Self-employed individuals often have unique tax requirements that can be overwhelming to manage during tax season. Fortunately, tax software can help you understand how to file self-employment taxes and make the process easier by streamlining the filing process and providing guidance on available deductions and 1099 rules. In this article, you’ll discover several tax software options that stand out as the best for self-employed people, offering a combination of user-friendliness, affordability, and robust features.
What is tax software?
Tax software is an essential tool for individuals, especially small business owners and self-employed professionals, to manage their tax affairs efficiently. In general, the best tax software for small business is designed to make tax preparation easier and more efficient. Here’s an overview of what tax software is and what it offers for small businesses:
- Digital Tax Assistance: Tax software is a digital program that significantly simplifies the tax filing process. It’s designed to assist users in calculating, preparing, and submitting their tax returns accurately and efficiently.
- Maximizes Deductions: One of the primary advantages of using tax software is its ability to help taxpayers identify and claim all the deductions and credits they’re eligible for. This feature ensures that users don’t miss out on potential savings.
- Cost-Effective Solution: By using tax software, individuals and small businesses can avoid the higher costs associated with hiring a professional accountant or purchasing expensive tax preparation tools.
- User-Friendly Interface: Most tax software programs come with a user-friendly interface, making it easy for individuals without a background in finance or tax law to navigate the complexities of tax preparation.
- Time-Saving Features: These programs often include features like the ability to import previous years’ tax information, auto-fill forms with financial data, and more, which can save a considerable amount of time.
- Accuracy and Compliance: Tax software is regularly updated to reflect the latest tax laws and regulations, ensuring compliance and reducing the risk of errors that can lead to audits or penalties.
- Audit Support: Many tax software programs offer audit support, providing guidance on what to do if you’re audited by the IRS.
- Electronic Filing: The ability to e-file tax returns directly through the software streamlines the submission process and often leads to faster processing of refunds.
- Tailored for Specific Needs: The best tax software for small businesses is specifically designed to address the unique tax situations and challenges faced by small business owners, including handling self-employment income, tracking business expenses, and more.
- Additional Resources: Many tax software options also provide additional resources such as access to tax professionals, educational content about tax laws and financial planning, and tools for tracking and organizing receipts and expenses throughout the year.
In summary, tax software is a valuable resource for simplifying and optimizing the tax filing process, offering a range of tools and features tailored to the needs of individuals and small business owners.
Why should you consider self-employed accounting software?
Self-employed accounting software offers many advantages for business owners in 2023. Here are five reasons why you should use tax software:
- Streamlines tax filing: Self-employed accounting software automates the tax filing process, reducing errors and saving time so you can focus more on your fun self-employed jobs.
- Organizes income and expenses: The software categorizes income and expenses, helping you track cash flow and identify tax deductions.
- Offers real-time financial insights: Self-employed accounting software provides real-time financial insights, enabling you to make informed decisions.
- Provides data security: The software securely stores your financial data, protecting you from potential data breaches or losses.
- Affordable and easy to use: Most self-employed accounting software options are affordable and user-friendly, making them accessible to businesses of all sizes.
Choosing the Best Tax Software for Self-Employed Individuals: Our Methodology
In our quest to provide self-employed professionals with the most reliable and efficient tax software options, we rigorously evaluate each product based on specific criteria. These criteria are rated on a scale of 1 to 5, where 1 indicates lesser importance and 5 signifies critical importance to our evaluation process:
- Ease of Use
- Importance: 4
- We prioritize software that offers an intuitive and user-friendly experience. A streamlined and simple interface is crucial for time-strapped entrepreneurs.
- Specific Features for Self-Employed Individuals
- Importance: 5
- It’s essential that the software provides specialized features such as Schedule C support, expense tracking, and the ability to manage personal and business expenses distinctly. These features are fundamental for accurately handling self-employment tax nuances.
- Accuracy and Compliance
- Importance: 5
- Accuracy in tax calculations and compliance with the latest tax laws are non-negotiable. We focus on software that guarantees up-to-date compliance to avoid legal issues.
- Cost-Effectiveness
- Importance: 3
- We consider the balance between cost and functionality. Affordability is important, but not at the expense of essential features and reliability.
- Customer Support and Resources
- Importance: 4
- Strong customer support is crucial, especially for complex self-employed tax situations. We look for software offering comprehensive help through various channels.
- Security
- Importance: 5
- Given the sensitive nature of tax data, robust security measures are imperative. We only recommend software with stringent security protocols.
- Integration with Other Tools
- Importance: 3
- The ability to integrate with other business and financial tools is a valuable feature that can enhance the overall tax preparation process.
- Audit Assistance
- Importance: 4
- Software that provides audit support or guidance is highly regarded, as it can be a critical aid in the unlikely event of an audit.
