3 Top-Rated Affordable Tax Preparation Software

By: Saumya Srivastava on January 24, 2024

Overflowing receipts, misplaced W-2s and the annual ritual of paperwork and tax calculations often overwhelm accountancy professionals. The tax season may push you into complex calculations. But fear not, as getting tax preparation software at an affordable price is the ideal solution for you.

This article highlights three top-rated affordable tax preparation software based on their pricing as found on vendor websites and verified software reviews. Based on our research, we've considered products priced less than $67.72 per month as affordable software and have arranged them in ascending order. Read more.

The software tools listed in this article provide tax preparation features, such as calculations, filing, and forms only for freelancers, business owners, or both.

1. Bonsai

Bonsai is a tax preparation tool that can help freelancers track expenses, generate write-offs, and estimate quarterly taxes. The software establishes a secure connection with your email accounts or cloud storage. The 1099-NEC forms (or other relevant forms for freelance work) received from clients and vendors are automatically scanned for information, including the names and tax identification number (TIN) for the payer and recipient, the amount of non-employee compensation paid, and tax withheld. 

The extracted information matches the client information stored in your Bonsai account. Any inconsistencies in the extracted data and client profiles are flagged to make necessary corrections or additions for income reporting.

Product features of interest:*

  • Track expenses: Pull transactions automatically from connected bank accounts and upload receipts and invoices using your computer device or mobile application. The tool suggests relevant categories for the imported transactions. You can customize these categories for your account books. 

  • Identify write-offs: Highlight deductible expenses based on your industry and location. The feature also tracks business mileage and per diem (per day) expenses for travel deductions. Detailed reports can be generated by category, date, and vendor/client information for tax calculation. 

  • Estimate quarterly taxes: Analyze trends in the generated expense reports to visualize fluctuating expenses throughout the quarter. The feature categorizes recurring expenses, including subscriptions, software fees, and rent. The records are updated as the business incurs expenses throughout the quarter. 

Starting price: $21 per month

Billing cycle: Annual

Customer support options: FAQs, blogs, help center, and how-to articles

Who should consider Bonsai?

Freelance accounting and tax professionals looking to stay organized and compliant with the income, expenses, and tax obligations in a centralized platform can benefit from Bonsai. You can automate the identification of discrepancies and eligible deductions to reduce your tax burden in the captured data. If your work involves specific projects, you can leverage the tool to estimate associated costs and allocate them to the appropriate quarter based on timelines and milestones.

Analysis performed January 2024**

Bonsai

Bonsai

4.63 out of 5 stars

70 reviews

Pro tip

Check if the software is only for freelancers or both freelancers and businesses. Freelancers with a less complex tax situation might not require software with extra features, making it expensive for their budget. Meanwhile, businesses might need extra features, such as inventory management and payroll, which may be outside of tax preparation software for freelancers only.

2. MyTAXPrepOffice

MyTAXPrepOffice caters to the tax software needs of businesses and freelancers. The tax preparer provides multi-entity support for sole proprietorships, partnerships, and S and C corporations. The tool also records employee payroll values or compliance reporting for businesses using forms 940 and 941. It also covers IRS forms, including 1040, 1040-EZ, and various schedules freelancers need to record for the relevant tax year. 

The tool provides automated tax calculations from uploaded invoices, e-filing, and access to prior tax return reports—in a single system. Teams can share reports and dashboards with an email invite to enhance collaboration.

Product features of interest:*

  • Client portal: Allow clients to view and download invoices and tax forms using the self-service portal. The feature allows sharing of relevant tax information with clients using built-in text messages. 

  • Informative login screen: Get all the important tax information, including reminders of upcoming tax deadlines, software updates and new features, and tax tips on standard deductions. 

  • Signature pad app: Capture the client’s signature in the cloud via the tool’s mobile application. They can sign on the screen using a stylus or their finger. The signature is automatically transferred and integrated into the relevant documents within the software.

Starting price: $49.5 per month

Billing cycle: Annual

Customer support options: FAQs, live chat, training videos, product demos, support ticket, and help center

Who should consider MyTAXPrepOffice?

MyTAXPrepOffice’s collaboration and remote signature features can allow accounting and tax prep businesses or freelancers to work smoothly with remote teams and clients across the globe. It’ll ensure smooth, accurate information exchange and simplify getting form approvals across teams and clients. The enhanced communication may reduce errors and delays in tax calculations, which are otherwise likely due to a lack of information.

Analysis performed January 2024**

MyTAXPrepOffice

MyTAXPrepOffice

4.52 out of 5 stars

145 reviews

Pro tip

Consider tax preparation software with automated data export and import to skip tedious manual effort. This lets you link your bank accounts, import past tax return reports, and create data processing workflows.

3. TaxDome

TaxDome offers tax preparation capabilities for your practice management needs. The tool offers a single platform for back-office operations, including workflow, customer relationship management, and reporting and managing client-facing tools, such as forms, signatures, invoices, and messages. All the documents, invoices, and emails are available in your team’s shared cloud storage.

The tool's automated workflows offer ready-made templates to build ideal workflows for tax preparation processes. These include data capturing, error checking, calculations, e-signatures, and approvals. The tool notifies team members or clients when their action is required on a task.

Product features of interest:*

  • Automated communication updates: Send automated messages to team members and clients at every step of the preparation process. Some message examples include, 'Please upload your documents here,' 'Your return is in data entry,' or 'Return is ready for review.'

