Tax Software: Buy the Download, Not the Online Service (2023)

Reports from the IRS show that of all the e-filed individual tax returns for a recent tax year, 59% were done by tax professionals and 41% were self-prepared. That 59% number is still surprisingly high to me, but today we focus on the 41% self-prepared returns.

When you’re part of the 41% who do your own taxes, using software makes it a lot easier than doing it directly on the forms. Some software products such as FreeTaxUSA are purely online. Others such as TurboTax and H&R Block offer both an online service and software for download, which you install on your computer.

Most people choose to use the online service. TurboTax reported that 80% of the returns it handled came from its online products. When you have a choice between buying the software you install on your computer and paying to use the service online, you are better off buying the software download.

Table of Contents

  • Prices
  • Features
  • Multiple Returns
  • Access to Previous Years
  • Filing versus Planning
  • Switching Vendors
  • Who Holds the Data
  • Operating System Compatibility
  • Possible to Get It Free
  • Conclusion


If you must pay, prices for online software are usually higher than software download.

(Video) The Best Tax Software for 2022

I compared the prices for federal-only, without state on a random day:

Federal-OnlyOnlineDownload (Amazon)
TurboTax, Deluxe edition$54$40
H&R Block, Deluxe edition$50$25

I also compared the prices for federal plus one state, including e-file for both federal and state:

Federal + StateOnlineDownload (Amazon)
TurboTax, Deluxe + State edition$103$50 + $25 state e-file
H&R Block, Deluxe + State edition$95$30 + $25 state e-file

When you do a state return online, the prices automatically include state e-file. The software download with state return only includes the preparation part of it. E-filing the state return requires an extra $25 fee. I added $25 to the prices of the software download for an apples-to-apples comparison.

I think $25 for just e-filing the state return is too high when the whole software with all the complex logic for both federal and state returns is only $30 – $50. Many states accept e-file directly on the state revenue agency’s website (see Free E-File State Tax Return Directly on the State’s Website). If you are willing to file directly with the state, you can save that $25 and get the software at half the price for doing it online.


Not only is the software download less expensive but it also has more features than the same-named edition online. For instance, if you sold investments with capital gains or losses, the online Deluxe edition of TurboTax or H&R Block software can’t handle it. You’d have to upgrade to TurboTax Premier or H&R Block Premium. However, the Deluxe edition of the software download includes handling capital gains or losses. That makes the software download even less expensive when compared to a required higher edition of the online product.

The software download also makes it easier to access the tax forms. If you are familiar with the forms you can toggle between the interview and the forms to confirm that you answered the questions correctly. The added transparency makes it so much easier to troubleshoot when you have problems.

Lower prices and more features give an advantage to the software download.

(Video) How to Fix Your Computer If You Can't Download Programs and Applications

Multiple Returns

The online product is designed to be used by only one person. If other people in the family need to use it, they must register separately and pay again.

After you install the software download to your computer, you can use it for multiple returns. It can be for a married couple filing separately. Or it can be for filing returns for children or parents. The software download includes five free federal e-files for this purpose. If you need to do more than five returns, you can buy another copy.

Access to Previous Years

With the downloaded software, if you ever need to amend a previous year’s return, you can always fire up or re-install the previous year’s program. If you used online software, by the time the year rolls over, the online software is automatically updated for the next year. There’s a process to get to a previous year’s return but it’s much more difficult.

Filing versus Planning

Online software is designed for after-the-fact filing. You work on only your actual return. It’s difficult to create multiple versions under the same user and compare the effects of different moves. If you’d like to see how much that 1099 cost you in taxes, you can delete it but you will have to re-enter it before filing.

The downloaded software works with data files. It’s easy to create a copy of the data file and name it something else. Then you delete that 1099 in the copy and compare the results. You won’t mess up your original data file. For instance, you can see the effect of how making more money will affect your ACA tax credit, how contributing to Traditional 401k versus Roth 401k will affect your taxes, what if you earned higher interest and less in dividends, and so on. Besides filing your tax return, the installed software is also a powerful planning tool.