Our evaluation is designed to ensure that the tax software we recommend not only meets the essential requirements for tax filing but also supports the diverse needs of self-employed professionals effectively.
Best Self-Employed Tax Software Programs
To help you choose the best self-employed tax software program for your business, we’ve compiled a list of some of the top options available. These programs stand out for their user-friendly interfaces, comprehensive features, and affordability.
1. Turbotax Self Employed
TurboTax Self-Employed is a tax solution aimed at independent contractors and freelancers in the United States. With a rating of 4.6/5 from 9,463 reviews, TurboTax Self-Employed offers a range of features, including industry-specific deductions, searching for 500 tax deductions and credits, personalized audit risk assessment, and self-employment tax guidance. The software is also available in Spanish.
TurboTax Self-Employed offers step-by-step guidance, allows users to snap and auto-fill their 1099-NEC and 1099-K forms, and syncs with financial accounts to find and categorize work-related deductions. The software costs $119 for a Federal tax return and $59 for State taxes.
2. Quickbooks Self Employed
QuickBooks Self-Employed provides small businesses and independent contractors with basic bookkeeping tools to help them get ahead. Made specifically for self-employed businesses, features include tracking mileage automatically via GPS, importing expenses from bank accounts, organizing receipts through photo categorization, running built-in reports to analyze business performance, and estimating and filing taxes.
The software offers three flexible plans with varying levels of features, including a bundle with Intuit TurboTax Self-Employed that enables direct payment of quarterly estimated taxes and access to real CPAs for advice and help with filing. QuickBooks also automatically syncs all bank and credit card transactions for seamless tracking of income and expenses.
3. H&R Block Self-Employed Online
H&R Block offers an online tax filing service, specifically designed for self-employed individuals and small business owners. The service includes features such as personalized guidance, technical support, and expense tracking, as well as easy importing of Uber income and support for reporting cryptocurrency sales.
H&R Block offers several guarantees, including a Max Refund Guarantee and an Accuracy Guarantee. The service also provides access to live phone or chat tech support and the ability to digitally organize tax documents for up to six years. It costs $115
plus $45 per state filed.
4. TaxSlayer Self-Employed
TaxSlayer offers a tax preparation service for self-employed individuals, including small business owners, contractors, and those with both 1099 and W-2 income. The service costs $59.95 plus state fees and provides support for entering business income and expenses, maximizing deductions, and accessing tax tips and resources.
Users also have access to a tax professional with self-employed expertise for more complex tax questions and audit defense for three years. Tax payment reminders are also available to avoid unnecessary fees. TaxSlayer has been in operation for over 50 years and has a 4.4 out of 5 rating on Trustpilot.
5. FreeTaxUSA
FreeTaxUSA is a tax preparation software that allows small business owners to prepare and e-file their federal and state taxes. Federal taxes are free while state tax returns are $14.99. The software supports various tax forms and deductions, including self-employed income, rental income, health insurance costs, vehicle expenses, and more.
The company earns revenue from optional services and state tax returns. The platform also provides customer support and guarantees that users won’t pay extra to file if they are self-employed, own a home, or have investments. FreeTaxUSA has filed over 50 million tax returns securely with the IRS.
6. TaxAct Self-Employed
TaxAct Self-Employed offers tax preparation services for freelancers, independent contractors, small business owners, and sole proprietors. They help users take advantage of all tax deductions they’re eligible for and offer year-round support for business and quarterly taxes.
TaxAct can import data from TurboTax and H&R Block returns, and their products are easy to use, accurate, and secure. TaxAct Alerts ensures that users avoid errors, omissions, and missed tax-saving opportunities. TaxAct also offers a Maximum Refund Guarantee, Xpert Assist, and a $100K Accuracy Guarantee. Users can access and print prior returns for up to seven years after filing.
7. eSmart Tax Premium
eSmart Tax is a tax preparation service that offers its Premium package for $85.95, best suited for small business owners or those with less common forms of income. The package covers self-employment income and related deductions, rental or farming income, and more.
eSmart Tax guarantees fast and accurate calculations and promises to reimburse any penalties or interest resulting from miscalculations. It is backed by Liberty Tax and provides features such as audit protection and tax break checks. eSmart Tax guarantees 100% accuracy and promises to provide the biggest tax refund possible or reimburse the tax preparation fees.
8. E-file.com Premium Plus
E-file.com offers online tax preparation software that helps people file their income taxes fast, easily, and accurately. Users can signup for a free account, enter their tax info and income figures, and any deductions, and the software will calculate and prepare their returns.
E-file.com provides full-featured online tax software at a significant discount to other programs. The Premium Plus E-file is $37.49 plus $22.49 for State with a coupon code.
