Best tax return software for freelancer?

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goodenoughinvestor
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Best tax return software for freelancer?

Post by goodenoughinvestor »

For the first time, I'm going to do my "head of household" return by myself rather than paying an accountant. I am self-employed and will be filing a schedule C--no w-2 income, all 1099s, including royalties, from various companies. I will also have income from investments (interest, capital gains, dividends.) I will have enough medical expenses to deduct. I will also have tuition payments/education expenses for myself and dependents and will be relying on the software to help me figure out which education deductions vs credits are most advantageous to claim. So is there one "above the rest" software you would recommend for someone with my profile? I know there are plenty to choose from out there and just as many opinions. I'm looking for ease of use for a relative beginner. Thanks.
livesoft
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Re: Best tax return software for freelancer?

Post by livesoft »

You know there are really not that many federal income tax software products. I say try out TurboTax Deluxe and you are ready to go. However, none of these programs are magic. They are simply "answer the questions and fill in the blanks".

I used TT deluxe last month for my 2013 return. I have all the items you mentioned plus some W-2s.

But I must say I have been doing my own taxes since the early 1970's and have read many of the IRS publications about the topics you mentioned, so maybe my judgement is not what a "relative beginner" should follow?
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Toons
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Re: Best tax return software for freelancer?

Post by Toons »

Been doing taxes with software since 1997,Turbo Tax for 10 years,Tax Act the last 6.Tax Act is fine,the price is excellent and it can handle any and all tax situations.You can set up an account and fill go through the interview ,you don't have to pay unless you file.I file Federal with them and enter data for state ,they compute the numbers for the state then I go to State site to file ,free. :happy

http://www.taxact.com/index.asp?sc=1404263301045c
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Spirit Rider
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Re: Best tax return software for freelancer?

Post by Spirit Rider »

All of the top three TurboTax, TaxCut, and TaxAct are all capable, given your circumstances. They all have wizards and/or Q&A that do a good job of automating your tax return. However, none of them can help you know what you don't know.

As other replies have stated, tax software is not a magic bullet and is not a substitute for knowledge of the forms and their instructions. If you have previously completed returns from professional preparers, that is your guide for your own return. You should start your education prior to filing your returns. I suggest the following books:

J.K. Lasser's Guide to Self-Employment: Taxes, Tips, and Money-Saving Strategies for Schedule C Filers
J.K. Lasser's Your Income Tax 2015: For Preparing Your 2014 Tax Return (Not due for publication for a couple of months)

Note: There are still likely to be tax law changes at the last minute. Our wonderful congress are chronic procrastinators. There is no substitute for the actual forms, instructions, and publications after their release for the tax year.

Good luck. Welcome to the joy of preparing your own tax returns.
WhyNotUs
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Re: Best tax return software for freelancer?

Post by WhyNotUs »

Self-employed all of adult life and use Turbo Tax. It is pretty straight forward and has links to explanations and examples of line items. My Schedule C is not particularly complicated and I play it pretty straight on deducts so I have never had any problems. I am sure that the others are about the same but I use Quicken and used to use Quickbooks and Intuit makes it easy to transfer data from them to TT.
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Re: Best tax return software for freelancer?

Post by abuss368 »

I have used Turbo Tax and Tax Act before. While both were could and will get the job done I would prefer Turbo Tax for the ease of use.
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LongerPrimer
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Re: Best tax return software for freelancer?

Post by LongerPrimer »

I love The Best inquiries.
Personally I like the one that was developed by the people who did TT, who is the developer of TA. But they changed the interface and raised the pricing of the program which made switching to a new interface/software relatively easy. I also like the one that Microsoft had. TA is OK, a bit clunky but it's cheap and I yearly remember the steps. The best of the best is a DOS program from the developers of TT and TA. It could run on Windows for Workgroups or DOS or DRDos. It even could print on an 8pin printer.
ubermax
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Re: Best tax return software for freelancer?

Post by ubermax »

livesoft wrote:You know there are really not that many federal income tax software products. I say try out TurboTax Deluxe and you are ready to go. However, none of these programs are magic. They are simply "answer the questions and fill in the blanks".

I used TT deluxe last month for my 2013 return. I have all the items you mentioned plus some W-2s.

But I must say I have been doing my own taxes since the early 1970's and have read many of the IRS publications about the topics you mentioned, so maybe my judgement is not what a "relative beginner" should follow?
+1

My experience is similar to Livesoft and I have been using TurboTax for a few years now - the primary reasons :

(1) Beats writing the numbers in by hand
(2) Neat and concise with supporting info for our records
(3) Electronic submission
(4) Reflects changes in the law

I don't think it replaces a knowledge of your own tax situation - similar to Livesoft I've been doing my own since 1970 and the leaning curve has been incremental as our tax situation has changed over the years - now also in contrast to those early years I'm using spreadsheets to help organize my input and verify things like Vanguard's 1099-B information .
LeeMKE
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Re: Best tax return software for freelancer?

Post by LeeMKE »

I also use one of the top tax software programs to do my taxes, and have been a consultant for about 20 years. Before that, I had an accountant who did them for me, and I studied the tax guidance from the IRS carefully to learn what they required/ how I could reduce my tax bill.

I disagree that you must study tax law first, before using the tax software. The software is very well designed, and will guide you to all the forms you need, and not the ones you don't need. IMHO it is the best video game on the market. Once I fill everything in, I play around to see if I can reduce the bill.

