It’s wishful thinking to believe that one tax software should be enough for life but to put it bluntly, yes, you will have to update the software every year that you want to prepare a tax return with the help of a program, regardless of whether you previously used a desktop or an online solution. This seems unfair perhaps – especially for those who have no choice but to purchase the top-tier version of the program due to their needs – but there is a logical explanation as to why a new solution is required every year.
Too many changes to the law
Few things change as much in U.S. law than those surrounding tax. Whether it’s for the better or for the worse, tax law changes are so frequent that once they enter into effect it’s way easier for tax software providers to release a new program rather than to implement the modifications into all previous versions.
To better understand why tax software providers cut the Gordian knot this way, here is an example: before the 2018 tax year, individuals had the option to deduct tax from miscellaneous expenses that exceeded 2% of their adjusted gross income (AGI) on their Schedule As. However, in 2018 this option was suspended, meaning that every tax program version before this year would incorrectly count this 2% AGI threshold rule, and therefore claim tax back on items that aren’t deductible anymore. This is an enormous change in itself, but there is no guarantee that the following year won’t surprise us with a new change even more radical. As such, abandoning last year’s version – which, if you think about it, becomes outdated the moment it’s released – and replacing it with a new version is indeed the most logical thing that tax software providers can do.
Usefulness beyond the grave
With all this in mind, you may be wondering why these companies recommend that users don’t get rid of previous versions as soon as the latest software is out. This is because the old programs are actually more useful than they seem and not just because they continue to receive regular system updates until the company has decided to pull the plug.
For instance, online tax prep software keeps returns preserved for three years, meaning that if users transfer from the previous year’s version to the current version of the same company, then they can simply create their new accounts with the same login credentials and easily import last year’s tax return into the latest program with a single click. This process can also be done manually by importing previous tax returns as PDFs, which is the only option for downloadable tax software users or for those deciding to switch to a completely different solution to do their taxes.
However, this isn’t the only reason to keep older tax prep programs since it is necessary to use the correct corresponding program when creating a tax return for a previous year, allowing you to put together the necessary documents and then print them to be mailed to the IRS.