How to Choose Online Tax Software

You know what they say—there are two things you just can’t avoid: death and taxes. Neither one is pleasant, but only one keeps coming back year after year demanding your money.

Yep, paying taxes is anything but fun. And dealing with all the forms and trying to keep up with the latest changes from the IRS can be overwhelming.

But using the right online tax software can help take the stress out of tax season. If you have a simple tax situation and feel comfortable filing online, you’ve got plenty of options when it comes to which software to use. So let’s talk about how to choose your online tax software so you can file with confidence!

What Is Online Tax Software, Anyway?

If you’ve been using a tax pro to file your taxes for the past several years or if you’re filing taxes for the first time (welcome to the club!), you might not be up to date with online tax software and all it can do.

Tax software has come a long way over the past few years and offers a convenient way to self-file your taxes online. Some tax software can be downloaded onto your computer, but most can be accessed online with just a few clicks.

Most tax software programs will walk you step-by-step through the whole process, helping you answer questions about yourself and your tax situation and then guide you in the process of filling out your tax return. Yep, that includes showing you how to upload all your tax forms and helping you claim any tax deductions and tax credits you qualify for.

Should I File With Tax Software or a Tax Pro?

When it comes to filing your taxes, you basically have two choices: File yourself with tax software or work with a tax pro. How do you know which option is best for your tax situation?

If your tax situation is more complicated than a Christopher Nolan movie plot, you probably need a tax professional in your corner. They can offer you advice to navigate tricky tax situations and answer any questions you have. If you’re stressed out about your taxes, reach out to a tax pro and let them handle it!

But if you’re comfortable doing your taxes online and your tax situation is simple, filing online could be a convenient option for you.

So what kind of simple tax situations can online tax software handle? Let’s look at a few scenarios:

• You only have one or two sources of income (like a full-time job and a weekend side hustle) or a fixed income.
• You have few or no investments outside of your tax-advantaged retirement accounts.
• You haven’t taken money out of your retirement accounts before you’re eligible.
• You plan on taking the standard deduction.
• You plan on making simple itemized deductions.

If these describe your tax situation, filing with online software might be the best choice for you.

If these describe your tax situation and you had few life changes (like buying a new home, getting married, or welcoming a new baby to the family), then tax software might still be the best choice for you.

If your tax situation is more complex (you own rental property or owe taxes in multiple states, for example) or you had major life changes (like retiring or receiving an inheritance), we recommend working with a tax pro.

Even if your situation is simple but you’re just uncomfortable with the idea of filing on your own, we totally understand! Dealing with the IRS isn’t fun. If that’s you, connect with a tax expert and let them take some of the stress out of dealing with Uncle Sam.

What to Consider When Choosing Online Tax Software

If you’re a do-it-yourselfer when it comes to taxes, you need self-filing software that moves you from start to finish quickly, accurately and affordably.

Don’t settle for tax software with hidden fees or agendas. Use one that’s on your side—Ramsey SmartTax.

But with several e-filing providers available, how do you choose? Here are some things to think about while you’re looking for the right online tax software for you:

Pricing

Most tax software providers offer multiple plans with tiered pricing to fit any budget. Of course, the most basic plans might meet your needs but offer fewer features, while the more expensive plans will offer more options and support, like live one-on-one chat and financial coaching.

Take some time to look through what each plan offers, but if you’re still not sure which features you’ll need as you get started, no worries! Most software will let you switch plans as you’re going through the filing process.

While each plan will be priced differently, keep an eye out for hidden fees or add-ons that will drive your price up along the way. Even the most straightforward taxes often need a few extra tax forms outside the basics, and some software will charge you for extra forms—even if you chose the most basic (and affordable) plan! They can also charge you extra fees (like a refund processing fee) that aren’t part of the original plan you chose.

These hidden costs and add-ons can drive up your total price faster than you can say “TurboTax.”

Surprise fees are one of our biggest pet peeves. That’s why you’ll find zero hidden fees in Ramsey SmartTax. The price of the plan you choose for federal filing stays the same through the entire filing process!

