Every tax season, many of us struggle with the same question: Do I hire a tax professional such as a CPA (certified public accountant) or go it alone with a free tax filing service? The answer depends on a multitude of factors including your income, employment status, number of dependents, investments, and even where you live (if you’re lucky enough to reside in a state that doesn't charge income tax).
One very good reason to opt for DIY taxes is the steep cost of hiring a CPA. According to a 2017 study conducted by the National Society of Accountants, the average fee for a professional to prepare and submit a simple Form 1040 and state return with no itemized deductions is $176. And the more complicated your taxes, the more you’ll have to shell out for a professional.
If you’re someone whose tax situation is particularly complex— say you own a small business, earn money through a side hustle, or own several rental properties—it’s probably worth your while to hire a CPA. But it’s still good to know that for virtually every financial situation, there’s a DIY tax program that’s either free or less expensive than hiring a professional. Here are our top six picks for 2019 (2018 tax year).
- TurboTax Free Edition
TurboTax is widely known as the gold standard for DIY tax preparation. From ease of use, to a customer-friendly interface, to 24/7 online support, it regularly tops many “best of” lists each tax season. If you’re filing a Form 1040, earn less than $100k per year, and intend to use only the standard deductions, TurboTax is 100% free. For 2019, in response to recent changes to the tax code, the TurboTax Free Edition now allows you to file for a few basic deductions and credits, including the Earned Income Tax Credit (EITC) and child tax credit.
Keep in mind that TurboTax is only free for filers whose taxes are very simple. If you’re self-employed, earn 1099 income, and/or have itemize deductions, you’ll need to upgrade to a paid version such as TurboTax Deluxe (pricing starts at $29.99).
- H&R Block
Founded in 1955, H&R Block has become virtually synonymous with individual tax preparation. Like TurboTax, H&R Block offers a basic version for qualifying users. If you plan on filing a Form 1040 (including Schedules 1-6) with no itemized deductions, you can file your federal and state returns with the H&R Block software for free.
“Overall, H&R Block offers one of the better tax software programs around,” says Kevin Mercadante of the Money Under 30 blog. “The free version is extremely comprehensive; if you need more than a free tax software, H&R Block isn’t the cheapest, but it’ll give you the level of performance and confidence you’ll need to prepare your returns.”
TaxAct is the leading “discount” tax filing program. Though it does offer a free version, TaxAct stands out because its paid versions are significantly cheaper than those of its competitors, particularly TurboTax and H&R Block. According to Josh Patoka of Debt Roundup, “when it comes to a return that requires a Schedule C, D, or E, you can save at least $47 by filing your federal & state returns with TaxAct instead of the other two programs.” TaxAct also offers free account support for all its software packages. One downside: TaxAct has a more bare bones, less intuitive interface than many of its competitors, so if your top priority is ease of use it may not be your best option.
- Credit Karma Tax
Now in its third year, Credit Karma Tax is 100% free regardless of your income level—really! Even if you’re self-employed, own a home, or have itemized deductions, you can still use the software at no cost. What’s more, Credit Karma’s software is easy to use, guiding filers through the process from start to finish and offering simple explanations that demystify confusing tax jargon along the way.
TaxSlayer is another popular option in the realm of reasonably priced tax filing programs, offering the same standard amenities as its competitors for its free package. What sets TaxSlayer apart from other programs is its flexibility. According to Money Crashers, TaxSlayer “allows you to complete the required forms and schedules with minimal guidance—or, if you prefer, with the help of a ‘wizard’ that emulates more hands-on programs such as H&R Block and TurboTax.” TaxSlayer also offers an accuracy guarantee for both federal and state returns, whereas many other programs only offer such guarantees for federal tax returns.
- FreeTax.com (also called DIY Tax)
Like Credit Karma, FreeTax.com truly does offer free filing for both federal and state taxes. FreeTax.com also offers a Q&A section that can help you navigate the software if you encounter issues. One minor hitch is that FreeTax.com uses a lot of tax industry jargon without offering definitions, so it may be best for experienced filers who are used to navigating complex filing scenarios.
Before you choose a tax filing program, make sure the info you have is up to date. Pricing for these tiered service packages tend to change fairly frequently, so it’s always possible that even the free, basic package you’ve chosen has recently acquired a fee.
Finally, if your tax situation is fairly simple but you’re unsure if it’s simple enough for a free program, it’s ok to start with the free option. You can always upgrade to the next level if it turns out to be a better fit. Your best bet is to choose the option that’s easiest for you to navigate and saves you the most money in the long run.