When filing a US tax return using tax software, it’s essential to consider how it will ease your overall experience through its features, filing options, and even its pricing. Toptax, Expatfile, and TurboTax are dependable US expat tax software that offers secure filing and ensures accurate returns for your financial peace of mind.
While living overseas is exciting, it also brings unique challenges, particularly in handling finances, reporting taxes, and staying updated with the US tax laws. Fortunately, specialized software providers for expats can simplify these processes.
What is tax software?
A tax software is an online software tool that offers tax solutions designed to help individuals and businesses prepare, file, and manage their taxes.
These tools make tax filing easier by automating calculations, finding deductions, and helping you complete the required forms.
What should I look for in an expat tax software provider?
Here are important factors you should consider when choosing the best expat software provider:
- Tax filing assistance: It should mainly help you file your taxes, including federal, state, and sometimes local taxes.
- Pricing: This includes any subscription fees (if applicable) or upgrade costs for additional services, such as filing state taxes or accessing premium features.
- User-friendly interface: It should be easy to navigate and provide assistance that simplifies tax preparation even for users without accounting experience.
- Form coverage: It should cover primary forms like Form 1040 and intricate forms for foreign-earned income, tax-exempt income due to treaties, foreign investments, and other specific tax needs.
- Onboarding assistance: The assistance you receive when you first start using the software, such as how to input personal information, select the proper forms, and follow tax filing procedures.
- Customer support: Provides real-time help from tax experts, FAQs, and guides. Excellent customer support ensures prompt assistance when needed, especially if you encounter filing errors or require additional guidance.
What forms are essential in a tax software for expats?
The best expat tax self-software provider should include a range of forms and schedules to accommodate your specific tax challenges. Here are essential forms you might need in your chosen tax software:
- Form 1040: Individual Income Tax Return
- Form 2555: Foreign Earned Income Exclusion (FEIE)
- Form 1116: Foreign Tax Credit
- Schedule A: Itemized Deductions
- Schedule B: Interest, Ordinary Dividends, and Foreign Accounts and Trusts
- Schedule D: Capital Gains and Losses
- Schedule EIC: Earned Income Credit
- Form 8965: Health Coverage Exemptions
- Form 2441: Child and Dependent Care Expenses
- FinCEN Form 114 (FBAR): Report of Foreign Bank and Financial Accounts
Who are the best expat tax software providers?
Here is a list of US tax software providers that offer competitive services:
- TopTax: Provides the best-value, lowest-cost and easy-to-use tax questionnaire specifically designed for Americans living outside of the United States. Their tax platform keeps client data rolling from one year to the next to make it very simple and fast to use year after year along with IRS e-filing.
- ExpatFile: Offers support for fundamental forms, easy navigation, and automated tax calculations, focusing on simplifying the process of filing international tax returns. Pricing is a little high, but instant IRS e-filing is a bonus.
- MyExpatTaxes: Provides expat-specific tax filing solutions, a list of forms to understand their services better, and access to tax professionals for assistance or queries. Provides an upsell for assistance from tax professionals.
- TurboTax: Not expat-focused but can do the job most of the time. The tax software that provides an easy-to-navigate interface and extensive coverage of US tax requirements, but you really need to know what you’re doing to get an accurate “international” US tax return.
- OLT: A budget-friendly tax software option for US taxpayers and limited scope for expats. It offers essential tax forms for expats at an affordable price and is best suited for those with more straightforward tax needs and ideally living in the United States most of the year-round.
Which is the most expensive provider?
MyExpatTaxes offers one of the most expensive packages, with the basic at US$167 to US$549 for the premium. The standard package is a do-it-yourself package that includes basic forms and credits. If you want your work to be reviewed by a tax professional, you can opt for their professional package at US$302
Expatfile offers 3 packages from US$119 for a standard tier to US$199 for the investor tier. If you are self-employed or want to file for child tax credits, you can choose their premier package for US$159 per tax return.
Turbotax offers US$0 to US$129 for their standard packaging. US$0 for state return if you qualify for a free federal return. The standard pack includes audit support and reliable customer service. If you want help from experts as you do your taxes, you can choose their assisted package, ranging from US$89 to US$219.
What are the most affordable expat software providers?
Toptax offers a flat rate of US$67 and includes the most amount of additional IRS forms that Americans living abroad need to file. Toptax offers the best value considering it’s designed specifically for expats and securely stores your information for the following year.
OLT offers US$0 for your federal return and US$9.95 for your state return. It is the cheapest, though it has fewer features intended for simple returns, deductions & credits. It’s not great when you’re living outside the United States but if you’re prepared to fiddle around, you can get it done.
Is it reliable to use an expat software provider?
Here are some factors to consider when evaluating the reliability of a software provider:
- Compliance with tax laws: It should ensure compliance with US tax laws, including specific requirements for you
- Accuracy of tax calculations: Based on your details, the software should correctly calculate taxes, including foreign income exclusions and credits. Choose a software that offers audit protection or guarantees accuracy for extra peace of mind.
- Data security and privacy: It should have strong security features to protect your personal and financial information, especially for international transactions, and keep your data safe from cyber threats.
However, if your finances are more complicated or you want personalized advice, it may be beneficial to consult with a tax professional in addition to using the software.
This article was written in cooperation with Get Ready Digital