According to a MyMoneyBlog.com reader poll taken last year, 52% used TurboTax, 18% used TaxACT, and 14% used H&R Block at Home to prepare their tax returns, which agreed with the most popular software overall in the US. The remaining 16% either used an accountant (10%), filed on paper (4%), or used another software (2%).
Last year, I used each of “The Big 3” to do my taxes in order to compare and contract in detail the three software programs. (As an example, my TurboTax 2011 review talks about comma-insertion as a feature…) I plan to do the same thing this year, but to help you early-birds, here’s the highly-condensed version of my reviews:
Accuracy and Maximum Refund Guarantees
In terms of accuracy and interview style, I think all three are comparable if not nearly identical. In fact, I’m certain they all dissect each other’s products annually to ensure this. As such, all three offer a “Maximum Refund Guarantee” as well as a “Accuracy Guarantee” that states that they will pay any penalty and interest assessed by the IRS or your state due to calculation errors on their part (though H&R Block limits this to $10,000).
In my opinion, the remaining major differentiating factors are price, time-saving features, and audit support. Now, there are various discounts and sales that pop up, but here I’m just comparing regular sticker prices.
- The most popular and most polished-looking user interface.
- Federal Deluxe regular price is $29.99. State return price is $36.99.
- Best import support from payroll providers and financial institutions for automatic import of W-2 and 1099 forms.
- Moderate audit support (you get help, but no in-person representation)
Bottom line: The time-saving choice if you have a lot of brokerage and/or bank 1099s to electronically import, or a lot of details to import from last year’s return and you used them last year. For those like me that would pay extra to avoid all that tax lot data entry.
TaxACT Online - Cheapest overall with Federal Deluxe regular price at $9.99. Many can get by with Federal Free version. Cheapest state return at $8.00.
- Again, just as accurate as the others.
- Limited import support (worst of the three).
- Limited audit support (worst of the three).
Bottom line: The value choice if you just want reliable DIY tax return software and don’t need any extras.
H&R Block at Home Online - Federal Deluxe regular price is $29.95. State return price is $34.95.
- Moderate import support for 1099s and W-2 (not as broad at TurboTax, better than TaxACT)
- Best free audit support, as it includes an H&R Block Enrolled Agent actually attending your audit in-person. Neither TurboTax and TaxAct not offer representation. However, you must think about whether you would hire your own representative in the actual event of an IRS audit (probably depends on severity).
Bottom line: The sleep-well-at-night choice if you want the assurance that a federally-authorized enrolled agent will guide you for free through a potential albeit unlikely audit.
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I got to say, that when it comes to taxes, legal matters, CFPs, etc, I have never lost money going to a professional I trust, one who gets great reviews from people I know are successful and in the know with these matters. There are some things to be frugal about, some things to play around with, and many more DIY projects that can be rewarding, but there are a few things where I go to a professional bar none.
It depends… if all you have is a W-2 job, a 401(k), and maybe a few stock trades, there is very little a CPA can do for you. People used to do their taxes by hand, this software just automates the process. Why pay someone to fill out a 1040EZ?
If you have rental property, a business, estate, or other complicated issues, then definitely there may be room for a professional. Even if I pay someone to do my taxes, I run it through the software myself so I understand what happened.
Excellent breakdown, I agree. If you have stocks in taxable accounts, you gotta use Turbotax for importing the 1099s. You’ll go mad manually entering all of those dividends and cost bases.
I tried TaxAct one year and was pretty happy with it. The only dealbreaker was that it didn’t import the 1099s.
H&R Block I avoid on principle. Their software may be fine, but their brick and mortar business is pretty shady. Especially with their tax-refund loans that ripped consumers off.
Until my parents died, I had always used their tax professional. Nice guy, but not cheap. The year my mom died that all changed. I was living in a different state and decided to try to tackle it myself. Had to file my own federal return, mom’s final federal tax return, her final state return, and her estate return. It was huge and messy and Turbo Tax tackled it like a champ. There were many stock transfers and trades and this and that. Now I am a guy that, until that point in my life, had never looked at a tax return; I had no clue. When finished with all four or so returns, I did have a professional look them over, someone I trusted, he said they were flawless and very well done.
Last year my wife had a CPA member of her chamber of commerce wooing her firm for work. She mentioned that she would take a look at our personal returns for the past three years to see if she could do us better. She reluctantly admitted to my wife that she could not.
As a person who normally has over 40 W2’s to enter per year along with all my brokerage information, Turbo tax has always performed like a champ.
You also have to weigh the odds of whether you will get audited. Unless you are a business owner (with lots of business related income) or you have complex investment income, the odds of getting audited are very low.