Complexity of Your Tax Situation

As we already mentioned, online tax software can handle simple tax situations when you’ve had few major life changes. And most software will offer a basic plan for the most simple tax situations and plans with more features and add-ons if you need them.

To make sure the software you’re considering can handle your particular tax situation, read over what each of the plans they offer can cover (this information will probably be listed on their website, but you may have to click around and do some plan comparison on those other companies, because it’s not always clear until you dig deep into their fine print what their plans actually include).

State Taxes

Unless you’re lucky enough to live in one of the nine no-income-tax states, you’ll need to find software that can offer all the state forms you need. Most major tax software does, and filing your state taxes is just as easy as the federal filing process. But keep in mind that you’ll probably pay extra for your state return, so factor in that cost before you decide which software to choose.

Ease of Use

One of the perks of using online tax software is how convenient and user-friendly it can be. Most software is easy to navigate, even if you’re a filing-your-taxes-online newbie! And the good news is that you won’t pay a dime on any of the major tax software programs until you’ve finished filling out your tax return and are ready to file. So don’t be afraid to test-drive your top software and see which one you like best! After all, filing taxes is a big deal, so make sure you’re comfortable using whichever online software you choose.

Customer Service

Customer service can be the best or worst experience of your day! Multiply that times 10 when it comes to getting help with filing taxes! Some software has customer service built in, even with their most basic, inexpensive plan. But others will charge a hefty fee for additional customer service features, like email, phone or live chat support. So when you’re choosing tax software, see what kind of customer support is included in their plans.

Refund Options

Let’s talk refunds. Everybody likes the sound of a tax refund, but we recommend adjusting your withholdings so you don’t owe Uncle Sam and he doesn’t owe you. Why? Because getting a refund just means you’ve been loaning the government money interest-free throughout the year. Yuck!

But let’s say you do get a refund this year. Most tax software will give you more than one option for getting that refund—direct deposit, PayPal or even a good old-fashioned check in the mail. So keep that in mind while choosing your software, and be wary of any software programs that push gift cards or prepaid debit cards as ways to get your refund. Gift cards and prepaid debit cards don’t leave a paper trail, so you have nothing in writing to save for your records.  

When Is the Best Time to Buy Online Tax Software?

Alright, you’ve picked the best software for you, so when should you buy it? The short answer: as early as you can.

Procrastination is a real struggle, and if you wait until the very last minute to file your taxes, you’re not alone. About a third of Americans file their taxes in the last two weeks leading up to Tax Day.¹

If you’re unfamiliar with tax software or don’t know which software to use, the last thing you want to do is wait until spring, when allergies are back in full force and Tax Day is just around the corner, to start the process of filing online. If you procrastinate filing and end up owing the IRS, you’ll have less time to make a payment plan that will help you avoid penalties and interest.

Putting off filing your taxes never pays, so take a deep breath, gather your paperwork, and let your tax software walk you through filling out your return.

If you need help with all that paperwork, check out our free tax preparation checklist. It can save you time and help you gather the right documents.

Why You Need Online Tax Software

If you want to self-file, using online tax software is a game-changer! It takes the chaos of all those forms, receipts, IRS updates and changes and turns it into a manageable step-by-step process that’s easy to follow.

A good tax software asks you questions about your tax situation, takes the headache out of all those calculations, and prepares the right tax forms you need for filing your state and federal taxes. Plus, it’s a lot easier and more accurate than trying to file by hand.

File Your Taxes Today With Ramsey SmartTax

Filing taxes may not be on your top 10 list of fun things to do, but finding the right tax software can help take the stress and anxiety of tax season off your shoulders.

If your taxes are pretty straightforward and you want an easy-to-use tax software that will give you some peace of mind, check out Ramsey SmartTax. No hidden fees, no advertisements, no offers to put you into debt. That’s how it should be!

If you’re uncomfortable filing online or would rather save some time and let a professional deal with all this tax stuff, you can connect with a RamseyTrusted tax pro, one of our Endorsed Local Providers (ELPs). They’ll sit down with you and help you put tax season behind you once and for all.