It’s much more difficult to do this type of what-if analysis with online software. You can register with two different email addresses, one for filing and the other for planning, but you will have to enter your data twice and be careful to keep them in sync. You will have to remember to undo the changes you made in the planning profile to go back to the baseline before you make additional changes for planning purposes.

Switching Vendors

If you ever want to switch from one vendor to another, it’s very easy with the downloaded software. TurboTax is able to import the previous year’s tax return created by H&R Block, and H&R Block is able to importthe previous year’s tax file created by TurboTax. When you use online software, it’s more difficult to switch because the competing online software can’t get into your online account with another vendor to import your data.

(Video) H&R Block Tax Software Online vs Download + Discount Code

Who Holds the Data

When you use online software your data are with the software vendors. Although we haven’t heard any hacking incidents at tax software vendors, many other places have been hacked. It’s also possible to fall for phishing when you use an online service.

When you use software installed on your computer, you have your data file. You can put your data file on a thumb drive and only plug it in when you’re doing your taxes. When you’re not doing your taxes, your data file isn’t connected to the Internet at all.

With all these advantages tilting toward downloaded software, why do so many people do their taxes online? It beats me. Besides awareness and marketing, I can think of only two reasons.

Operating System Compatibility

Online software is compatible with a wider variety of devices. You can use it with Linux, Chromebook, or tablets, whereas the software download typically only works with Windows or Mac. Sometimes the software also requires a more recent version of the operating system.

When you use the software online, you don’t have to worry about installing the software. The installed software usually requires several updates before it’s finalized. The online software is updated automatically in the cloud.

Online software clearly has an advantage here. However, if you have a Windows or Mac computer, installing and updating software only requires a few clicks. It takes just a minute.

Possible to Get It Free

Through a partnership with tax software companies, the IRS offers Free File to people with income below a threshold. The cutoff is $73,000 in Adjusted Gross Income (AGI) for the 2021 tax year, which covers 70% of all taxpayers. Unfortunately, only about 3% of all taxpayers actually use Free File because the government doesn’t have a large marketing budget.

(Video) 🌹TurboTax Deluxe + State 2018 Tax Software | PC Download

Free File is completely online. There is no software download option. The two largest tax software vendors Intuit (TurboTax) and H&R Block already left the Free File program. Also, some Free File vendors only cover federal returns. You may still have to pay for state returns when you use Free File.

It’s also possible to get it free from the tax software companies themselves. FreeTaxUSA offers free federal returns with no limit on income or any restriction on features. TurboTax and H&R Block both offer a free edition with limited features. If you choose to use FreeTaxUSA or if you don’t require any of the features excluded by TurboTax or H&R Block, it’s possible to get to use the online software free of charge.

However, the free, limited-feature editions of TurboTax and H&R Block are subject to upgrade traps. You thought you didn’t need any features not covered by the free editions, but after you’re halfway into entering your data, the software tells you that one small thing you need isn’t covered. Now you face the choice to start over somewhere else or relent and upgrade to a paid edition. That’s why they offer the free teaser edition in the first place.

Again, all these possibilities are only online. There is no free software download. Online software has an advantage here if you know for sure you’re able to get it free, but many end up paying more after being lured by marketing.


Except for operating system compatibility and the possibility to get it free, all other factors give advantages to the downloaded software. Although it sounds like more old school, if you must pay, the software you install on your own computer is both less expensive and more powerful.

If you already use online software, it’s possible to switch to software download by the same vendor and carry over all your data. TurboTax gave these instructions:How do I switch from TurboTax Online to the TurboTax software?Contact H&R Block support if you’d like to do the same with H&R Block.

Say No To Management Fees

If you are paying an advisor a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.

(Video) Installation Of Computax for New Server || Computax New User || Computax

Find Advice-Only


Why is my TurboTax download not working? ›

Additional help with installing

If TurboTax still won't install, try these steps: Run the Windows System File Checker tool. Install TurboTax from a different CD or DVD drive on your computer, if you're installing from a CD. If you downloaded TurboTax, delete the downloaded file and download TurboTax again.