W2 income + 1099s + interest income less deductions for household members Less:
Mortgage interest deduction less state taxes less charity = almost no shot at getting audited.
My question: is the downloaded version “better” from a privacy perspective than the online versions?
@Brad. All good points, regarding the audit possibilities.
As for security, I began my relationship using TurboTax on my computer and a few years later migrated to the online version. Yes, it’s ‘personal data’ but not bank account numbers or credit card numbers (except for your payment transaction).
It has never been a worry to me. And by using the online version, you are always assured that it has been updated with the latest tax code information.
I have been using Turbotax for years. I makes my life easier each and every year. I have retirement accounts and a business, but I have not had issues putting in any data with TurboTax. I just enjoy it’s ease of use!
I’ve been using H&R Block online for years. I’ve been very satisfied with the product. I use the premium version due to rental income. I decided to buy the software version this year when it went on sale at Amazon for $24.99. Come to find out, I can’t import my years of data from the online version to the software version. All my depreciation calculations, stock sale carryovers etc. I will have to recalculate and input. For some reason you can import the software data into the online version, but not the other way around. What a pain!
Wellsfargo has TurboTax coupon that you probably don’t have to open account to get it. It’s good for one TurboTax Online Deluxe federal form.
Just walk to your nearby Wellsfargo bank. Maybe because I am a customer so they didn’t ask me to open account, but the worst you can get is a no.
I’ve used taxslayer.com for the past 8 or 9 years and have no complaints, but I’m thinking of trying taxact just to see how it compares. Do I have download/install something for taxact, or does it have a web interface? I can’t see installing something when there are probably hundreds of websites that could offer the same features.
I have been a TaxAct user for years, no complaints what so ever. Everything is web/cloud based. They have automatic import feature that imports all your data from previous year.
@ JW
First thanks to Jonathan once again for this article.
JW, how do you know you have never lost money going to a professional?
In the “good old day” (ending towards the end of the 1990’s) if the people on this list took their tax information to 5 different “trust worthy” professionals, they would most likely get 5 different returns. I say this because Money magazine, at that time, ran an annual competition requiring the preparation of the tax return for an imaginary American family. The sad thing is that for most years, there were no correct responses. It was so embarrassing, that many accounting firms stopped responding.
I do not believe this to be true anymore however. That’s because nowadays many professionals are using tax software just like the rest of us.
On a side note, do not assume the IRS always get it right either. There are plenty of instances where they have not. In fact there is a tax law that states that if you contact the IRS, and they give you the wrong information which you act on, you are responsible for that information being incorrect!
Its a pity that we have to live with the current tax law environment. But thats a discussion for another thread, and perhaps another blog.
@JW: I lost money going to a professional I trust. I wasn’t a big account and she didn’t spent a lot of time on my stuff. She could have offered a simple change (small IRA contribution or recharacterization) and garnered me a $400 credit.
My taxes aren’t complicated, so I’ve since always read the directions and filled out the PDFs myself. I understand the tax laws better, and I see for myself the opportunities where I might make changes that have a positive effect.
Great points. I personally do have a more complicated return, a job, two startups, some real estate, and stock trades and do feel I need to go to a professional.
Information is key, and I do not go to my tax guy like a lemming. I spend time looking up information, asking questions, staying informed. No matter what you do, being informed is important.
@DonB that why it’s important to be informed, two heads are better than one
@Mushroom definitely agree the IRS is not right 100% of the time, and neither are tax professionals, and neither are software systems. But hopefully bringing different perspectives will add to the correctness and money saved.
Jonathan, you state that TacAct has state returns for $8. When I go to the site through your link, it says $14.99. Please advise.
@tj – All quoted prices for State Returns are when bought with the Federal Deluxe versions, in order to maintain apples to apples comparisons. If you do TaxAct Federal Free, State is $14.95. If you buy TaxAct Federal Deluxe, State is $8 ($17.95 total for both Fed + State), Hope that clears it up.
I have to use an accountant for the returns of myself and my two sons who are both in college. The accountant divides the left over tuition tax credits between myself and the boys’ father. He charges just under $200.00 for the 3 electronically filed returns.
Because I am a client of his accounting firm I can call or email questions to him throughout the year. The boys still have 2 more years of school to get through and I haven’t decided how I will when I am not obligated to visit him.
Turbo Tax just sent out an email that you can get $10 off their software at Amazon, Target, Bestbuy, Staples, Newegg, Officemax, Officedepot, Meijer and Frys.com this week instantly
I personally use H&R Block At Home Premium & Business 2012. Works great for my S-Corporation and personal return.
I have been using TurboTax for years. Last year I had to amend my return. I went back into the Turbotax program only to have it say that I had not filed yet. I had used the program to do e-filing for both federal and state returns. TurboTax’s only fix was to tell me to “fake” the system by going through the process to print the original returns.
