Every year, more than three out of four Americans qualify for a tax refund. With refund checks averaging $3,000, many taxpayers qualify for a windfall that they won’t get any other time this year. For those who are eager to get their money back, early filing makes a ton of sense.
But one problem with early filing is that we don't know when you can file your return yet. It's always a guessing game when the IRS will start accepting tax e-File tax returns (usually it's the last week of January), but you can legally mail in your return starting on January 1. You can see our Tax Refund Calendar here. Update: Tax season will open on February 12, 2021.
Last year, only a few companies released early versions of their tax software by late December. But this year, several major competitors released their software by mid-December. Because of the early release schedule, we’re comparing TurboTax, H&R Block, TaxHawk, TaxAct, and OLT.com.
If you want to prepare to submit your taxes the day the IRS opens e-filing, these are the software companies to consider. Who's software is the best? Who's is the cheapest? What's happened in the past that could make a difference this year? Let's break it down.
Finally, maybe you're an individual seeking a tax refund loan. If so, check out our guide to tax refund loans so you can see what your options are.
Are You Filing Your Taxes Too Early?
There are several things to consider when you start prepping your taxes early in the season. While early filing ensures you get a timely refund, there is such a thing as too early. These are a few reasons to wait before filing.
Although filing too early is a mistake, all six companies listed above are allowing users to start entering information today. Get a jump in the software, but wait until you’re sure before filing.
Great Reasons To File As Early As Possible
While filing too early is problematic, filing as early as possible makes sense in most situations. These are a few reasons to get a jump on filing.
You need complete information, but getting a jump on collecting and entering that information can help you file as early as possible.
Comparing The Tax Software For Early Filers
When it comes to filing your taxes online, there are two major competitors this year: TurboTax and H&R Block. However, there are many more "small guys" out there.
I'm going to try to review as many as possible, but for early filers, there only a few who have their software updated in December. You can read our full list of the best tax software here.
Finally, you may be an individual seeking a tax refund loan. If so, check out our guide to tax refund loans so you can see what your options are.
To compare the software for early filers, I looked at the following:
Header | TurboTax | H&R Block | TaxAct | TaxHawk | OLT.com |
|---|---|---|---|---|---|
Ease of Use | Easiest | Easy | Easy To Moderate | Moderate | Difficult |
How Much Works? | All income, credit and deduction sections worked. States are still delayed. | Schedule C (Self-Employed income) doesn’t work yet. State filing will not be ready until late December. Some form imports are blocked until January. | All income, credit and deduction sections worked. State filing is ready. | All income, credit and deduction sections worked. State filing will not be available until the end of January | All income, credit and deduction sections worked. State filing is enabled. |
Do You Need To Sign Up To Try? | Yes | Yes | Yes | Yes | Yes |
Offers Refund Advance Loans? | Yes | Yes | Yes | No | No |
Any Technical Issues? | None | None | None | None | Yes. Entering routing information for bank caused a circular error. |
Federal Pricing | Free: $0 $40 $70 | Free: $0 $29.95 | Free: $0 $24.95 | Free: $0 $6.99 |
$0 |
State Pricing | Free: $0 $40 $40 | Free: $0 $36.99 | Free: $0 $44.95 | $12.95 |
$9.95 |
Cell |
You can read our full reviews here:
Best Tax Software Choices For Early Filers
The limited time offer from TurboTax for free virtual reviews (for Free filers) is compelling. Unfortunately, many people won't qualify for TurboTax free filing due to its limited functionality.
H&R Block still has the best free option for early filing in 2021. The free tier includes student loan interest deductions, education-related credits, Child Tax Credits, and the Earned Income Tax Credit.
This year’s battle comes down to price vs. functionality, which is a personal decision. TurboTax and H&R Block offer amazing functionality (with TurboTax having an edge), but both are quite expensive. TaxHawk, meanwhile, is a bargain software but is somewhat more difficult to use.
If you're looking for an early tax refund anticipation loan, check out H&R Block as well. While we didn't compare them here, they are the one of the only companies offering advance loans to online filers. And they should have their software online very soon!
Which tax filing program did you use last year and why? Are you planning to use the same this year?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.