Can I use TurboTax without downloading? ›

Some software products such as FreeTaxUSA are purely online. Others such as TurboTax and H&R Block offer both an online service and software for download, which you install on your computer. Most people choose to use the online service. TurboTax reported that 80% of the returns it handled came from its online products.

Should I buy TurboTax disc or download? ›

We happen to like them both, but we recommend the TurboTax CD/Download software if you want to: Create multiple returns for family members (it usually ends up costing less) File separate state returns for married spouses, especially in community property states.

What software can I use to do my taxes for free? ›

However, several companies offer free federal and state filing for a subset of customers. For example, TurboTax, H&R Block, TaxSlayer, TaxAct, and Cash App Taxes offer both federal and state filing for free. Cash App Taxes is the only company offering free state filing to all qualified users.

Is TurboTax a download or online? ›

TurboTax Online and the TurboTax CD/Download products are very similar and both cover most tax situations. The majority of our customers choose TurboTax Online to confidently file their taxes. Note: There are some tax situations that TurboTax Online does not cover.

Why is TurboTax not letting me file my taxes? ›

You may need to clear your cache and cookies. Make sure your return is saved in your TurboTax account and then sign out. Clear the cache and delete the cookies on your computer, open a new browser, sign back into your account and try entering your information again.

How many times can TurboTax be downloaded? ›

You sure can! TurboTax 2021 software can be installed, authenticated, and activated on up to 5 different computers per the TurboTax Desktop Software End User License Agreement for Tax Year 2021.

When should I not use TurboTax? ›

Even though Turbotax and other programs are easy to use, they have their own limitations.
Disadvantages of TurboTax
  1. Problems dealing with complex situations, like small businesses, investments or other tax concerns.
  2. Planning suggestions aren't available, which can be important to people trying to manage their wealth.
9 Mar 2022

How many times can you use TurboTax for free? ›

TurboTax CD/Download Products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns.

Is it better to buy discs or download? ›

Physical and digital games usually release at the same price. However, a physical game usually reduces in price much quicker than its digital counterpart. If you're looking to buy a new copy of a game a few months after it released, the physical copy is usually cheaper.

Can I switch from TurboTax download to online? ›

Q: If I previously used TurboTax Desktop products, can I switch to TurboTax LIVE online this year? A: Yes, you can transfer your previous year's Desktop tax data file (with a filename extension . tax[year], such as .

Is the paid version of TurboTax worth it? ›

TurboTax is generally pricier than everything else out there, but even though confident filers may not need all the bells and whistles that most TurboTax online products offer, many people will find the experience and the availability of human help worth the extra cost.

What is the best way to file your taxes for free? ›

IRS Free File

The IRS Free File program provides free tax filing from many online tax software companies to Americans with an adjusted gross income (AGI) of $73,000 or less in 2021, including TaxAct and TaxSlayer. If you earn more, you can use a different online program called the Free File Fillable Forms.

What is the cheapest and best tax software? ›

Our Top Picks for the Best Tax Software
  • TaxSlayer - Best tax for self-employed filers.
  • E-file - Best for year-round discounts.
  • FreeTaxUSA - Best low-cost tax software.
  • Cash App Tax - Best free tax software.
  • Drake Tax - Best for tax preparers.
  • - Best for simple tax returns.
11 Nov 2022

Which tax software gets you the biggest refund? ›

Which tax software provider gets the largest refund? Generally TurboTax and H&R block provide the largest refund!

Can I download TurboTax without the CD? ›

That's OK — you can download your software directly from TurboTax. But, keep in mind, you can't use both the CD and the download — you must use one or the other. Select Create Account if you don't already have one.

What is the difference between Turbo and TurboTax? ›

Turbo is strictly a financial app that gives you metrics such as your credit score. Obviously, TurboTax is a consumer-level income tax preparation product.

How much does the online version of TurboTax cost? ›

For most people, the best option is using TurboTax online, where you do your taxes on your computer, or using the TurboTax mobile app. There's a free version of the software available, but it only works for the simplest tax returns. The most popular version is TurboTax Deluxe, for $59 plus $49 per state.

