Online Tax Software vs Downloadable Tax Software: The Big Debate

Although tax season is still a major pain in the neck, more and more taxpayers are realizing that preparing their taxes with tax software can save them a lot of hassle. Thankfully, there are a variety of tax solutions out there meaning that no matter what a user’s particular tax situation is, they’ll be bound to find a program that best fits their individual needs. But now that cloud technology and browser-based software is so dominant, taxpayers are split when it comes to deciding whether they should pick a downloadable program or opt for an online solution for their tax preparation. At first such a debate seems pointless, as both desktop and online tax solutions provide the same features, convenience, and straightforwardness. However, there are instances where it does matter which version is chosen.

Desktop software: The friend of multi-fliers and businesses

There are very few differences feature-wise between desktop tax prep programs and their online counterparts so, as always, the devil lies in the details. For instance, desktop tax programs are capable of creating multiple tax returns, making them a huge asset for families and anyone else who has to prepare more than one tax return. Choosing a desktop-based solution isn’t limiting when it comes to digital filing, either, since they always including the option to e-file five federal tax returns for free. But in case of higher-tier products, it’s possible to even file one state return without paying any additional fees, too. However, by far the biggest reason for desktop tax software being the better option is that certain versions of it correlate with specific business needs, which is ideal for larger business entities or individuals who want to manage their personal and business-related taxes separately.

But sadly, downloadable tax solutions aren’t perfect. For starters, they are limited to just one computer and are only capable of importing previous years’ returns when they are saved in the right format from an external source. Additionally, taxpayers also have to update the program manually should they want to keep up with the latest tax changes and maintain the strongest data security. However, with that in mind it’s worth noting that while desktop tax solutions are quite a bit more secure than their online counterparts by the nature of not requiring constant internet access, a computer virus could still result in the program being compromised. And of course, desktop-based tax programs are never available free of charge, which automatically excludes all those users hoping to file only a simple tax return.

Online programs: Convenience for individuals

It’s no secret that for individual use there is no better option for handling tax returns than an online tax prep solution, least of all because even complete beginners can put together an accurate return with relative ease using such a solution. In fact, their cloud-based nature is the source of many advantages, like unlimited availability from any kind of browser or speeding up the process by importing data from previous tax returns, competitor documents and electronic W-2s. Additionally, online tax programs are perfectly secure due to the providing bank-level data encryption and – unlike their desktop-based counterparts –can adapt to mobile screens or, better yet, are available in app format.

It’s a bit of a shame, though, that online tax software is always limited to just one federal tax return per program, while filing state taxes alongside federal returns typically costs extra. Thankfully, however, this is a nuisance that is easily overshadowed by the biggest advantage of online tax prep software: versatility. Simply put, these services are designed to handle everything from the simplest tax return to more complicated tax situations that involve multiple sources of income. Users won’t even need to pick the right choice from the start, either, since these solutions usually prompt for an upgrade when it is revealed during the interview process that a higher-tier product would be necessary due to the availability of forms.

However, the deal-breaker here is that online programs don’t require an upfront payment at all, meaning that they can be used for free up until you file the returns. And even when it comes to payment, there is still the option to pay nothing out of pocket for the program or any additional services by simply letting the company deduct the necessary fees from the refund you’ll be claiming back in tax.