Best Tax Prep for the Self-Employed
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Tax season is dreaded by a lot of consumers, but for freelancers or the self-employed, the filing process can be even more complex. Independent contractors looking to file a Schedule C with the IRS as well as small business owners alike may have to account for business expenses, depreciation, income tax, and self-employed tax.
When you’re just starting out as an independent contractor, you may have relatively simple returns. However, as your business grows, so can your tax liability — as well as the need to start evaluating whether or not tax services are something your business should consider. Some of the various tax software programs on the market are certainly one of the filing options you should weigh the pros and cons of as you think about filling out your tax forms in-person or online.
As a freelancer myself, I have often turned to tax preparation software in order to manage my complex tax situation. Using online tax software, it’s much easier for me to explore various tax deductions and organize my tax documents as they come in. Tax preparation software helps me take the invoices I’ve generated year-round and connect them with my state returns and federal tax return in order to streamline my tax filing.
While this article will review a few different tax prep options, the only two I’ve personally used for federal filing extensively are TurboTax and FreeTaxUSA. If you’re not trying to work one-on-one with a CPA or tax professional, the options on this list offer a user-friendly way for taxpayers to handle their federal return and state filing.
In this article
Overview of the best tax software for the self-employed
Tax Preparation Software | Best For |
H&R Block | Online and brick-and-mortar support |
TurboTax | Best user interface |
TaxAct | Good all-around value |
FreeTaxUSA | Least expensive option |
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Best tax software for the self-employed
H&R Block
H&R Block has long made a name for itself by helping individuals and small business owners in the world of accounting and tax preparation. One major benefit of getting to use H&R Block is that you always have the opportunity go get in-person help at a physical branch should you need it. Even so, having their online tax preparation software means that you’ll save some money and get to do your taxes when it’s convenient for you, focusing on one step at a time, should you need to spread the task out.
When you use their self-employed online tax preparation software, you’ll get to take advantage of their maximum refund guarantee and an accuracy guarantee. In practice, this means that your tax prep is free if you find a bigger tax refund elsewhere — and that H&R Block will reimburse you for penalties and interest up to $10,000 should the software make a mistake. You also get to take advantage of audit protection as well as audit support if you get a tax notice from the IRS.
H&R Block’s online software supports a broad array of tax credits when you file. Some of the most common credits you may want to handle using their software include:
- Earned Income Credit (EITC)
- Child Tax Credit (CTC)
- Real estate taxes and home mortgage interest
- Rental income & deductions (Schedule E)
- Student tuition, payments, and/or loan interest
In addition to these credits, you’ll also be able to claim small business expenses, and report things like asset depreciation and other business deductions.
Especially as someone who’s self-employed, this can be a huge benefit. You can use H&R Block to track expenses like mileage, receipts, and other business expenses all year long, making it easier to account for these come tax season. Plus, if you drive for Uber, you can automatically import your 1099-K or 1099-MISC from your Uber account directly to H&R Block’s handy platform. H&R Block also offers other handy features like a mobile app and the ability to use your refund to cover your tax prep.
- Costs, fees or price: $115 + $49 per state filed
- Where to download/enroll/find: www.hrblock.com
- Where accessible: USA
Intuit TurboTax
TurboTax has been a popular option for filing your taxes since the software first launched in 1984. Intuit (who also owns Quickbooks and ) acquired the software in 1993, and since then has ensured that it integrates nicely within the Intuit ecosystem. As such, if you’re using any of these other personal finance solutions, you may get extra bang for your buck using Turbotax for your self-employed taxes.
In order to access all of the tax forms you’ll need filing as an independent contractor or small business owner with TurboTax, you’ll need to pay the $129 fee for TurboTax premium. This is the version of their solution aimed at investors, self-employed, and freelancers. In addition to handling your Profit or Loss from Business Income and Expenses (also known as a Schedule C), you’ll get support for the following tax forms and credits with TurboTax premium:
- Earned Income Credit
- Form 1098-T Tuition Statement
- Schedule 1, 2, and 3
- Schedule D (Capital Gains and Losses)
- Itemized Deductions
- Interest and Dividend Income (Schedule D)
- Form 1099-MISC and 1099-NEC
One of the features that makes TurboTax so seamless for independent contractors is the way it helps you discover industry-specific deductions that you might otherwise miss. From fields like delivery driving and real estate to online retail, consulting, and rideshare driving, TurboTax will automatically remind you of certain expenses you may want to include as business deductions. Particularly if you’re dealing with the sometimes complicated math related to business mileage or a home office deduction, TurboTax is well worth its $129 price tag for Premium.