Why can't I electronically file my taxes? ›

Returns can't be e-filed if they: Contain overrides. Have no taxable income. Contain a W-2 where box 1 is blank or the box 16 amount is greater than the box 1 amount.

Is TurboTax being investigated by IRS? ›

The Federal Trade Commission has been investigating Intuit and its marketing of TurboTax products, following ProPublica's reporting that the Silicon Valley company deceived tax filers into paying when they could have filed for free.

Can you still use TurboTax in 2022? ›

You'll need to file your return by March 31, 2022, and you'll need to have a simple return to be eligible to use this service. With this option, you can prepare your taxes while getting some assistance. As you prepare your return, you can chat with a tax expert. You can also set up a time to video chat.

Can I use TurboTax download for more than one person? ›

In the CD/Download version of TurboTax, you can prepare as many federal returns as you want. Up to five can be e-filed. Additional returns must be printed and mailed.

Can I use someone else's TurboTax software? ›

You can only install the TurboTax software that you purchased on computer that you own.

How many times can I use TurboTax license code? ›

TurboTax can be installed on up to five computers using the same license code. If you receive either one of these errors, wait a few minutes and re-enter your license code: Sorry, we're experiencing a problem on our end.

Can a tax preparer get me more money than TurboTax? ›

Unless you have a basic tax situation or have sufficient time to dedicate to the nuances of tax codes, laws, and regulations, Enrolled Agents, Certified Public Accountants, and Tax Attorneys can save you time and money compared to relying on TurboTax alone.

Is it better to file with TurboTax or an accountant? ›

TurboTax is an inexpensive option to prepare simple tax returns with algorithmic triggers for potential deductions. On the other hand, CPAs, though high-priced, are adept at handling complex financial dealings through prompt human interaction.

Can TurboTax make mistakes? ›


100% Accurate Calculations Guarantee: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest.

Why is TurboTax charging me when it's supposed to be free? ›

Customers with more complex tax situations will file with our paid TurboTax products that provide all the additional forms and guidance they need. We also offer additional benefits that go beyond filing your taxes, but they are optional and are not required to file simple taxes for free.

Can I use the same TurboTax every year? ›

Because there isn't a way to update your prior-year tax software to handle the 2021 tax laws, you'll need to purchase TurboTax 2021 if you want to use TurboTax to prepare this year's taxes.

What is going on with TurboTax? ›

Intuit , the owner of popular tax filing software TurboTax, will pay $141 million in restitution to millions of low-income Americans who were “unfairly charged” for services that should have been free, according to a multistate agreement announced Wednesday. TurboTax also agreed to reform its business practices.

Why are discs cheaper than digital? ›

When you buy a physical game disc, it doesn't cost the platform provider anything for it to sit on your shelf. New digital games partially subsidize the upkeep of older games that may not be selling as much anymore.

Is disc faster than digital? ›

If you have the disc, it only downloads updates or patches. If you buy the digital version, it downloads the contents of the game, plus the patches and updates. In either case, the download speed is the same (as determined by your internet connection).

Does save data transfer from disc to digital? ›

The answer is yes. As long as you purchase the same game, you can switch to its digital edition and still keep your saved data and progress.

Can I use TurboTax download code online? ›

If you purchased the CD or Downloaded version of the program then you must use the CD or downloaded version ... the code will NOT work for the ONLINE program.

Is TurboTax cheaper at Costco? ›

Factor in the time it takes to drive to the store plus the price of gas, and you really aren't saving much buying TurboTax at Costco.
TurboTax Cost: Online vs. Costco.
TurboTax:Online:Costco: (Download)
Self-Employed (Home & Business) :$104$99.99

How much does TurboTax charge to e file federal returns? ›

How much does TurboTax cost?
DIY online filingFull-service expert
Federal return cost$0 - $119$0 - $389
State return cost$0 - $49$0 - $54
Federal + state$0 - $168$0 - $443
21 Nov 2022

Why is TurboTax trying to make me pay? ›

Certain forms are not available in Free Edition and require an upgrade to Deluxe, such as one of Schedules 1-3, itemized deductions, education credits, student loan interest, retirement savers credit, etc.