9. FreshBooks
FreshBooks is a user-friendly and top accounting software for self-employed individuals. It makes accounting, invoicing, time tracking, and reporting effortless. The software allows users to automate tasks such as organizing expenses, tracking time, and following up with customers.
FreshBooks offers online payment solutions that get users paid 11 days faster, send automated late payment reminders, and allow for the creation of recurring profiles. With FreshBooks, users can easily organize business expenses and track billable hours.
10. Jackson Hewitt Online
Jackson Hewitt Online offers online tax filing for a flat fee of $25 with a guarantee of the biggest refund. The service offers step-by-step instructions, live chat support, and automatic error checking. It also provides security features, including two-step identity verification, encrypted data transmission, and alerts for account activity.
Jackson Hewitt also provides in-person tax filing services with flexible hours and locations, and a range of guarantees, including a Maximum Refund Guarantee and a Lifetime Accuracy Guarantee.
| Software | Key Features | Pricing | Unique Offerings |
|---|---|---|---|
| TurboTax Self Employed | - Industry-specific deductions - 500+ tax deductions and credits - Audit risk assessment |
$119 Federal, $59 State | - Snap and auto-fill 1099 forms - Syncs with financial accounts |
| QuickBooks Self Employed | - Mileage tracking via GPS - Import expenses from bank accounts - Organize receipts with photos |
Varies (Flexible plans) | - Bundle with TurboTax for tax filing - Access to CPAs |
| H&R Block Self-Employed | - Personalized guidance - Technical support - Cryptocurrency sales reporting |
$115 plus $45 per state | - Digital organization of tax documents for 6 years - Max Refund and Accuracy Guarantees |
| TaxSlayer Self-Employed | - Business income and expense entry - Access to tax professionals |
$59.95 plus state fees | - Audit defense for three years - Tax payment reminders |
| FreeTaxUSA | - Supports various tax forms and deductions - Free federal tax filing |
Free Federal, $14.99 State | - No extra charge for complex tax situations - Secure filing with the IRS |
| TaxAct Self-Employed | - Year-round business and quarterly tax support - Data import from other tax services |
Varies | - $100K Accuracy Guarantee - Xpert Assist - Access and print prior returns for 7 years |
| eSmart Tax Premium | - Self-employment income and deductions - Rental or farming income |
$85.95 | - Backed by Liberty Tax - Audit protection and tax break checks |
| E-file.com Premium Plus | - Easy, fast online tax preparation | $37.49 Federal, $22.49 State with coupon | - Significant discount compared to other programs |
| FreshBooks | - Accounting, invoicing, time tracking - Automated tasks |
Varies | - Online payment solutions - Faster payment processing |
| Jackson Hewitt Online | - Step-by-step instructions - Live chat support - Automatic error checking |
$25 flat fee | - In-person filing options - Maximum Refund and Lifetime Accuracy Guarantees |
How to Choose the Best Tax Software for the Self Employed
Choosing the best tax software for self-employed individuals can be overwhelming. To make it easier, here are four factors to consider when making your decision:
Available Tax Forms
Not all tax software programs support every tax form, so it’s important to check if the program you’re considering supports the forms you need.
Cost
Cost is an essential factor when selecting tax software for self-employed individuals. Some programs offer free versions with limited features, while others charge a premium for their services.
User-Friendliness
Look for a tax software program that is intuitive and user-friendly. The software should offer clear guidance and instructions throughout the tax filing process.
Customer Support
If you’re new to tax filing or require assistance, look for a program that provides adequate customer support. Some programs offer phone support, chat support, or email support, so choose one that fits your needs.
Can a self-employed person file their own taxes?
Yes, self-employed individuals can file their own taxes using tax software or paper forms. However, it’s important to have a good understanding of tax laws and regulations to ensure compliance and minimize errors.
Can a self-employed person file taxes for free?
Yes, self-employed individuals may be eligible to file their taxes for free using certain tax software programs like FreeTaxUSA or by utilizing free filing options offered by the IRS. Eligibility requirements vary by program.
Is it better to use a tax preparer or tax software if you’re self-employed?
The decision to use a tax preparer or software depends on your personal preference, budget, and tax situation. Tax software is often more affordable and user-friendly, while a tax preparer can provide personalized guidance and advice.
What is the best accounting software for self-employed taxpayers?
The best accounting software for self-employed taxpayers depends on your specific needs and budget. Popular options include QuickBooks Self-Employed, FreshBooks, and TaxSlayer Self-Employed.
Which tax software is best for calculating self-employed business expenses?
Many tax software programs offer features for calculating and deducting self-employed business expenses. Some popular options include TurboTax Self-Employed, H&R Block Self-Employed, and TaxAct Self-Employed.
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This article, "The Best Tax Software for Self-Employed People in 2023" was first published on Small Business Trends