Filing my tax returns as a teenager in the 1970′s was easy. I’d go to the post office to get the tax forms. It took me about an hour to fill them out both my state and federal returns. And then I dropped them in the mail and anxiously waited for the tax refund checks.
My how things have changed. Today, millions of tax returns are filed online. According to the IRS, last year nearly 100 million taxpayers filed their returns via the IRS e-file system. If your income is $57,000 or less, you can use the e-file system for free. For those who make more or want some help with their taxes, however, there are some low cost options for filing your taxes online.
Right now, there are two main players in the online tax return space and both of them offer a quick and easy way to file your taxes online exactly as a professional would.
TURBO TAX / INTUIT – With the most well known and respected online tax software around, TurboTax offers all users a free federal return if you file 1040ez and a low cost state return. Signing up for turbo tax is extremely simple, and I am proud to say that I have been using Turbo Tax to file my federal returns for the last 5 years and have never encountered a single problem. TurboTax currently offers four varieties of their federal and state tax software:
- Free Federal Edition – Offers users the ability to file their 1040ez federal returns for free online. If you have all of your tax information readily available, the entire process of filing your return should take less than an hour.
- Deluxe Edition ($29.95) – Perfect for those looking to maximize their deductions, this version offers users hundreds of available tax deductions and is perfect for those that own a home or have recently paid off medical bills.
- Premier Edition ($49.95) – Uncle Sam wants to make sure that any money you made by investing or owning real estate is properly taxed, so if you are looking to save every penny you can, this edition focuses on just that.
- Home and Business Edition ($74.95) – If you own your own small business, are a registered LLC or corporation and want to make sure you file your business returns appropriately separate from your personal returns, this is definitely the version for you.
Note that with each edition of TurboTax you get free efile of your returns.
TAX ACT – An up and comer in the online tax preparation game, TaxAct is another great option for anyone looking to file their taxes online this year. Tax Act focuses more on an individuals tax return rather than a business return. And if you are looking to file both a federal and state return, Tax Act can be cheaper than TurboTax. Tax Act currently offers three basic packages for all users.
- Free Federal Edition - Extremely similar to Turbo Tax’s free federal addition, Tax Act also offers the same service. With accuracy checks through every stage of your return, it’s becoming increasingly difficult to screw things up.
- Deluxe Federal Edition ($9.95) – Again, similar to the Turbo Tax deluxe edition, this software will make sure you receive the maximum amount of deductions available to you. At $20 cheaper than its TurboTax counterpart, Tax Act has made this a very attractive option for filers.
- Ultimate Bundle Edition ($17.95) – If you need to file a state return this year and want to maximize your deductions on both your federal and state returns, then here’s where you go. You won’t find a better price anywhere for this service and Tax Act has added phone and email support for your convenience.
If you’re old school and still enjoy the feel of visiting your local H&R Block tax office, then you may want to consider using H&R Block at Home software, which is also quick, cheap and simple.
Remember though that an online return generates a refund much faster than a paper return, so if you want to see your money faster, online is certainly the way to go.
Published or updated October 28, 2012.