, if you prefer one of the bigger names in the tax industry, you may not be out of luck. Over the past few years, 12 major tax companies have joined the IRS Free File program, which allows them to offer free federal tax filing for most people who earn up to $66,000 per year. If you make more than that, you’re stuck paying. (Note that many of these free tax apps still charge a fee for state-level taxes even if you can file federal free.)
If you want to have more in-depth knowledge of how tax deductions work and how you can save come tax time, check out Cofield's Concepts. Their tax course will teach you everything you need to know about how taxes on investments work, how to save money on your taxes, and more.