  • Online calendar: Visualize your work in a timeline format. The entries can be adjusted as per the built workflow and deadlines. The feature allows prioritizing your team’s workload entries for the next day, week, or month.

  • Kanban and list view: Manage and create preparation workflows using boards with columns representing different task stages. For example, ‘To do,’ ‘In progress,’ or ‘Done.’ The cards will move across boards as they progress.

Starting price: $50 per user per month

Billing cycle: Annual (for three-year subscription)

Customer support options: Blogs, webinars, chat, FAQs, knowledge base, and online courses

Who should consider TaxDome?

Businesses and freelancers can consider TaxDome when seeking tax preparation, client management, and team management capabilities in a single system. With this tool, you can handle everything from data capturing to e-signing for filing state return forms for the relevant tax year. Additionally, automated workflows with personalized communication keep you informed of the document processing stages, identifying and eliminating hiccups for an on-time and error-free tax preparation process.

Analysis performed January 2024**

TaxDome

TaxDome

4.74 out of 5 stars

3034 reviews

How much does tax preparation software cost?

Tax preparation software solutions can cost as low as $21 per month or up to $389+ per month, depending on various factors—features, number of users, functionality integrations, automation, training availability, deployment options, and storage. Most tax prep solutions typically include the following pricing plans:

  • Free trial: No-cost plans ranging from seven to 30 days give users access to all or limited software features. These are ideal for businesses that wish to try out a tool before purchasing it.

  • Free version: Free software plans offer basic features and limited access to premium features. These are ideal for small business owners with a limited budget.

  • Entry-level: Starts at $21 per month and offers limited features, such as tax forms, automated calculations, and document management. These are ideal for small businesses with basic tax preparation needs.

  • Mid-tier: Range from $32 to $169 per month and offers features such as feature customization and automation rules for workflows, calendars, Kanban boards, e-filing, and collaboration. These are ideal for businesses that have outgrown basic tax preparation solutions and don’t require the full range of functionality offered by enterprise-level tools.

  • High-end: Advanced software plans start from $65 per month and offer unlimited entry-level and mid-tier features with cloud storage and priority support. These are ideal for larger businesses spread across the globe.

Hidden costs associated with tax preparation software

Besides the software license, additional costs may be associated with the best tax preparation system, including

  • Implementation and training: These include data migration, customization, and employee training. These hidden costs can be substantial, especially for complex systems or large organizations.

  • Software upgrades: Additional costs may be incurred for software upgrades to access the latest features and security patches, ensuring the software remains up-to-date and functional.

  • Cloud storage: Storing a large number of tax documents might lead to storage costs if your software limits storage capacity.

Frequently asked questions when selecting tax preparation software

Here are some questions to ask software providers before making a final purchase of the best tax prep software:

  • What are the supported tax filing forms for freelance and business tax filers?

Freelancers and businesses have a range of options depending on the complexity of their work and the tax situation. Most freelancers use 1040 and 1040-EZ for minimal income and deductions. They operate as businesses that use Schedule C for income and expenses and SE for self-employment. Similarly, businesses use 1120 or 1120S for corporations, 1065 for partnerships, and Schedule C for sole proprietors. For accurate filing, you should consult a tax assistance advisor when unsure or in a complex tax situation. 

  • Does the software integrate with other accounting software and bank accounts?

Most tax preparation software programs can integrate with your existing accounting tools and bank accounts. This means you can automate importing and tracking financial transactions to eliminate tedious manual effort and errors in data capturing. However, integration capabilities are different for each software. Hence, consider your current accounting tools and desired bank accounts during selection. 

  • What are the security measures in place to protect financial information?

Look for tax preparation software that uses encryption to protect data during storage and transmission. Also, it should allow regular backups that can be accessed with passwords, multi-factor authentication, and granular user permissions. The software should stay updated for security reinforcements and be compliant with data regulations, for example, GDPR (General Data Protection Regulation) for transparent and secure privacy policies.


Methodology

To be considered for this list, products had to:

  • Have at least 20 unique product reviews published on Software Advice’s tax preparation software category page within the past two years, with an average rating of 3.0 or higher (as of Jan. 10, 2024).

  • Include tax calculation, filing, and forms as core features.

  • Must meet our market definition for tax preparation software: “Tax preparation software is designed to help taxpayers electronically prepare and file tax returns. It allows users to automatically calculate how much tax is owed and how much of a refund one can expect to receive.”

  • We assessed all products that met the first three criteria for their monthly pricing and considered the products with publicly available pricing information. Based on the assessment, the average price was calculated to be $67.72. Products with a monthly subscription price lower than $67.72 were then shortlisted to be included in this list and arranged in ascending order.

*Our research team identified these features from vendor websites (as of Jan. 10, 2024) based on their analysis of what users find valuable in or expect from tax preparation software. This list is not exhaustive. For additional features, refer to the vendor's website.  

**We selected products for this article based on their average ratings as of January 2024; however, the article displays each product’s current average rating, which may differ if more reviews have been left since our analysis.

Editorial independence: We select and rank products based on an objective methodology developed by our research team. While some vendors may pay us when they receive web traffic or leads, this has no influence on our methodology.

Note: Products evaluated for the pricing calculation were taken from Software Advice’s tax preparation software directory. The pricing ranges exclude freemium versions of the products. The features highlighted were identified based on their relevance and the percentage of products in the Software Advice directory that offer them.