It's that time of year again, and whether you are preparing to write Uncle Sam a hefty check or you are anticipating a fat refund, it's clearly in your best interest to make sure that your tax returns are complete and error free, and that they contain all the deductions you're entitled to. Fortunately, Americans who do their own taxes have more software choices than ever before, and for lightweight returns there are even free options available. While I don't claim to know which application is going to put the most cash in your pocket (the applications should theoretically deliver the same results), I can provide you with a rundown of some of the available choices.
Although this article provides a brief description of five free tax applications, it's worth noting that the IRS actually offers its own free tax filing service, called FreeFile.
Note: This article is also available as an image gallery and a video hosted by TechRepublic columnist Tom Merritt.
1: TurboTax Federal Free Edition
TurboTax is probably the best known and most popular tax filing application in America. Unfortunately, TurboTax recently suffered some bad PR when it was revealed that some fraudulent returns were filed using TurboTax. Even so, Intuit recently said that a spike in fraudulent state tax filings through TurboTax was not due to a breach of security. Intuit is also working with authorities to address the increase in fraudulent filings.
Although I do not personally use TurboTax, my opinion is that it remains a viable option for those who want to prepare their own returns. Intuit offers the Federal Free Edition of TurboTax (Figure A) for completing simple federal returns. Unlike some of the retail versions of TurboTax, the software runs in the cloud, so there's nothing to download. The Federal Free Edition does lack some of the features of commercial versions, such as the ability to import last year's return or to access IRS schedules A, C, D, or E. (Schedule B was not listed on the comparison sheet.)
The software simply asks you some questions and uses your answers to complete the underlying forms (which are not immediately exposed during the interview process). Unfortunately, Intuit has included nag screens in the interview process to try to get you to upgrade to the commercial version.
2: TaxACT Free Federal
Like TurboTax Federal Free Edition, TaxACT Free Federal (Figure B) is a cloud application for completing federal tax returns. When I started a return, a couple of things immediately jumped out at me. First, unlike TurboTax, I was able to skip the registration process. Second, the TaxACT interface makes it easy to jump around rather than sticking to a rigid interview process.
The nice thing about TaxACT Free Federal is that you can use it to complete both simple and complex returns. Not so nice is the fact that the software occasionally nags you to upgrade to the Deluxe Federal version, which allows data to be imported and contains some extra calculators, reports, and things like that.
One especially helpful TaxACT feature is the ability to import a PDF copy of your previous year's return. This makes it convenient to enter basic information (name, marital status, etc.) without having to do it manually.
3: TaxSlayer Free Edition
TaxSlayer (Figure C) lets you create a simple federal return. Like TurboTax Federal Free, TaxSlayer Free Edition requires you to complete a registration process prior to beginning your return. And like the other software discussed so far, it also presents the occasional nag screen in an effort to get you to upgrade.
As with some of the other apps, TaxSlayer uses an interview process. But oddly enough, when I clicked on certain navigational links within the interface, I received error messages telling me that to ensure that the tax return data was saved properly, I had to use the buttons at the bottom of the page. It was really frustrating to have navigation links I couldn't use. I can only assume that they aren't really links, but rather progress indicators.
One thing I did like about TaxSlayer is that it provides an online tutorial and a browser compatibility test. Both of these are handy because they allow you to make sure that you have got all your ducks in a row before you get too far into your return.
4: H&R Block Free
H&R Block Free (Figure D) is another online tax preparation site. It includes all the basics for simple tax returns, but it lacks access to forms such as Schedule C, Schedule C-EZ, Schedule D, Schedule EIC, and Schedule SE.
One good thing about this app is that it doesn't require you to create an account right away. This means that you can explore the software without the hassles of account setup. The software also allows you to import your previous year's return from H&R Block, TurboTax, or TaxACT. And once you start your return, the software tells you what you might need next (such as social security numbers and birthdates of family members).
H&R Block uses a simple interview process to ask for the information it needs. In working through some of the screens, I didn't encounter any nag screens, although it is possible that some may exist.
1040.com (Figure E) offers free federal tax returns to individuals under 65 years of age (as of the end of 2014) and whose taxable income is $100,000 or less.
A few things stood out about 1040.com. First, the Web app had the cleanest interface of any product I looked at. In fact, it reminded me a lot of the Office 365 interface. Second, 1040.com did not pester me with nag screens. I can't say for sure that there aren't any, but if there are I didn't encounter them.
Another thing that struck me about 1040.com is that it did not seem to be as limiting as some of the other free options. The site's initial screen indicates that the free version can be used only if you're taking the standard deduction, yet I was able to access Schedule C and screens related to mortgage interest deductions. It's possible that the software lets you get all the way to the end of your return before telling you that you have to upgrade to the paid version. I tried to complete a "sample return" to find out, but the software would not allow me to use a bogus social security number.
What's your favorite tax app?
Have you had good luck with any of these apps or do you have a preferred app not listed here? Share your recommendations with fellow TechRepublic members.