Another feature that makes TurboTax a breeze for the self-employed is the ability to take a picture of your 1099-NEC or 1099-K forms with your smartphone and upload and autofill them. If you work with a variety of clients and get a lot of 1099s, this can be a major timesaver when it comes to inputting these details. Speaking of import features, if you use QuickBooks for your accounting, you can also import your income and expenses from that account, too. If you have a Schedule C from a prior year, you can also import that to save time. You also get access to their audit defense should the IRS send you a notice.
As far as getting your refund, TurboTax offers a few simple ways to get your money. For starters, you can choose to receive your tax refund via direct deposit or as a check mailed to your address. One additional option (that also serves to illustrate just how powerful the integrations are across Intuit’s software platforms) is to get your refund up to five days earlier if you’ve connected a Credit Karma Money checking account. All of this makes Turbotax just another valuable tool in the already useful suite of Intuit products. If you want to stay on top of your expenses and income year-round, Intuit has the tools to keep you organized.
- Costs, fees or price: $129 + $59 per state filed
- Where to download/enroll/find: www.turbotax.com
- Where accessible: USA
TaxAct
Just because you may not have heard of TaxAct doesn’t mean that it isn’t worth considering. With a Self-Employed and a Sole Proprietor option available, TaxAct is a solid contender for handling your small business taxes. It handles all of the forms you’ll need to manage as an independent contractor, including profit and loss forms via a Schedule C. Other forms and credits TaxAct supports include things like:
- Itemized Deductions on a Schedule A (Form 1040 and Form 1040NR)
- Earned Income Credit
- Mortgage Interest Credit
- Various education credits
- Interest and Ordinary Dividends (Schedule B)
- Capital Gains and Losses (Schedule D)
One way that TaxAct makes transitioning to its online solution easy if you previously filed with TurboTax or H&R Block is its ability to import PDF data from 1040 returns created using either competitor. Similar to TurboTax, TaxAct also helps you maximize your deductions for your business by suggesting similar deductions for filers who are in the same line of business as you. This makes it easy to ensure that your income and expenses are properly reported, as well as depreciation for any assets you’ve purchased for your business.
Like all of the other platforms on this list, TaxAct offers guidance every step of the way as you work to file your return. Similar to H&R Block and TurboTax, TaxAct also guarantees that your return is accurately filed and will get you your maximum refund. They offer that accuracy guarantee with a backing of up to $100,0000 to cover any of your audit or legal costs.
TaxAct self-employed is also a tool that you can use year-round, giving you an easy way to manage your quarterly estimated taxes, too. Plus, you’ll be able to access your returns online up to seven years after you file in case you need to reference anything. While it doesn’t come with the integrated suite of tools Intuit offers, it still packs plenty of value into its $99.95 price tag for federal returns, making it one of the cheaper options for self-employed individuals.
- Costs, fees or price: $99.95 + $54.95 per state
- Where to download/enroll/find: www.taxact.com
- Where accessible: USA
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FreeTaxUSA
With most of the well-known software solutions for tax preparation, paying to file your federal returns will cost you. You’ll also pay an additional fee to file your state tax returns. While you can certainly deduct the cost of tax software as a business expense on the next year’s return, if you want to save money now as a filer, FreeTaxUSA is the cheapest option available to you.
Unlike TurboTax, H&R Block, or even TaxAct, FreeTaxUSA is truly a free option for filing your self-employed taxes. From managing common deductions based on your line of work to creating a Schedule C or home office deduction, you’ll get more than what you paid for with FreeTaxUSA. More popular forms and credits eligible to be managed with the online platform include:
- IRA and pension distributions (Form 1099-R)
- Capital gain distributions (Form 1099-DIV)
- Form 1099-NEC and Form 1099-MISC
- Partnership or S corporation income (Schedule K-1)
- Education expenses (Form 1098-T)
- Student loan interest (Form 1098-E)
- Home mortgage interest, points, and insurance (Form 1098)
One thing to note about FreeTaxUSA is that it can be a little clunkier to use in the user-interface department. By no means is this a major dealbreaker, since it still follows a simple question-and-answer based way of determining certain aspects of your tax situation, but it definitely feels like a free tool. Even so, for a no-frills option that can save you (and your business) money each year, that is a trade that may be worth its while, particularly if you’re just getting started with a side gig or side hustle.
