Best tax software for the self-employed and self-employed in 2023

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free work Not all sweatpants have snooze buttons.

Well, sometimes it is. But most of the time, it’s about cabin fever, caffeine withdrawals, volatile cash flows, and fierce competition for customers.

When you boil it down, being your own boss is really hard work — and no time is more evident than with tax season.

Compared to those with a typical 9-to-5 job, freelancers, independent contractors, and other freelancers face a unique set of challenges when it comes to filing an annual return. For one thing, you need to keep business records throughout the year separate from your personal records to ensure you’re organized once tax season rolls around. You are also responsible for creating files Estimated tax payments(opens in a new window)(Opens in a new tab) Every quarter, since the money isn’t automatically deducted from your paycheck throughout the year.

Perhaps most frustratingly, instead of getting a tax refund like 9 to 5 people, you may actually need to pay extra money to cover the year’s taxes in the event that those estimated payments are less than required. (You might be punish(opens in a new window)(Opens in a new tab) If you neglect to pay them outright.)

Oh, and don’t forget the massive federal 15.3% Self-employment tax(opens in a new window)(Opens in a new tab) You are required to pay if you are He earned at least $400(opens in a new window)(Opens in a new tab) of your freelance work. Sure, it’s heading toward Social Security and Medicare which is great for you in the future — Maybe maybe?(opens in a new window) – but not very interesting for Current You.

If your head isn’t already swinging from all that tax talk, consider the fact that QuickBooks survey(opens in a new window) Among the 500 self-employed found that taxing the individual is among the most difficult challenges faced by the self-employed in modern times. It’s a loathsome, tedious ordeal — loathsome and tedious, in fact, more than a third of self-employed workers don’t even bother paying taxes, according to the same survey.

Since tax evasion is a type of felony, filing the return each year is in your best interest. However, simply filing taxes is not enough. If you try to figure it all out on your own, you can still run into heavy penalties and interest if you make a mistake. On the other hand, you can always go to a CPA and have them take care of your income tax return for you, but their fees can burn a hole in your pocket as well.

For a happy medium between the two, consider opting for some tax software.

What is tax software?

Tax software is a type of software designed to guide users through the process of preparing and filing their returns, helping them comply with tax laws while identifying any deductions and credits that may be available. Basically, it is software that makes paying your taxes less taxing.

In the past, tax software came in the form of a CD that you could download to your desktop computer. (How retrograde.) Nowadays, you can only download software from a trusted tax preparation company’s website. Or even better, some tax preparation tools are available entirely online or via a mobile app for maximum convenience.

What should you look for in tax software?

“Freelancer” is synonymous with “self-employed” employerIn the eyes of the IRS (more specifically)Sole owner(opens in a new window)(Opens in a new tab)), so you will report your business income and expenses on schedule c(opens in a new window)(Opens in a new tab) And your self-employment tax on a SE scheduler(opens in a new window)(Opens in a new tab); Include both with your Figure 1040(opens in a new window)(Opens in a new tab)Standard individual tax filing form. The tax software you use will definitely need to support these paperwork Form 1099-NEC(opens in a new window)(Opens in a new tab), non-employee income document that you get from your clients in lieu of a W-2. You may also receive a file Form 1099-K(opens in a new window)(Opens in a new tab) From a third party payment network such as Venmo or PayPal if your customer(s) pays you at least $600 this way.

Other good features include:

  • Easy-to-use e-filing process with straightforward questions and prompts

  • Kind of accuracy and maximum refund guarantees

  • Strong customer support, with optional access to a real tax expert in case of an emergency

Don’t forget that you will also need to file your state taxes in addition to your federal taxes (unless your Do not collect income tax(opens in a new window)(Opens in a new tab) – See Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming). Some tax software providers will include one state for free, but most will charge you depending on the state in which you need to file.

Also, keep in mind that the cheapest tax software option is not necessarily the best tax software option. The software you choose should be powerful enough to handle complex tax situations and elicit tons of potential deductions, and also ready to offer a high level of protection in case you get audited. In other words, now is not the time to be stingy: You want your taxes done, but also done right. This doesn’t mean you have to pay for features you don’t need, just make sure you cover your bases.

What can independents deduct from their taxes?

Speaking of deductions: One thing freelancers go for during tax season is the fact that they can write off more work-related expenses than the average employee—including office supplies, internet bills, meals, education, mileage, health insurance premiums, and the portion of rent you Covers your home office. Don’t be too rude, though: These expenses should be “normal and necessary” for your business, depending on tax authority(opens in a new window). (So ​​you can’t write off a road trip just for fun, for example.)

Is it worth having an accountant do your taxes?

If you have a very minimal tax situation, if you already have a few years of freelance registration under your belt, and/or if you earn less than $73,000 a year, you may be able to get a free deposit option through The IRS’s Free File program(opens in a new window)(Opens in a new tab). However, most freelancers will have complex enough tax situations to warrant a paid software solution with premium features and built-in support from seasoned tax professionals. Budget for about $105 for your federal return and about $50 for each state return.

That’s all to say that you probably don’t need to splurge on getting a real CPA, but that’s always an option if you don’t feel comfortable signing up on your own. According to the National Association of Accountants survey(opens in a new window)the standard American company charges an average of $343 for detailed(opens in a new window)(Opens in a new tab) Form 1040 with status return and $220 for the unstated Form 1040 with status return, plus $192 for Schedule C and $41 for Schedule SE. Most will also bill you for 1099s ($67.72 on average) and unorganized or incomplete files ($165.82 on average).

What is the best tax software for the self-employed?

Here are the program options with support for Schedule C, Schedule SE, Form 1099-NEC, and Form 1099-K we recommend for tax season 2023. (Note: All of the following are online products that were around in Fall 2022.)



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