Anyone else have this problem?
@Dan: good looking out. Previously, I used to buy TT at Costco with the $10 Costco coupon, which I think came out to $40. But looks like Amazon is also $40, so might as well save myself the time and crowds of Costco. Although I’d be missing out on some delicious free samples. Hmm… dilemmas… =)
I’ve been a user of Turbo Tax for years, but last year tried the Jackson Hewitt Online product. It’s pretty decent and easy to use. I actually found a code for 25% off – 25HD2013.
I’ve used H&R Block for last few years. Had them do it @ Sears and online myself.
Sears is no longer working with H&R Block and they’ve switched to Jackson-Hewitt for in-store taxes. I think I’m going to drop H&R all together and just go with TurboTax online from now on.
TaxAct just doesn’t seem good to me.
I have used both online version (to play around, and see what is there). Have to like the turbotax imports, but I fine that it asks a lot of questions that are not really clear (I can figure them out because I do 3 or 4 family members taxes for years). H&R seems to be more user friendly (like when I have IRA conversions from 2010 with delayed tax split between 2011&2012. TT just punted and asked me to enter values from forms XXXX, box NNx). I find H&H Block an be muh cheaper too when you buy the software online. Already got it for $21, deluxe with state, and fed efile, but no state efile from amazon. Just was going to print my state and mail it in, but NYS law requires them to give me state efile for free. So the entire thing is $21. I also do my mother’s, MIL’s and younger brother’s. The TOTAL for all of us was $21 since I have 5 free fed efiles.
I started using the Microsoft tax and HR TaxCut back in the90’s, found them to have better results than going into the office. Had to use the office since when received disability severence payfrom military taxcut did not know how that pas was tax-free.
Tried using taxact free online version, but unable to print your retrun or save as PDF without paying for it. Twice did an amended return with taxcut after doing with taxact and had a second return.
I had to redo my taxes since my company reissued my w-2’s so I thought I would start from scratch (no real reason). What a surprise that H&R Block now imports from Vanguard!!!!! I wonder now how much more TT imports than HRB
Incase anyone hasn’t filed yet and looking at HR Block, there is now a Google offer for $10 for $30 credit for filing (can be applied to state). Sounds like same deal as last year which I used.
https://www.google.com/offers/ppo/SELF/8DHLQE92AKQEJEYB
I go back and forth between TT and HR Block each year. I have a 4th grader in Catholic school and can deduct the K-12 payments which Turbo does very well but HR Block does not ask this question and leaves me to find this deduction each time. Turbo is easier to understand but since I have been doing for a while, I know where to go.
Turbo won out this year.
So which is better if you have a business? I used H&R last year because they included anLLC k1 schedule. Does TT do that?
@Lisa,
Why do you think your K-12 catholic school tuition is tax deductable? Some states allow it, but not at the federal level
Well TT might be a better choice this year since you still cannot e-file NYS on H&R block. Every day for the last 10 they said it would be updated, but it still hasnt
Good breakdown. I read many comments, and found useful. I have been using TurboTax online since 2000, except last year. Last year, they had a bug in online version, so I used desktop version. Even though ther were trying to fix it, but I did not want to wait. Bug was related to some 1099-B areas. This year, I have serious problem with a bug they have in both online and desktop versions, that I can’t use it at all until they fix (they are trying to fix, though). I have wash sales, and due to this bug, my capital calculated by TT comes out to be 3.65 multipled by actual. I tried entering these transactions manually, still same problem. I found that TaxAct may be a better alternative this year. But, once I leave, I may not come back to TurboTax.
Any school tuition beyond Kindergarten is never deductible, as far as I know. Of course, you can lie on the form and deduct it but lawfully, you can’t.
The big reason why I use TaxAct is because I did some contract work last year and TaxAct lets me file the necessary paperwork without needing to upgrade to an expensive small business version (like TurboTax does).
Does the price increase on MArch 24 mean that the free offer for Turbo tax via farmers insurance will be no longer applicable?
@srian – If you mean State Farm, I don’t think so. But the 15%/20% off offers will be 15%/20% off the higher retail prices.
FYI for Minnesota residents – the Minnesota Dept. of Revenue just cleared TurboTax for 2012 state filings on 3/19/13 after confirming that Intuit fixed programming errors which caused errors before the state agency discovered the problems with the software:
http://www.startribune.com/local/198974031.html
Thanks Jonathan.I did mean State Farm
For Tax Year 2014, TurboTax removed Sch C, D, E support from “Deluxe” Package. Now you need “Premier” package, at $79, not $39. Many people have switched to H&R BLock and TaxAct, which both import old TurboTax data and all common major brokerage house data.