College students need to do their taxes, and many have student loans. So, if you’re a student or a student loan borrower, which tax software is best? Best Tax Software For Students
This year, several major tax companies are courting student loan borrowers with the promise of free state and federal filing for people claiming education credits and student loan interest deductions.
Anyone who qualifies to file their taxes for free should take advantage of these software packages.
However, filers anticipating free filing should be cautious of potential pitfalls. Student loan borrowers who aren’t careful may wind up paying for expensive software. Below, we compare the top tax software options for students and student loan borrowers. Best Tax Software For Students
Why “Free” Tax Software Might Not Be Free For Most Student Loan Borrowers
Tax software companies scream “FREE!” all over their advertising. But many student loan borrowers won’t qualify for free returns. Several companies offer free software for people who want to claim the deduction for student loan interest. Premium software packages, H&R Block and TurboTax, support this deduction on their free tier. Best Tax Software For Students
However, this so-called free software may not be suitable for all student loan borrowers. Filers might use one of these packages to “start for free” only to find they’re ineligible for the free option. It can be frustrating! Best Tax Software For Students
Many filers will need to pay for the most expensive version of the software because they have self-employment income. Self-employment is an expansive term that covers a wide range of work situations, including most side hustles.
For example, people who flip items on eBay, those who drive for rideshare companies, and many others have to file a Schedule C. These jobs, which you may have taken on to help pay off your debt, qualify as self-employment income. This type of income often requires upgrading to an expensive “Self-Employed” package. Best Tax Software For Students
Below, we clearly lay out which tax situations each software supports for free (and which situations aren’t supported). That way student loan borrowers can figure out what software will work for them. Best Tax Software For Students
Top Tax Software For Students
This year, our top software options for student loan borrowers include H&R Block Free, TurboTax Free, Cash App Taxes, Chime Taxes, and FreeTaxUSA. Best Tax Software For Students
Our overall pick for the best tax software for students is Cash App Taxes.
Cash App Taxes
Cash App Taxes offers completely free state and federal filing for most filers. However, it does not support multi-state filing (which can be difficult for students living and working in multiple states), limiting its usability for those who may need to file in more than one state due to internships or jobs in different locations.
But, most college students are probably already using Cash App (it’s the largest peer-to-peer money transfer app), so it’s also a natural fit. Best Tax Software For Students
Chime Taxes
Chime lets you file both federal and state returns completely free through the Chime mobile app, with no fees, upsells, or premium tiers. It handles most common student tax situations (W-2s, simple 1099s), but you must open a Chime banking account and it doesn’t support multi-state filing. Best Tax Software For Students
FreeTaxUSA
FreeTaxUSA offers low-cost software that supports all situations. It’s not as easy to use as the other three software, but it has a very good user experience given the low price point. Best Tax Software For Students
H&R Block
H&R Block offers a simple experience. It allows users to import W-2 and 1099 forms right into the software. The software then takes over generating the returns. Importantly, education credits and the student loan interest deduction are both included on the free plan.
TurboTax
When we review the best tax software each year, TurboTax is always near the top in terms of ease of use, navigation, and support options. It also covers the deduction for student loan interest. But unlike with H&R Block, you’ll need to upgrade to a TurboTax paid tier if you want to claim education credits. Best Tax Software For Students
What Student Loan Borrowers Should Look For In A Tax Software
Price is, of course, a top consideration when choosing tax software. But it isn’t the only consideration. Student loan borrowers should also consider how easy it is to use the software. Best Tax Software For Students
Free and low-cost software options like Cash App Taxes and FreeTaxUSA aren’t typically as easy to use. Filers using these options may expect to spend a bit more time preparing their returns. However, they clock in at lower price points.
Premium software like H&R Block and TurboTax makes filing very easy, even for filers with complex taxes. Users can snap pictures of their tax forms and upload them directly to the app. The app takes care of the rest. Filers can also quickly figure out how to add rental or self-employment income and the associated deductions. These features are great, but filers have to weigh the benefit with out-of-pocket costs they will expect to pay. Best Tax Software For Students
In general, we recommend choosing premium software when you can use it for free. Filers who can’t use the free software face a more difficult decision and should decide whether to spend more time or more money filing their taxes. Best Tax Software For Students