The beginning of the year inevitably leads to thoughts of April 15 and the upcoming tax season. Millions of Americans rely on tax software packages to help them file their taxes. Tax software aids people in navigating their way through complicated tax rules and typically costs less than hiring an accountant. It can also help taxpayers file — and receive any refund they’re due — early.
Much of the attention often goes to packages such as TurboTax, TaxAct and H&R Block. But TaxHawk stands out as a compelling choice. The following information should help you decide whether the online software package can serve your tax preparation needs.
TaxHawk is one of the lower-cost options available for tax software. The vast majority of federal filers can use the software for free. Where the company earns money is on state returns and services offered by the deluxe option. TaxHawk Deluxe offers additional features such as moving you to the front of the line with customer service questions submitted by email, unlimited amendments to returns and help with audits should they occur.
Users have several modules to choose from under TaxHawk’s Products & Pricing menu. In addition to navigation links to the free and deluxe editions, you’ll find options for filing a tax extension or filling out a prior year’s return. You can prepare returns for as far back as 2012, but you’ll need to print and mail in the completed forms.
TaxHawk offers a straightforward user interface. After setting up the account, it takes down your basic information such as filing status and dependents. After asking about an optional upgrade to TaxHawk Deluxe, the process starts in earnest. The first section, for reporting income, breaks down earnings by three different types:
- Common Income: As the name implies, this covers the kinds of income most taxpayers earn, such as wages, Social Security, retirement income, interest, dividends, capital gains and capital loss carryovers.
- Business and Rental Income: This section deals with income earned as a sole proprietor or partner as well as farm or rental income earned during the year.
- Uncommon Income: Examples of unusual types of income include gambling, scholarships, royalties, canceled debt and the sale of a primary home.
The program moves on to deductions. Here you can enter deductions for taxes, charitable contributions, mortgage interest and other common write-offs. TaxHawk uses that information to determine whether you’re better off taking the standard deduction or itemizing. It then goes through these deductions on an individual basis, with sections addressing even less common situations such as excess IRA contributions, teacher expenses or home energy credits.
Don’t Forget: The 6 Most Important Tax Deductions You Need To Claim
Once you complete the deductions, TaxHawk takes you to a Miscellaneous section that deals with estimated taxes paid, foreign income and any taxes paid on behalf of nannies or other household employees. You then have the option to run the Refund Maximizer analysis.
After completing this section, you review a summary before moving on to a section for preparing your state tax return, if applicable. After you’ve completed your state tax form, you can check your returns one last time before beginning the filing process.
Check Out: The Average IRS Tax Refund Amount by State
TaxHawk allows you to import some data. Taxpayers who used TaxHawk, TurboTax, TaxAct or H&R Block for last year’s return may import a PDF of their returns. Doing this allows for easier data entry. But TaxHawk doesn’t offer import capabilities for information on W-2s, 1099s or investment statements.
Some filers will need the import feature more than others. For people who earn employee wages from one source and have few separate investment accounts, this is likely a minor inconvenience at worst. But taxpayers with significant tax carryovers and numerous accounts might find that the lack of an import feature makes for an arduous manual process.
The TaxHawk software has a real-time tax refund or taxes owed tally that automatically updates as you enter your tax information.
The Refund Maximizer will analyze your return and ask you questions to maximize and protect your refund. In fact, TaxHawk guarantees its software will get you the biggest refund as quickly as possible.
How Much Does TaxHawk Cost?
TaxHawk doesn’t charge users for filling out a federal income tax form with its software. Given this, you might ask how the company earns revenue. In addition to charging fees for state returns, the company makes money on upgrades to TaxHawk Deluxe and product add-ons to both the free and deluxe plans.
As mentioned before, federal income tax preparation is free for all users, including the self-employed and individuals with investment or rental income. The free plan also includes the use of the Refund Maximizer, prior year federal returns, extensions and transmitting your return to the IRS.
The free plan imposes a fee of $12.95 for each state return you prepare for the current year — $14.99 for each prior-year return.
Gallery: IRS Delayed Refunds Last Year for Millions of Taxpayers — Here’s How To Get Yours Faster (GOBankingRates)
Hire a Professional
Find That Professional Before It’s Too Late
Use an Online Program To Ensure Accuracy
Double-Check All Your Personal Identification Information
Double-Check All Your Tax Credits
Double-Check That Your Wages Match What’s on Your W-2
Double-Check the Social Security Numbers for Everyone on Your Tax Forms
Make Sure You Have Selected Only One Filing Status
Make Sure Only One Parent Is Claiming Your Child as a Dependent if Filing Separately
Don’t Wait Needlessly To File Your Taxes
File Your Taxes Electronically
Make Sure Your Direct Deposit Information Is Correct
If You File by Paper, Make Sure You Do It Correctly
Don’t Miss the April 15 Deadline
Users who need help to fill out their tax form can choose the $6.99 TaxHawk Deluxe plan. Deluxe members will receive priority support via email plus the ability to conduct live chats with TaxHawk tax specialists.