As far as pricing goes, FreeTaxUSA truly is free-of-charge for filing your federal return. However, unlike other tools on this list, you’ll need to pay if you want additional live support (the Deluxe version with this feature costs $8). Additionally, if you’re going to be filing your state taxes using FreeTaxUSA’s software, you’ll also be charged $14.99 per state. This price is still considerably cheaper than other big name tax prep tools, but it is a cost you’ll want to factor in.
- Costs, fees or price: Free to $8 (for Deluxe version with live support + $14.99 per state)
- Where to download/enroll/find: www.freetaxusa.com
- Where accessible: USA
Best tax software for self-employed filers by price
Tax Preparation Software | Self-Emplyed Federal Filing Fee | Self-Employed State Filing Fee |
H&R Block | $115 | $49 per state |
TurboTax | $129 | $59 per state |
TaxAct | $99.95 | $54.95 per state |
FreeTaxUSA | Free to $8 | $14.99 per state |
FAQs
Can I file my state taxes with these tax preparation software solutions?
Yes. While each state has its own tax laws, all of the tools on this list can help you file these returns. Once you’ve filed your federal return, you’ll have a massive head start on your state return, since a lot of the same information can automatically be added to that filing.
Are these software solutions secure?
Yes. Each platform on this list handles your personal data with latest end-to-end encryption technology. One could even argue that filing your taxes online is an even more secure method of handling your self-employed and business taxes than sending them in the mail.
Do you need to understand tax laws to use these tools?
No. The beauty of all of the solutions listed here is that you don’t need to be a tax expert in order to use these tax preparation tools. Each software solution makes filing your taxes a breeze, assuming that you have all necessary forms and documents organized before you sit down to take care of your taxes. Especially if you’re using TurboTax in conjunction with a tool like QuickBooks, you can make short work of your taxes thanks to integrated importing of your income and expenses.
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3. Save effortlessly. Ready to save? Just click Capital One Shopping and the best deal discovered will be applied to your cart.
Why should (or shouldn’t) you use
If you’re self-employed (whether that means you run a small business or freelance as an independent contractor), you need to file your taxes. How you choose to get that task done is up to you. If you want to stay in control of your personal and business finances, using tax preparation software like FreeTaxUSA or TurboTax can be an easy way to get the job done. Especially when it comes to managing granular expenses related to your business, having such a personalized view of everything can be eye-opening for the way you run your business and how you expense certain things.
On the other hand, if your taxes are complex, you and your spouse are juggling multiple 1099s and W2s, or you just need to focus on running your business, you may not want to file your taxes yourself. In those sorts of scenarios, there’s no shame in sending things off to a tax accountant to handle your returns for you. After all, you can still deduct your tax preparation services as a business expense!
The bottom line
Do-it-yourself tax prep software can make handling your business’ taxes much more straightforward. From ease of use to convenience and audit support, the full service functionality of many of the programs on this list can be major lifesavers. Perhaps best of all, you can generally write off last year’s software on this year’s tax return. This may not be as great as getting to use the free version of the software of your choice, but it is pretty darn close.
While all of these software platforms can handle your tax return, which one you choose is ultimately up to you. If you’re already using Intuit QuickBooks to handle your cash accounting as a self-employed individual, Intuit’s TurboTax could be the clear pick. On the other hand, if you want to have the option to visit an in-person tax expert instead of chatting online with customer support, H&R Block’s brick-and-mortar option as well as online software could be an excellent way to get the best of both worlds.
Of course, if your tax situation gets particularly complicated or you’ve graduated to forming an LLC or S-corp, there’s nothing wrong with using a CPA or other tax professional to handle your taxes. While I certainly feel a sense of pride doing my taxes on my own, I’ll also be the first to admit that this year things got particularly complex — leading me to seriously consider talking to a tax professional before filing next year’s return. Ultimately, as long as you’re making the choice that’s right for you and your business, you can’t go wrong.
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Writer
Brent Ervin-Eickhoff is a Chicago-based writer, stage director, and filmmaker with a background in digital marketing and content creation. In addition to Joy Wallet, Brent has written for Complex, Volkswagen, HowlRound, Picture this Post, and Third Coast Review, among others. He currently serves as the Associate Director of Marketing for Content Creation at Court Theatre at the University of Chicago. Brent graduated from Ball State University with Academic Honors in Writing.
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