Most people don’t think of off-the-shelf tax preparation software as a business tool, but if you’re self-employed, an independent contractor or a landlord, or if you run your own shop, it could be a great resource. We’ve done some research to help you find the best tax software for your sole proprietorship.
Best tax software for the self-employed: At a glance
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⬇ Jump to info about help and audit support
3 things about self-employment and taxes
- If you operate a small business as a sole proprietorship, you need to include the profit or loss from that business in the income you report to the IRS. This requires you to file a slew of extra forms. All of them feed into your 1040, which calculates how much you owe Uncle Sam.
- Most major tax-software providers offer packages equipped to help you fill out these forms. They’re typically the higher-end packages, though, which can cost a lot more than the basic (or even free) versions that are fit for simpler returns. But if your business income and expenses are fairly straightforward, and you’re a reasonably confident filer — and you’ve got the time to do your own taxes — it could be cheaper than paying a professional the average $457 to prepare an itemized 1040 with a Schedule C and a state return. And, hey, it’s a deductible business expense.
- You’ll need to decide early on whether you want a desktop program or online software. Online versions typically are more convenient because there’s nothing to install and you can access your return from multiple devices. Desktop versions offer more control by allowing you to house your data locally. Many providers offer desktop software, but those packages aren’t part of this review.
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Business taxes can get complicated quickly. You’ll have to calculate items such as depreciation on your business assets and deductions for a variety of business expenses, including your home office — and even packages meant for businesses have their limits. If your business is incorporated and has a lot of employees, for example, you’ll probably need to move up to the full-blown business-only versions, which are outside the scope of this review. Even if a premium package can accommodate your business, you might want to ask a qualified tax advisor if you’re doing everything correctly.
» MORE: Try our federal tax calculator
Pros: TurboTax is the industry giant. It has some of the most robust products on the market, as well as a huge knowledge base for users and user community. You can get free, real-time help via its SmartLook mobile app, phone or email with the Self-Employed version.
Cons: TurboTax is expensive. Many providers offer much cheaper packages for self-employed filers. If you’re audited, the company offers free guidance, but if you want actual representation before the IRS, you’ll need to buy an add-on product when you file; you can’t do it after the fact.
Pros: H&R Block has about 12,000 brick-and-mortar locations across the country, which is good to know if you get stuck or totally screw up your return. (Getting in-store help does cost extra.) H&R Block offers online users Worry-Free Audit Support, a sort of combo product that gets you one-on-one contact with a tax professional to guide you through an audit. It costs $19.99 and includes IRS correspondence management, audit preparation and in-person audit representation.
Cons: H&R Block’s Premium software package isn’t the most expensive available, but it’s up there. If you’re filing a Schedule C-EZ (for freelancers with very simple expenses), you can save money by using the Deluxe online version, which lists for $54.99 plus $36.99 for a state return.
Pros: TaxAct is less expensive than most of the competition, as is the price of state return prep. The interface isn’t fancy, but it has all the basics, and you still get handy stuff like import functions for last year’s returns, a donation assistant and some planning tools and calculators. Tax support via email is available, and the free tax help via phone is a rare find, especially at this price point. During tax season, it’s available seven days a week, including into the evenings Monday through Friday.
Cons: There’s no 1099 import, and TaxAct’s audit support consists mostly of a FAQ page on its website. You can buy “audit and inquiry assistance services” from a partner company, but that runs $50 for Premium users.
Pros: TaxSlayer’s Premium package is well-priced, and its interface is as handsome as other, more expensive options on the market. The interview-style Q&A is similar to what’s available in many tax packages, plus there’s an online knowledge base, and Premium users can submit questions to tax pros, get priority tech support and gain access to free live chat.
Cons: Anybody filing a Schedule C does not qualify for audit assistance. There is no audit defense available, nor is there an import function for 1099s.
Pros: You don’t have to pay anything to file a federal return, even if you’re filing a Schedule C. (Many providers limit their free versions to the 1040EZ and 1040A, which are mostly for people with very simple tax situations and who don’t itemize.) You can upgrade to the Deluxe version for $6.99, which gets you more support.
Cons: Some people might hate the plain interface, but others might welcome it. The software has a searchable knowledge base and email support, and people who pay $6.99 for the Deluxe version receive chat and priority support, but it might not be helpful if you have specific questions. FreeTaxUSA offers only audit support (called Audit Assist), and it’s available only to Deluxe customers. State returns aren’t covered. If your federal return is audited, company specialists will help you prepare, but they can’t represent you or correspond directly with the IRS.
Pros: Like H&R Block, Jackson Hewitt has a large chain of brick-and-mortar locations where you can go if you get stuck. Premium users receive phone support in addition to the online knowledge base and email and live chat options that all users receive. The Q&A process makes data entry similar to most competitors’ offerings.
Cons: Pricing could be more competitive. There’s no 1099 import function, and audit support is nonexistent.
Additional features and support
No matter how you file, you can choose to receive your refund via direct deposit to a bank account (the fastest option) or in the form of a paper check. Other options include applying the refund to next year’s taxes or directing the IRS to buy U.S. Savings Bonds with your refund. All but TaxSlayer offer a prepaid debit card. Check their websites for all offers and terms.
If you think you’ll need tech support or want to ask tax questions, each provider has options:
- TurboTax: Searchable knowledge base, huge online community, video tutorials and free, real-time, face-to-face human help via the SmartLook mobile app.
- H&R Block: Searchable knowledge base, free tech support via chat, expert tax advice via chat, Best of Both review available (starts at $40), and about 12,000 brick-and-mortar locations.
- TaxAct: Searchable knowledge base, free phone support (seven days a week, and into the evenings Monday through Friday) and free support by email.
- TaxSlayer: Searchable knowledge base, free tech support by phone, email or chat, and access to human tax support via email.
- FreeTaxUSA: Searchable knowledge base, email support and live chat.
- Jackson Hewitt: Searchable knowledge base, free support via chat, free email and phone support.
What if I’m audited?
Things get real when the IRS comes calling, so if you think you’re at risk of an audit, understand what your software provides.
In general, there are two levels of service: guidance (which basically means helping you understand what’s happening) and representation (which means a skilled human will speak with the IRS on your behalf). Most preparers offer free guidance, but you’ll likely have to pay for representation:
- TurboTax: Gives customers free audit guidance; audit defense, called Max Assist and Defend, is an add-on product that costs $44.99.
- H&R Block: Offers a sort of combo product called Worry-Free Audit Support. This gets you one-on-one contact with a tax professional to help guide you through an audit. It costs $19.99 and includes IRS correspondence management, audit preparation and in-person audit representation.
- TaxAct: Audit support consists of a FAQ page on its website. But customers can buy “audit and inquiry assistance services” from a partner company called Protection Plus. That service runs $50 for Premium users.
- TaxSlayer: Premium software comes with free audit assistance, which helps you prepare for an audit but won’t represent you in front of the IRS. There is no audit defense available.
- FreeTaxUSA: Offers only audit support, called Audit Assist, and it’s available only to Deluxe customers. State returns aren’t covered.
- Jackson Hewitt: Offers no audit support or assistance. That’s a significant departure from the competition, so if you’re worried about an audit, you may want to consider looking elsewhere.
Unsure about whether to hire a human tax pro or just use software? We can help you determine the best way to do your taxes.
Tina Orem is a staff writer at NerdWallet, a personal finance website. Email: email@example.com.
Updated March 13, 2017.