Is TurboTax or H&R better? ›

H&R Block's DIY filing options are less expensive than TurboTax across the board and edged out TurboTax in our overall ratings. While TurboTax offers an engaging user experience, H&R Block's online tax interface is more straightforward, cleaner, and less distracting.

Should I pay for TurboTax or use free? ›

TurboTax is great if you can use it for free.

The software is easy and accurate, so filing for free is worth your time. If you're self-employed and want to try QuickBooks Self-Employed, paying the fee for TurboTax is worth it to get the free subscription. Any other filers should check out the competition.

What is the easiest free tax filing online? ›

The best free tax software: Free filing options compared
  • Credit Karma (Cash App Taxes) Its goal is accuracy and max refund for tax filers. ...
  • TaxSlayer Simply Free. Only for those with the simplest tax returns. ...
  • H&R Block Free Online. Importing information and data is easy. ...
  • TurboTax Free Edition. ...
  • TaxACT Free Edition.
15 Apr 2022

What is the lowest income before you have to file taxes? ›

According to a draft of IRS Publication 501, you must file a tax return for 2022 under any of the following circumstances if you're single, someone else can claim you as a dependent, and you're not age 65 or older, or blind: Your unearned income was more than $1,150. Your earned income was more than $12,950.

What is the easiest cheapest way to file taxes? ›

5 Free or Cheap Ways to File Your Taxes
16 Mar 2022

What tax software is truly free? ›

IRS Free File lets you prepare and file your federal income tax online using guided tax preparation, at an IRS partner site or Free File Fillable Forms. It's safe, easy and no cost to you for a federal return.

What is the number one tax software? ›

TurboTax ranks No. 1 in our ratings of the Best Tax Software and the Best Mobile Tax Apps of 2022. Tax filers like its easy-to-use interface and question-answer survey when completing taxes. TurboTax offers four versions of its software, from free to Self-Employed.

How much should I pay someone to do my taxes? ›

In 2021, the average cost of hiring a certified public accountant (CPA) to prepare and submit a Form 1040 and state return with no itemized deductions was $220, while the average fee for an itemized Form 1040 and a state tax return was $323. 9 Costs will go up as the complexity of a return increases.

What tax software offers rapid refund? ›

Use CalFile to e-file your state tax return directly to the Franchise Tax Board. Get real-time confirmation and the fastest refund possible. And best of all, it's free.

What is the smartest thing to do with tax refund? ›

Save it for a Rainy Day. Having a little extra cash for a rainy day can go a long way. If you set aside at least a portion of your tax refund in your piggy bank or savings account, you will be on your way to building up a fund for unexpected activities and purchases in the future.

How can I avoid getting a big tax refund? ›

How to Stop Getting Big Tax Refunds
  1. Add Up Your Withholdings. Get out your last paystub again and see how much your employer withheld for your federal income tax. ...
  2. Calculate Your Tax Liability. Your tax liability is how much you'll owe in taxes throughout the year. ...
  3. Subtract the Difference. ...
  4. Adjust Your Withholdings.
2 Nov 2022

How do I download my TurboTax download? ›

Once you've received an order confirmation for your purchase, follow these instructions to download your TurboTax software:
  1. Go to Access my downloads and sign in with the same User ID you used to purchase your software.
  2. On Your TurboTax account, select the Downloads tab.
13 Sept 2022

How do I activate my TurboTax download? ›

To download TurboTax with the license code, enter your activation number in the License code box on the activation screen and select Continue to complete installation. You're free to use the same license code to install the software on up to five computers; you'll need to purchase another license if you need more.

How do I reinstall TurboTax download? ›

Download a new copy of TurboTax software (if you are using a download): Go to My Downloads and sign in to your TurboTax account. Select Downloads and find your download. Select Copy Code and Download for Windows.

