What does tax software do?
Online tax software can help you complete and file your tax return with the IRS by the filing deadline (April 15 in most states) while simplifying complicated tax laws and industry jargon.
Most tax software options walk you through the tax filing process in an interview-style format. As you enter details from your tax forms, the software will fill in the corresponding tax forms on your behalf. Many also provide comprehensive FAQs menus to answer pertinent questions you may have as you file. Others will offer help from tax professionals through paid tiers.
The best tax software will take into account all the tax rules and laws and will either file your tax return with the IRS electronically or allow you to print your tax return for mailing. Tax programs also let you enter your direct deposit information so that the IRS can send money directly to your bank account. You can also receive a check in the mail or have your funds added to a prepaid debit card.
Do freelancers need to use tax software?
If you freelance, have a side hustle or own your own business, you’re responsible for paying your fair share of income tax, along with self-employment tax. Freelancers typically do not have taxes withheld from their earnings. So figuring out the exact amount you owe can be tricky. It’s important to keep track of all income streams and expenses related to your freelance work in one place. Tax software can help guide you through your tax requirements during tax season if you have freelance income.
You may also be eligible for a variety of self-employment tax deductions, including the cost of office supplies, travel costs, industry subscriptions and potentially your home office. You may need to itemize your expenses, and the right tax software can help streamline this process.
It’s worth noting that if you have multiple streams of freelance income, your self-employment tax responsibility has become more complex or you feel unsure about what you should be tracking and reporting for tax filing purposes, it may be less expensive and more helpful to hire a certified public accountant, or CPA, instead of using tax software.
How to choose tax software if you’re self-employed
When filing your self-employment taxes, you want to make sure you use tax software that’s appropriate for your tax situation and has all the tax forms and features you need. Audit protection and access to a tax expert may be crucial when filing complicated tax returns. Here are a few factors to keep in mind when choosing the right self-employment tax software:
Ease of use
You want to make sure the tax software you chose has an intuitive interface that makes it easy to navigate the tax filing process. With self-employment taxes, it may also be important to have access to a live chat or frequently asked questions that help you troubleshoot any issues along the way. While TurboTax and H&R Block have clean, easy-to-use interfaces, we also think TaxSlayer, our top pick for self-employed individuals, is simple to navigate.
Cost
This is a major factor you should consider before paying to use tax software. Most tax software options offer tiered payment plans -- and if you have self-employment income, you typically have to pay for the most expensive tier, which can cost hundreds of dollars if you want a tax review or want to hand off your taxes to a tax pro.
One reason why we selected TaxSlayer as our top choice for self-employment taxes is that as of April 14, it costs just under $121 to file a state and federal return for this tier. H&R Block charges $174 for state and federal self-employment taxes, while TurboTax charges $203 for this tier currently.
We recommend considering a CPA if you have complicated or self-employment taxes, since they can offer specialized support and are often the same price -- sometimes even less -- than tax software plans with expert support. Just book your appointment with a CPA soon, so you can file your taxes before the April 15 deadline.
Customer support
If you want to have a tax expert double check your return or want on-demand support while filing your taxes, it’s important to compare the different customer support options and pricing available.
Some tax software companies offer online chat support while others have a phone number you can call with pressing tax questions. But this support often comes with a higher price tag. Compare your options between price, support, and ease of use before signing up to determine if tax software or an accountant makes more sense for your filing situation.
FAQs
If you’re self-employed or a gig worker, you’re allowed to deduct “both ordinary and necessary” expenses related to your work, per the IRS. An ordinary expense is one that’s familiar to anyone in your industry and claimed by other self-employed tax filers. A necessary expense is one that’s absolutely required in order for you to work.
Depending on the specifics of your job, you can deduct all sorts of expenses. Office supplies, travel costs, software, internet service fees, vehicle expenses, insurance costs, advertising and legal services are some of the most common business expenses for the self-employed.
Accurately organizing and reporting your business expenses is a good way to reduce your overall tax burden and increase the size of your tax refund. Be warned, however, that self-employed business deductions can be a red flag for IRS audits — make sure to keep all of your receipts and documentation if the IRS has to review them. It is best to ensure your calculations are not overstated.
Many taxpayers can file their tax returns for free, and some may have several options to choose from. If your adjusted gross income is $84,000 or less, you can use the IRS Free File program.
Both Cash App Taxes and FreeTaxUSA will let anyone file a federal tax return for free. Cash App Taxes also offers one free state return.
Other commercial software like TurboTax, H&R Block, TaxSlayer and TaxAct do offer free versions of their software, but they are limited in the IRS forms they include and service provided. Most free versions of paid software do not include the forms that self-employed taxpayers need to complete their tax returns.
Freelancers generally receive IRS 1099-NEC forms that detail their taxable income from various payers. Other forms include 1099-MISC forms that report miscellaneous income like rent or attorney payments.
If you earned more than $5,000 and/or had 200 or more transactions from online payment services in 2024, you may receive a 1099-K form. Online payment processors have specific 1099-K thresholds, it is best to check your payment processor’s tax reporting dashboard to determine if you’ve received a 1099-K. Even if you do not meet the payment processor’s threshold to receive a 1099-K, it is still your responsibility to report those transactions to the IRS. The payment processors have a responsibility to send this data to the IRS, it is a good rule of thumb to ensure the totals reported on your tax return are the same as your payment processor’s.
When filing their tax return, most freelancers will need to complete IRS Schedule C, Profit or Loss from Business. Self-employed workers should use that form to report their taxable income and business expenses for tax deductions. Throughout the entire tax year, utilize a spreadsheet, app or software to help you track the income received and expenses paid out to ensure your totals are correct for tax filing.
Methodology
CNET reviews tax software by comparing products across a set criteria. We use the software to prepare personal tax returns, examine tax products’ terms and offers, communicate with software representatives to resolve questions about products, compare feature sets and analyze each software for its effectiveness in common tax situations.
We consider the features and functionality of the tax preparation software, the user experience, the software interface, website performance, quality of help and support, and the value based on price. We are also looking for and evaluating specific features, including file importing or photo capture of forms, number and type of available IRS forms and schedules, contextual help, desktop and phone/tablet compatibility and syncing, professional tax assistance, maximum refund and accuracy guarantees, live support and security protections.
Specifically for best tax software for freelancers, we consider the number and types of IRS forms and schedules related to freelance work that are included with tax software, the level of support and help directed toward freelance tax filers, and the additional cost required of self-employed tax filers.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
