Personal Finance

Income Tax Software – Desktop Version Versus Online Version

With tax season in full swing many people are gathering the necessary documents to prepare their tax return. There are many options available to consumers, each with their own pros and cons that must be considered. If you plan on preparing your tax return on your own, you should carefully research each option in order to find the one that is right for you. Here we look at the difference between two popular do-it-yourself tax preparation options – the desktop version and online version of tax software.  If you are considering using tax preparation software such as TurboTax or TurboTax Canada (for Canadians) then this article should be of interest to you.

Ease of use

Desktop version– If you opt for this method of tax preparation you will have to download tax software to your computer from either a CD or tax software download. Installing tax software on your computer is generally easy to do, however there is always the chance that problems may arise if the software is incompatible with currently installed hardware or software. Beyond the initial installation, downloading software to one computer limits the user to that computer only to access their information.

Online version– When you prepare your taxes using the online version there is no software to install, thereby eliminating the chance of incompatibility. You can access your information from any computer using an Internet browser such as Firefox or Internet Explorer. While this can be convenient for users who have limited access to a computer, there is also a risk for those who access their tax return via a public network. If you have no other option and must use a public computer you must be certain to log off of your account and close the browser window completely before leaving the computer.


Desktop version– The desktop version is more expensive however this can be the most affordable approach for families. Once purchased the downloaded software applies to up to five people.

Online Version- When you prepare your taxes online it is less expensive initially, however costs can add up if you have to add other options. This can still be the least expensive option for a single individual.


Desktop Version– When you download software to your computer you do not have the same implied security risks as you would entering personal information online. You also have access to your tax return information when you are not online. There is still a risk associated with storing your information locally as your computer and the information contained there can still be hacked into if your anti-virus software is not up to date or working efficiently.

Online Version– Any time you enter personal data online you must first check the security of the site you are visiting. For the purpose of filing your tax return you will likely be on websites that offer the same security that is used by large financial institutions. Before entering any information take the time to review the websites privacy and security policies.


Desktop Version– When you download tax software to your computer the file and data contained on the file will remain on your computer until you delete the file. It is not uncommon to have to go back to previous tax returns therefore you should keep the software as your data can only be read by the software used to file the return. Since software changes year to year, this can be a problem if you do not have access to the original software. When switching computers you may have to transfer the data from previous returns.  Make sure that you back up your computer files religiously in order to avoid losing data.

Online Version– Websites that offer online tax preparation usually save that information for three years in PDF form. You can access this information online or save it to your computer or removable storage.

As you can see there are differences between the two options that must be taken into consideration when making your decision. Remember that every person has unique needs therefore what works for one individual may not be the best option for another. Pick the method that best suits your personal needs.  Some good software to consider are TurboTax or TurboTax Canada (formerly QuickTax).

More resources

A complete review of popular tax software TurboTax.

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