TRUE STORY: In my third or fourth year of using tax software, I overrode the software and changed entries in the forms, because I knew better from reading the IRS guidance. Sure enough, I was called for an office audit (these mean they have a few questions they want you to answer, not a full blown audit). In EVERY case that I changed the numbers, the IRS agent targeted my entry, and corrected it back to what the tax software had used. By the 4th or 5th change, we were both laughing because it was obvious I wasn't cheating or incompetent, just over confident I knew better than the software.

TRUE STORY: In 2006, I was certain our return would be too complicated for tax software. We got married, each sold one house, one at a loss, one at a profit, bought a house together, continued one Sch C business, added a second Sch C business, had home offices in both previous homes, and then again in the new home, had a loss to report, had previous losses that exceeded the annual limits and were being written off each year, and a few other details I can't remember now. But when I sat down to do the dummy tax return in preparation for a meeting with a tax accountant, the software popped up with new questions, guided me to new forms, checked to see if I needed multiples of some forms, and correctly calculated everything. Humph. Pretty amazing.
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ubermax
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Re: Best tax return software for freelancer?

Post by ubermax »

LeeMKE wrote:I disagree that you must study tax law first, before using the tax software. The software is very well designed, and will guide you to all the forms you need, and not the ones you don't need
I agree , one certainly shouldn't shy away from using the software for any reason , but from my own personal experience and without going into a lot of detail, it was helpful to have an understanding of some aspects of the tax rules especially when, for example, there's a connection between Federal and State filings .
PatrickA5
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Re: Best tax return software for freelancer?

Post by PatrickA5 »

It helps to understand the tax laws even when using software. I'm a CPA/Tax preparer who has been studying taxes for years. I use Turbo Tax for my own personal taxes and even I have times when I know the ending result is wrong, but have answered a question the wrong way in the tax software. I eventually find what I did wrong, but had I not had a very good idea of what the answer "should" have been, I'd never know that I'd inputted something wrong in the tax software.

I'm all for people using tax software for their simple returns. Anybody can plug in a W2 and maybe a 1099 or two and get the right answer. If you have a complicated return, study up first before trying to do the return yourself. Or, have a good tax preparer do it for you.
ubermax
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Re: Best tax return software for freelancer?

Post by ubermax »

PatrickA5 wrote:It helps to understand the tax laws even when using software. I'm a CPA/Tax preparer who has been studying taxes for years. I use Turbo Tax for my own personal taxes and even I have times when I know the ending result is wrong, but have answered a question the wrong way in the tax software. I eventually find what I did wrong, but had I not had a very good idea of what the answer "should" have been, I'd never know that I'd inputted something wrong in the tax software.

I'm all for people using tax software for their simple returns. Anybody can plug in a W2 and maybe a 1099 or two and get the right answer. If you have a complicated return, study up first before trying to do the return yourself. Or, have a good tax preparer do it for you.
+1 BINGO !!!!!!!!!!!!!!!
IPer
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Re: Best tax return software for freelancer?

Post by IPer »

If you can handle the "work flow" of Tax Act then you save a bit, for me it is not worth it so I use Turbo Tax, I prefer the downloadable product but
the online does almost as much except for a few custom forms that you cannot fill in, you probably would not need any of those, and you can use Turbo
Tax online for free, just pay to file.
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furwut
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Re: Best tax return software for freelancer?

Post by furwut »

TRUE STORY: In 2006, I was certain our return would be too complicated for tax software. We got married, each sold one house, one at a loss, one at a profit, bought a house together, continued one Sch C business, added a second Sch C business, had home offices in both previous homes, and then again in the new home, had a loss to report, had previous losses that exceeded the annual limits and were being written off each year, and a few other details I can't remember now. But when I sat down to do the dummy tax return in preparation for a meeting with a tax accountant, the software popped up with new questions, guided me to new forms, checked to see if I needed multiples of some forms, and correctly calculated everything. Humph. Pretty amazing.
And how do you think the tax account would have prepared your return? Answer - using the same software! Preparing individual returns for people is now a volume business. It has to be highly automated to be profitable. All the tax software companies sell commercial versions of their products but the underlying tax analysis engine is probably nearly identical.

Some of the work is also done in India. You meet with a rep who collects your information, inputs it, and the return is prepared over there. If someone in India can use software to prepare an American tax return I think most people here can as well.
furwut
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Re: Best tax return software for freelancer?

Post by furwut »

I agree that any of the 3 major tax software packages should be fine. Every year at tax time I read the various reviews and none has ever come away heads and shoulders above the rest. In some of the reviews the reviewer prepared their return using all 3 and got the identical results.

TurboTax is probably the best known and the only package I have ever used. Once you start using a particular package it's very appealing to continue with it year after year as importing your data from the previous year greatly reduces the work.

But last year TurboTax, in my opinion, effected an underhanded price increase of removing some very common forms from their Deluxe package making you purchase their more expensive Premium package instead - which I had never needed before. Because of this a friend of mine switched to TaxAct as she had to not only prepare her return but her mother's as well and was unwilling to take a double hit on the price increase. She found it just as easy.

My advice would be to read a few reviews but of the 3, if I were just starting for the first time, TurboTax would be probably be ranked below the other 2 solely because of price. Also keep an eye out for specials! The companies are highly competitive and one can find discounts.
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