How to Choose and Use Tax Software for Your U.S. Tax Return

Tax software is a tool that guides you through preparing and filing your federal and (usually) state income tax returns, step by step, using an interview-style process instead of paper forms.

Used correctly, it can help you claim common credits and deductions, reduce errors, and e‑file directly to the Internal Revenue Service (IRS) and your state tax agency.

Quick summary: Getting started with tax software

  • Direct answer: Tax software is usually the easiest way for individuals and families to prepare and e‑file tax returns without hiring a paid preparer.
  • First action today:Gather last year’s return and this year’s income documents, then compare at least two reputable tax software providers (look for products that support e‑filing to the IRS and your state).
  • Where this connects to the system: Your return is ultimately filed with the IRS e‑file system and your state Department of Revenue/taxation portal.
  • Typical cost: Some providers offer a free federal (and sometimes state) return for simple situations; more complex returns usually have tiered fees.
  • What to expect next: After you enter your info, the software will calculate your refund or balance due and let you submit electronically; you then track status at the official IRS or state site.

How tax software actually works with the IRS and your state

Most consumer tax software is an “Authorized IRS e‑file Provider,” meaning it formats your information into the official electronic tax return format and sends it securely to the IRS e‑file system.

For state taxes, the software usually connects to your state tax agency (often called the Department of Revenue, Department of Taxation, or Franchise Tax Board) and files your state return electronically if your state participates in e‑file.

Typically, you will:

  • Create an account with the software provider.
  • Answer interview-style questions about your income, dependents, and life changes.
  • Enter numbers from forms such as W‑2 and 1099 documents.
  • Review a summary of your income, credits, deductions, and refund or amount due.
  • Choose to e‑file with the IRS and state, and optionally pay any tax due through bank draft or card.

Rules, supported forms, and free/paid options vary by state and provider, so you may need to compare features carefully before committing.

Key terms to know

Key terms to know:

  • E‑file — Sending your tax return electronically to the IRS and state instead of mailing paper forms.
  • AGI (Adjusted Gross Income) — Your income after certain adjustments; commonly used to verify your identity and to qualify for some credits.
  • Standard deduction — A fixed amount you can subtract from your income instead of listing itemized expenses like mortgage interest or charity.
  • Refund vs. balance due — A refund means you paid more tax during the year than you owed; a balance due means you owe additional tax when you file.

Where to go: Official touchpoints and safe starting points

There are two main official systems that interact with your tax software filing.

  1. IRS Free File and IRS e‑file system

    • Search for the IRS Free File program to see if your income qualifies for no‑cost online filing through trusted partners.
    • Look for providers listed on the official IRS website; these have passed IRS security and suitability checks.
    • Once your return is sent, the IRS e‑file system usually returns an acceptance or rejection notice within minutes to a day, which your software provider relays to you.

  2. Your state tax agency online portal

    • Search for your state’s official Department of Revenue or Department of Taxation portal (look for addresses ending in .gov to avoid scams).
    • Many state portals let you verify that your e‑filed state return was received, check refund status, or make payments.
    • Some states offer their own free online filing tools for residents with simpler tax situations, separate from commercial software.

First specific action today:
Search for “[Your State] Department of Revenue tax filing” and confirm whether your state accepts e‑filed returns and whether it offers a free filing option; note the name of the state system because some tax software will ask you if you want them to e‑file your state return there.

What to prepare before you start using tax software

Having your information ready makes tax software far smoother and reduces the risk of wrong entries or delays.

Documents you’ll typically need:

  • W‑2 forms from each employer showing wages and tax withheld.
  • 1099 forms (such as 1099‑NEC for freelance work, 1099‑INT for interest, 1099‑DIV for dividends, 1099‑G for unemployment benefits, 1099‑R for retirement distributions).
  • Last year’s federal and state tax returns (to transfer data, match AGI, and check what forms you needed before).

Depending on your situation, software commonly asks for:

  • Social Security numbers or ITINs for you, your spouse, and any dependents.
  • Proof of health insurance coverage (such as Form 1095‑A for marketplace plans).
  • Records of child care costs, including provider name, address, and tax ID number.
  • Records of education expenses (Form 1098‑T from schools, or student loan interest statements).
  • Information about estimated tax payments you made during the year.

To avoid re‑typing everything, keep these items in a folder or envelope and mark documents that apply to multiple areas (for example, a 1098‑T might affect both credits and deductions).

