04/2020 KIPLINGER’S PERSONAL FINANCE 51COURTESY H&R BLOCK
AS THE TAX DEADLINE NEARS, YOU HAVE
two choices: pay someone to prepare
your taxes or hunker down and do
it yourself. If your tax situation is
straightforward—you don’t own a
business, for example, or have a large
amount of investment income—you
can save a lot of money by preparing
your own return. The average cost of
paying someone to prepare a federal
and state tax return for taxpayers who
claim the standard deduction is $176,
according to the National Society of
Accountants. For taxpayers who item-
ize, the average cost is $273.
But tax software can get expensive,
too. Although most major providers
offer free programs for taxpayers who
claim the standard deduction, earnmodest income and have no depen-
dents, you may be forced to upgrade
to a more expensive version if you con-
tributed to a health savings account or
deducted interest on a student loan.
To help you find the program that’s
right for you, Kiplinger reviewed the
most popular programs and ranked
them based on cost, ease of use, tax
help and more. We used two fictional
tax returns: one for a single taxpayerwith income reported on Form W-2,
and a second for a married couple with
a young child and a mortgage who
itemized deductions. (For more on our
methodology, see the box below.)
Prices quoted here are as of Febru-
ary 14. Many tax prep providers
engage in surge pricing, which means
the cost could rise as the tax filing
deadline approaches. For a rundown
of all nine programs we reviewed, go
to kiplinger.com/links/taxsoftware20.- Credit Karma Tax
PROS: Easy to navigate; free with no
exceptions, even for complex returns
CONS: Won’t process multiple state tax
returns
http://www.creditkarma.com/tax
The credit monitoring and credit card
site tops our value rankings. Even for
our hypothetical couple who itemized,
Credit Karma Tax supported all the
forms they needed.
Credit Karma can’t prepare more
than one state tax return, a drawback
for anyone who lived in more than one
state. Credit Karma Tax makes money
by marketing products and services
based on the information you provide
on your tax return, but you can opt out
and still use the program. - FreeTaxUSA
PROS: Free federal return, even for complex
tax situations
CONS: Program can’t import W-2s and 1099s
http://www.freetaxusa.com
FreeTaxUSA has streamlined its pro-
gram, which means you don’t have
to spend time answering questions
that aren’t relevant to your situation.
And, as is the case with Credit Karma
Tax, you can use the free program
even for more-complex tax returns.
The program will import past years’
BEST VALUES IN
TA X S O F T WA R E
We ranked the most popular tax-prep packages to help you find
the ones that provide the best experience at the lowest cost.
BY RIVAN STINSON, ROCKY MENGLE and SANDRA BLOCKTA X E SOUR METHODOLOGY We ranked the programs on cost, navigation (ease of use), the availability of
tax help and the number of state returns included in the base price. We deducted points if more expen-
sive upgrades were needed.//For each tax software program on our list, we applied our criteria to two
fictional tax returns. One of our returns was for a single taxpayer who rents an apartment, received one
W-2 form, has a student loan, contributed to an IRA and has no dependents. The other return was for
a married couple who own a home, have a young child, received investment income, donated to charity
and contributed to a health savings account. They both received a W-2 form for earned income and
contributed to separate IRAs.■H&R BLOCK’S
SOFTWARE
PROGRAM IS
EASY TO USE, BUT
WATCH OUT FOR
COSTLY UPGRADES.