TurboTax vs H&R Block: The Best Online Tax Software for Entrepreneurs (2020)
This article will compare two of the best online tax software options for entrepreneurs: TurboTax and H&R Block. There are several others that are worth checking out too, like Tax Act, Tax Slayer, Tax Hawk, and more. I have personally used TurboTax for a number of years, and also tried H&R Block one year. These tax services are trusted and make the process much more easy and approachable. They guide you through the tax forms by breaking down the sections into easy to answer questions, and helping you to include everything properly—so you don't get audited by the IRS. All three guarantee 100% accurate calculations and the biggest tax refund possible, but they vary in price and support.
For the DIY boot-strappin' entrepreneur
Taxes in the United States can be intimidating and complicated, especially with the more investments or businesses you have and how many states they're in. One of the most important goals to have in mind while doing your taxes is to not get audited by the IRS, which is a major headache. If you're at an advanced stage, you might already have an actual accountant to help you. I've been using a local accountant for the last couple years. It is quite a bit more expensive than using online tax software, but can be more pleasant and less stressful. However, for the DIY boot-strappin' entrepreneurs out there, an online tax software service can get the job done just fine.
Federal vs state tax filing fees
Filing federal taxes are generally free, but state filing includes a fee, which, at least when you ‘e-file' online, varies with the service more than by the state. However, about 20 states are part of the State Free File program, and you may also be exempt of fees altogether if your income is below $69,000. The tax software companies don't exactly advertise this though, so go through the IRS website here if you can't find the program.
TurboTax is a product of Intuit, which makes a variety of online financial services and software for entrepreneurs, including Mint, Quicken, and QuickBooks. The website is clean and straight-forward, with an easy to navigate menu of dropdowns across the top, and a detailed secondary menu at the bottom of the home page. The “Resources” tab offers some good information and infographics to explain various tax concepts under the “Tax tips & videos” section.
The basic Free Edition includes free filing for both federal and state taxes for the online version. If you use the CD/Download version, the Free Edition is actually $24.99 per state. However, the Free Edition does not include the extra forms that an entrepreneur might need—Schedules C, D, or E, which apply to business income, investment sales, and rental income, respectively. The package geared toward small business owners or sole proprietors is the most expensive that TurboTax offers, starting at $120. TurboTax also has two lower tiers, the Deluxe for $60 and Premium for $90, which include extra guidance and forms for progressively complex tax situations. These prices are for the online services, though they also offer physical CDs and downloads at slightly higher prices for those who prefer a more palpable product. The CD/download version includes unlimited federal returns.
If you'd rather use your phone or a tablet to file your taxes, there's an app for that, for both Mac and Android users. Scroll down to the bottom menu on the TurbTax website to access all the Mobile Tax Apps.
Get your refund
You can choose to receive your refund as a Turbo Prepaid Visa Card to get your refund the fastest, and the actual fee for their service (state filing) can simply come out of your refund if you choose.
H&R Block is another great tax software for entrepreneurs. It's very similar to TurboTax, but has the added infrastructure of brick-and-mortar offices, so you can always go talk to someone in person. I've done this before and had a good experience. You can usually just walk in, but I'd recommend calling ahead to be safe, especially during COVID times.
H&R packages / pricing
The H&R packages are broken up just like TurboTax, with Free ($0), Deluxe ($49.99), Premium ($69.99), and Self-Employed ($104.99). Their fee for state filing is free with the free package, and $44.99 with any paid package. The paid packages come with more forms and carry over information through the different state filings. Both TurboTax and H&R Block come with free audit guidance if trouble should arise.
Import previous tax returns from other services
A competitive feature of H&R is that you can import last year's tax return from H&R or other tax preparers—including TurboTax or TaxAct. They offer an Emerald Prepaid Mastercard as one method to receive your refund, in addition to a check by mail or direct deposit into your bank account.
Get your refund
They offer an Emerald Prepaid Mastercard as one method to receive your refund, in addition to a check by mail or direct deposit into your bank account.
Tax prep considerations
Remember to gather all your forms and keep track of your business expenses throughout the year. TurboTax and H&R Block both have checklists to prepare you for sitting down to do your taxes. If you're self-employed, there are a few extra things, like the Schedule C, maybe some 1099s for freelance gigs, and probably no W-2s. If you haven't done witholding throughout the year, you won't get a big refund and will probably owe taxes, unfortunately.
Home Office Deductions
You *may* be able to claim a deduction for your home office if you work from home, though it's a little tricky. To be honest, I tried doing this one year and then gave up. The criteria are if you have a room or a separate structure (shed, etc) that you use regularly and exclusively for your business, you can deduct it. It's based on square footage of the business room as a percentage of your total home. “If the use of your home office is merely appropriate and helpful, you cannot deduct…” Here's the IRS page about making home office deductions.
Other Tax Services
Of the other online tax services out there, TaxAct and TaxHawk are two of the biggest. Their prices are significantly lower, so they're definitely worth checking out. I just haven't used them so I can't speak to how good they are overall or how easy they are to navigate. I'd double check their support system / cost if you think you'll have any questions.
Do your research and find the tax software for your own situation as entrepreneur or self-employed, but speaking from experience, I like both TurboTax and H&R Block a lot. They have been around for a long time and are big companies. This is both good and bad—they must be doing something right to have so much success, but they do get occasional bad reviews for customer service. It's important to mention that we are affiliate partners, so if you decide to use one, please click through our links to help support our website. That said, I have never had any problems, even when filing in multiple states, and I highly recommend both TurboTax and H&R Block as great options of online tax software for entrepreneurs.
All images are screenshots from the TurboTax and H&R Block websites.
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