But the service doesn’t end there. Should you forget something after transmitting your return, the TaxHawk Deluxe allows for unlimited amendments free of charge. And in the event that the IRS audits your tax return, TaxHawk’s audit specialists will answer your questions and guide you through the audit process.
Who Should Use TaxHawk?
TaxHawk will likely work well for certain types of tax filers.
Taxpayers who live in states without state income tax can do all of their taxes at no charge. Admittedly, the costs of upgrading to a TaxHawk Deluxe account and filling out a state form might not amount to much money, but every little bit helps.
Second, despite TaxHawk’s handling of investment, rental and self-employment income, it will tend to appeal to those with simple tax situations. The reason is that TaxHawk offers only limited functionality for data imports.
Who Should Pass on TaxHawk?
TaxHawk is not for everyone. Although it offers extensive functionality, some filers might not experience the smoothest user experience.
Due to limited import capabilities, filers with more complicated tax situations must enter data manually. Considering the time that could take, a more robust software package might better serve this type of taxpayer.
Also, TaxHawk does not work well for people with earnings in multiple states. In the event you earned income in three different states last year, you would have to pay for three separate state tax forms at $12.95 each. In this case, software packages that include state income tax forms might serve you better.
Don’t Miss: 10 Tax Loopholes That Could Save You Thousands
Alternatives to TaxHawk
Taxpayers have numerous choices when it comes to tax filing software. It has become a more complicated decision than choosing between TurboTax and TaxAct, both of which earned spots on GOBankingRates’ list of the Best Free Tax Software Programs To Use Right Now. Though TaxHawk’s functionality and cost might appeal to some users, knowing what else is available can help you make an informed decision. Here are some of its better-known competitors:
TurboTax offers both downloadable and online products. Its online version starts as a free product with limited functionality. Added features come at an increased cost, though they do include phone and online support. The most popular version, called Deluxe, costs $60, with state versions adding $40 more to the price. The cost includes accuracy and security guarantees as well as the maximum refund amount possible — even if refunds are not always a good thing. You will have to consider factors such as mortgage interest deductions or self-employment income when deciding which version is best suited for you.
Unlike TaxHawk, TurboTax lets you import data and input information from your W-2 by taking a picture of the document.
Tax software company TaxAct has provided tax preparation solutions for individuals, businesses and tax professionals since 1998, promising to get you the “best possible result” without paying a premium price.
TaxAct offers limited features with the free version. Added functionality comes at a price. Its most popular Deluxe version and Premier packages sell for $24.95 and $34.95, respectively. State tax forms cost an additional $44.95.
H&R Block has helped prepare taxes since 1955, but today’s consumers seem to know it best for its H&R Block software. In many respects, it resembles TurboTax and TaxAct, offering both downloadable and online versions, with a free version offering limited features.
Like its main competitors, H&R Block charges filers based on their needed functionality. H&R Block Deluxe sells for $29.99, with a cost of $36.99 for state income tax returns. Where this package stands out is by offering these versions with support. The company’s Online Assist allows you to file taxes with on-demand help from a tax expert, enrolled agent or CPA. The service comes at a significantly higher cost, and the version chosen will determine how much extra this service costs. H&R Block Deluxe with Online Assist costs $69.
Filling out forms and filing taxes remains both a time-consuming and uncertain process that sometimes stokes fears of accidental tax fraud, so some taxpayers play it safe by hiring an accounting professional to prepare their tax returns.
Although an accountant could cost $400 or more, a professional can find deductions that software might miss, especially if you own businesses or rental properties. Moreover, you might have a specific situation where an accountant’s advice could serve you well, such as a self-directed retirement account or a college savings plan. And in the event the IRS contacts you, it pays to have a relationship with someone who understands how to deal with that agency. A CPA could also help with issues such as tax allowances, managing your tax refund and avoiding misusing the proceeds.
Software packages address many of these situations. But given the number of possible deductions and opportunities for a misstep, hiring an accountant could make more sense.
TaxHawk Review Takeaways
TaxHawk’s handling of complicated tax situations sets it apart from other free tax preparation software. This alone might tempt some filers into choosing it over other free tax software.
Despite the extensive functionality, TaxHawk is most suitable for taxpayers with more straightforward tax situations. One reason is the lack of ability to import data. Taxpayers with multiple or unusual sources of income will need to input a large volume of data. This could become a time-consuming, error-prone process. Moreover, it could require a premium software package or a tax professional to understand some tax situations.
TaxHawk looks like an especially compelling choice for taxpayers who file taxes using Form 1040 or 1040-SR without schedules. Its free federal forms and low-cost state forms offer an affordable solution for completing your return accurately in a reasonable time frame so you can maximize your money back and put your tax refund to use.
TaxHawk is not well-suited for every filer. But for taxpayers who want an affordable software package to deal with a simple tax situation, TaxHawk is an excellent choice.
More From GOBankingRates
This content is not provided by the companies mentioned. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved or otherwise endorsed by TaxHawk.
This article originally appeared on GOBankingRates.com: TaxHawk Review: Find Out If This Tax Software Flies Above Its Peers