Step-by-step: Using tax software and what happens next

1. Decide which software tier you actually need

Compare at least two reputable providers and choose the lowest-cost option that supports all the forms you need (like self‑employment income, rental income, or education credits).
If your situation is simple (W‑2 income, standard deduction, no business income), you may qualify for free filing through either IRS Free File or the software’s own “free” product, but read the description carefully to confirm.

2. Create your account and verify your email

Sign up with your name and a strong password, then verify your email or phone as required.
Avoid using shared or public computers; if you must, make sure you log out and clear any saved passwords or downloads afterward.

3. Enter personal information and last year’s return

Input your legal name, address, filing status, and Social Security number exactly as they appear on official documents.
If you have last year’s electronic return, many software systems let you import it, which can auto-fill personal data and carry forward items like depreciation or capital loss carryovers.

4. Enter income documents (W‑2s, 1099s, etc.)

Use your physical forms to carefully enter each box exactly; some software can scan or import W‑2s from major employers or payroll providers, but always review for accuracy.
If you had unemployment, Social Security, freelance income, or bank interest, look for matching 1099 forms and enter each one into the correct section so the IRS records match the software’s calculations.

5. Answer questions about deductions and credits

The software will walk you through topics such as dependents, education expenses, childcare, retirement contributions, and health insurance.
Respond honestly and completely; if you are unsure about a question, most products include built‑in explanations or help buttons that show which IRS forms or rules are involved.

6. Review your summary and fix any flagged issues

Before filing, the software typically runs a check for missing entries or common errors, such as mismatched Social Security numbers or missing dependents’ information.
You’ll see a summary of your taxable income, credits, and refund or amount due; verify these numbers against your expectations (for example, if you had large withholding but see no refund, double‑check your entries).

7. E‑file and watch for acceptance notices

When you choose to e‑file, you’ll be asked to sign electronically, usually by entering last year’s AGI or a self‑selected PIN, and to choose how to receive a refund or pay a balance.
After submitting, you’ll usually receive an email or in‑software notification telling you whether your return was accepted or rejected by the IRS e‑file system and, if applicable, your state’s system.

What to expect next:

  • If accepted, you can track your federal refund by searching for “IRS refund status” and entering your Social Security number, filing status, and refund amount on the official portal.
  • For state refunds, use your state’s official tax/refund status tool listed on its Department of Revenue site.
  • If rejected, the software will usually show the official reject code and explanation; you then correct the specific issue and re‑submit at no additional IRS fee.

Real-world friction to watch for

Real-world friction to watch for

A frequent snag is when the IRS e‑file system rejects a return because the AGI from last year doesn’t match its records, which often happens if your prior return was amended, filed late, or processed slowly. When this happens, first double-check that you are using the actual prior-year AGI from your accepted return (not the original if it was amended), and if you still can’t match it, consider using the IRS option to request an online transcript or switch to using a self‑selected PIN method if allowed by the software.

Scam warnings and how to get legitimate help

Because tax filing involves money, identity, and government systems, scams are common, especially around email and text messages.

Be cautious about:

  • Emails or texts claiming to be from the IRS or your state asking you to click a link to “fix” your return or “confirm” your refund — the IRS and most state agencies typically do not do this.
  • Third‑party sites that charge upfront “refund release fees” or promise “special credits” if you send them bank information.
  • Software sites that don’t clearly show the provider’s full name, physical address, and data security explanations.

To stay safe:

  • Only enter your Social Security number and bank information on sites that clearly belong to a known provider or end in .gov when dealing with IRS or state portals.
  • If you’re unsure whether a message is real, independently search for the IRS or your state tax agency’s official phone number and call them directly instead of using phone numbers in the message.

If you’re stuck or uncomfortable filing on your own, look for:

  • IRS Volunteer Income Tax Assistance (VITA) sites for people who typically have lower incomes, disabilities, or limited English; searches on the IRS site can show local options.
  • Tax Counseling for the Elderly (TCE) programs, often run through nonprofits or community centers, for people age 60 and older.
  • State or local nonprofit financial counseling agencies that offer free or low‑cost tax assistance; verify they are legitimate by checking for government partnerships or listings on official state or city sites.

If you call an official office, a simple script is:
“Hi, I’m preparing my taxes using online software and need to confirm how to check my refund status and avoid scams. Can you tell me the correct website or phone line I should use?”

Once you have your documents gathered and a trusted software option selected, you can follow the software’s prompts to complete and e‑file your return, then confirm status directly with the IRS and your state tax agency through their official channels.