How do I update my TurboTax download? ›

If you're on a PC, open TurboTax and select Check for Updates from the Online menu near the top. On a Mac, simply quit and reopen TurboTax. If there are any updates, you'll be prompted to download them.

Can you open a TurboTax file without TurboTax? ›

TurboTax files can only be read with the TurboTax software for each tax year.

How do I download TurboTax if I bought the CD? ›

Follow these instructions to download the software:
  1. Go to
  2. Select Create Account if you don't already have one. If you do, sign in. ...
  3. Enter your license code in the pop-up window. ...
  4. Select your operating system, and select Get Download.
  5. Download your software and install it.
15 Apr 2022

Can I activate TurboTax without Internet? ›

In order to activate TurboTax software, you need an internet connection to verify your product license code. Once you complete verification, you don't need internet access to use TurboTax, however there are certain critical updates that require internet access, including tax form updates and any tax law updates.

Why is my TurboTax service code not working? ›

If your license code isn't working to activate the TurboTax software, it may be because you've entered it incorrectly. Double-check your code and enter it carefully in the License code box on the installation screen. Note: Your license code is not case sensitive—you don't need to worry about capitalization.

Can I uninstall TurboTax and reinstall? ›

Scroll to TurboTax, select it, and then select the Remove, Change, or Uninstall button. Follow the on-screen steps to uninstall TurboTax. (For additional help with uninstalling, see this article.) Restart your computer.

How do I reinstall H&R Block tax software? ›

If you installed your state program from within the H&R Block Tax Software and need to reinstall:
  1. Open the H&R Block Tax Software.
  2. Click the Start a Return button.
  3. Go to the Tools menu and choose Reinstall State Program.
  4. Choose the state(s) you want to reinstall.
  5. Click Next.

Do I need to reinstall TurboTax every year? ›

Because there isn't a way to update your prior-year tax software to handle the 2021 tax laws, you'll need to purchase TurboTax 2021 if you want to use TurboTax to prepare this year's taxes.

Can I use TurboTax without updating? ›

You don't have to do all of this. When you click update and the new update window opens, just cancel the update. It will ask if you are sure and say yes. Then it will open TT without updating.

How do I manually update my TurboTax software? ›

TurboxTax 2021 Individual — R.

Close TurboTax and all other programs except this browser window. Select this link to download the 189 MB update. Save the update file to your Windows desktop. Double-click the update file w_perrelsuperpatch... on your desktop to install the manual update.

How do I upgrade to full service on TurboTax? ›

To upgrade your version of TurboTax:
  1. Make sure you're signed into TurboTax and have opened your return.
  2. If you don't see this option, select Upgrade from the menu. ...
  3. Select the version you'd like to upgrade to.
  4. We'll prompt you to pay if you want to print or e-file your taxes.
17 Mar 2022


1. TurboTax 2021 - How to Download and Install
(Top Financial Tools)
2. How to Download FREE Tax Software and Online Filing. Step by step guide for a Single person.
(Hannyliz Villafuerte in Canada)
3. Download our app so you will not miss any of our services
4. How to Connect to e-Services
5. How to get a copy of your T4 slip / TurboTax Support Canada
(TurboTax Canada)
6. Best Online Tax Software 2021 (Tax Year 2020)
(Smart Family Money)
Top Articles
Latest Posts
Article information

Author: Gregorio Kreiger

Last Updated: 12/04/2022

Views: 6031

Rating: 4.7 / 5 (77 voted)

Reviews: 92% of readers found this page helpful

Author information

Name: Gregorio Kreiger

Birthday: 1994-12-18

Address: 89212 Tracey Ramp, Sunside, MT 08453-0951

Phone: +9014805370218

Job: Customer Designer

Hobby: Mountain biking, Orienteering, Hiking, Sewing, Backpacking, Mushroom hunting, Backpacking

Introduction: My name is Gregorio Kreiger, I am a tender, brainy, enthusiastic, combative, agreeable, gentle, gentle person who loves writing and wants to share my knowledge and understanding with you.