Tracking income and doing your taxes can be quite stressful, and it only gets more complicated as a freelancer. Compared to traditional 9-5 employees, freelancer workers have a unique set of problems when it comes to taxes. You need to worry about estimated payments, paying your fair share into social security, and collecting 1099s.
Having the right assistance can make this process easier, which is why I review some of the best tax software for freelancers.
Why Freelance Taxes Are Complicated
We can’t deny that being a freelancer comes with a lot of positives. Acting as your own boss can relieve the stresses that happen when you work for a demanding employer. Other freelancer perks include working on your time, setting your own rates, choose the projects you want to work on, and many more.
Freelancing is a great way to make money while doing something you love. However, with everything in life, there are always downsides that muddy things up. Being responsible for your business isn’t as easy as it may sound.
You have to be aware of several responsibilities when you’re self-employed, with taxes being one of the most important. A 2018 survey by QuickBooks showed that 500 freelancers consider one of the most challenging parts of being self-employed is doing their taxes.
The QuickBooks survey also found that more than one-third of freelancers don’t even pay taxes due to it being a huge hassle and headache-inducing. This is a bad idea. Tax evasion is a serious criminal offense.
If you underpay your taxes, you can be fined and audited. To avoid overpaying, you need to thoroughly track and record every business expense throughout the whole year. These can include hiring help, buying a new laptop, and anything else you need to keep your business running.
Reviews of The Best Tax Software for Freelancers
Thankfully, tax software makes things easier. Even so, finding the right one for you may prove to be challenging.
To help, I compiled a list of the best tax software for freelancers. I specifically looked for those that help track self-reported income, business expenses, and 1099 forms. I hope that my list will help narrow down your search!
1. H&R Block Self-Employed Online
This list wouldn’t be complete without H&R Block Self-Employed Online. It is one of the most popular and well-known tax software companies on the market today. It’s very user-friendly while also being feature-rich.
The self-employed package has a very neat feature where the program will ask you questions about your profession, income, and expenses. It is super beginner-friendly.
If you need more information before answering, each question can be expanded upon to learn more about why they are asked. The program then immediately scours for every potential business credit and deductible out there. This step is to ensure that you get the best possible tax refund.
H&R Block boasts a guaranteed 100% accuracy in their services. You can conveniently import all relevant expenses that can be considered as business-related, such as Uber rides and meal receipts during a business trip. This tool is one-of-a-kind and H&R Block’s star feature.
Another great thing about H&R Block is their impeccable customer support. You can reach their support team through online chat or phone. You can even visit one of the thousands of their physical stores for extra in-person assistance.
2. H&R Block Free File
If you just need basic help, you may want to try the H&R Block Free File program. This option is perfect for people who are on a tight budget and have simple tax returns.
Don’t be turned off by the free price. Many beginners may not need feature-rich tax software to help them organize their stuff. This is the best tax software for freelancers who need to file Form 1040 and account for a few common tax breaks.
H&R Block Free File also lets you file Schedules 1, 2, and 3. This aspect is a significant bonus as a lot of self-employed workers need to file those forms without realizing it. They allow you to report critical information such as deductible student loan interests, business income, alimony, etc.
On top of this, you also get a great and user-friendly interface. Even in the free edition, H&R Block goes out of its way to guide you through the process. Overall, it is a suitable entry-level tax software for freelancers who have tight wallets.
3. FreeTaxUSA Deluxe Edition
If you’re low on budget but still want feature-rich tax software that is arguably better than free editions and have access to live customer support, you can check out FreeTaxUSA Deluxe Edition. This budget-friendly and easy to use tax software is one of the top picks for freelancers who are just starting.
FreeTaxUSA Deluxe Edition steers away from the Q&A interview process and instead goes straight to helpful and comprehensive explanations to commonly asked questions. FreeTaxUSA, as the name implies, can actually be used for free; however, it is worth it to upgrade to the Deluxe Edition for just a few bucks.
This affordable tax software can track down more than 350 deductions and credits to maximize your refunds and minimize liability.
TaxSlayer is a tax software perfect for freelancers who are confident in their abilities to do their own taxes. TaxSlayer has a unique pricing policy. They don’t place the prices of their packages based on their features; instead, TaxSlayer bases their prices on the level of support they provide.
The TaxSlayer Classic package has access to the same features that their most expensive software package has. These features include but are not limited to self-employment returns, rental income, itemizing investments, etc. When opting for this level, you get fewer support options compared to the expensive plans.
If you’re an experienced freelance taxpayer, you will save a lot of money from not paying the hands-on support that other tax software companies offer. However, you can still reach tech support through phone and email for free.
Doing your taxes as a freelancer can be quite a headache, but it doesn’t have to be this way. Leverage the right tax software can make filing less stressful.
If you are not sure which to choose, I suggest going with H&R Block Self-Employed Online. With its fully loaded toolkit, H&R Block is the safest bet and a good investment.
I have been a freelance digital marketer since 2014, specializing in content marketing and editing. My interest in finance and frugal living began while living overseas, inspiring me to start this blog. When I am not helping clients generate more leads or market their services, I explore the world, listen to podcasts, and dream big.