Editor’s Note: This article is intended for informational purposes only. Mentions of any specific products here do not constitute an endorsement, either by the authors or the publisher.
Tax preparation software packages, such as TurboTax, TaxAct, H&R Block, and TaxSlayer, are popular ways for individuals to prepare their own income tax returns.
The Upside of Using Tax Preparation Software Packages
Most of the leading income tax preparation software solutions are popular because they are:
Accessible. They come in boxed, downloadable, or online versions.
Affordable. Most are in the $50 to $150 range for the federal self-employed version. There may be an additional cost to prepare a state return. However, some versions are free for lower-income individuals.
Convenient. These packages allow users to e-file federal (and sometimes state) returns. This helps speed along the refund process. A higher-end package usually offers optional (for an additional fee) add-ons such as:
- the ability to import tax data from other sources (e.g., from investment accounts or from Quicken/QuickBooks);
- the ability to track real-time information during the year (such as TurboTax’s ItsDeductible feature for tracking charitable donations);
- an interview interface to guide you through the preparation process;
- error-checking of the return after it has been prepared;
- a deduction finder to alert you to income tax deductions that may be applicable;
- easy access to IRS publications and tax practitioner explanations;
- tax planning assistance;
- audit defense (for example, in the case of an IRS audit, the manufacturer will defend the income tax filer if there is an error resulting from the use of the manufacturer’s product), and
- financial or retirement planning assistance.
Caveat Emptor
Tax preparation software packages often do not address three tax rules applicable to duly ordained, licensed, or commissioned ministers who are paid for services performed in the exercise of their ministry.
These rules do not apply to income or wages earned by a minister outside of the ministerial context (such as in secular employment).
RELATED: Key Federal Tax Law Changes Churches and Clergy Need To Know for 2025–2026
1. Social Security and Medicare Taxes
Under federal tax law, ministers employed by a church have a “dual tax status.”
They are considered employees for federal income tax purposes but are considered self-employed for federal employment tax purposes.
Therefore, a minister will generally receive a Form W-2 from his employing church for wages earned, but those wages are not subject to employee- and employer-paid FICA taxes (the 7.65% each respective side pays into the Social Security and Medicare systems).
Instead, ministers are responsible for paying the full 15.3% due into Social Security and Medicare through the payment of self-employment taxes (also known as SECA), which are computed on Schedule SE of their personal income tax returns.
