For those who choose to go it alone, preparing and filing their own taxes, facing tax filing season is stressful enough. They simply do not need the added pressure of trying to decipher the reams of complex and confusing IRS regulations that often defy understanding and choosing the right forms.
Income Tax Online
Does it really need to be that difficult? As in most years, there have been a myriad of important changes to the federal tax code. Even tax preparation professionals find that it takes an inordinate amount of time to keep abreast of them. Those who face the daunting task of tax preparation only once a year need all the help they can get. A solution came about several years ago with the advent of income tax online preparation and online tax filing. As an added bonus, tax refunds arrive in as little as 8 – 14 days when E-file is used.
Whenever the topic of online tax preparation comes up, many people want to know, “What is the best online tax software to use?” Offered here are comparisons of three of the most popular online tax preparation programs available based on cost, application, and ease of use. The goal is helping taxpayers make an informed choice when selecting the best program to prepare and file taxes online based on individual circumstances and to allow them to get through this tax season as easily and cheaply as possible.
Online Tax Software Products Compared
Included in the comparison are these online software products: H&R Block (Tax Cut), Tax Act, and Turbo Tax. This of course is not an exhaustive list since there are other choices available, but these four online tax software offerings are among the most popular.
Online Tax Preparation Cost Comparisons
H&R Block’s At HomeTM (Tax Cut Online)
- Free Edition: Free for basic returns that do not involve self-employment or income from farming, investment transactions or shareholder/partnership income or losses.
- Basic Edition: For $14.95, this edition has the same features as the free edition but includes some additional features such as previous year’s return and W-2 import functions and audit support.
- Deluxe Edition: Priced at $29.95, the deluxe offering is suitable for returns that include investment transactions and itemized deductions. The import functions and audit support are also included.
- Premium Edition: The top end offering available for $49.95 is the only edition suitable for those with self-employment, farm income, or rental income. This edition includes all the features from the Deluxe Edition plus one live online session with an H&R Block tax professional if there are questions.
All editions include one free federal E-file and all but the free edition allow for filing state tax returns at additional cost of $29.95.
Tax Act Online
- Free Online Edition: The Tax Act free edition supports for all types of returns, not just basic returns. Assistance available to help users choose the right return form to file.
- Deluxe Online Edition: For $9.95, the Deluxe Edition includes tools that help maximize deductions, enhanced interviews that address additional tax issues not covered by the free edition like life changes and related tax implications and previous tax year import functions for returning users. Also free guidance from Tax Act tax specialists via phone or email is available with this edition.
- Ultimate Edition: This offering includes everything from the Deluxe Edition for federal taxes plus online software for state taxes for $17.95. Also includes tax expert advice on all types of deductions and free assistance and support via phone, email or live over the web.
All editions include one free federal E-file and all allow for filing state tax returns. State returns are free with the Ultimate Edition, $8.00 with the Deluxe and $14.95 with the Free Edition.
Turbo Tax Online
- Free Edition: The free Turbo Tax edition is only for 1040EZ and other simple returns.
- Deluxe Edition: Priced at $29.95, the Deluxe Addition includes additional guidance to help maximize itemized deductions, eliminate errors, and minimize chances of IRS audits. It does not support investment transactions or rental income.
- Premiere Edition: Turbo Tax Premiere is the edition that people with more complex returns would need to handle things like investment transactions and rental property transactions. This addition however does not support self-employment income.
- Home & Business Edition: The top of the line, Home & Business Edition, priced at $74.95, is appropriate for the most complex individual returns and does prepare all IRS forms and schedules including those required for taxpayers with self-employment income.
All editions include one free federal E-file and all allow for filing state tax returns. State returns cost $27.95 with the free edition and $36.95 for all other editions.
Online Tax Software Ease of Use Comparisons
H&R Block products are easy to use even for a first time experience filing taxes online. The question and answer format offers step-by-step guidance through the tax preparation process.
Based on actual experience, the Tax Act products are not as easy to use as the H & R Block products. Some instructions are less clear and it is not nearly as easy to move between forms and screens. Still Tax Act is a good product that most people should be able to use without major difficulties.
Based on published reviews on the Turbo Tax website, many past users complained that instructions were not always clear and that the programs are inflexible in that changing entries requires users to re-answer questions already previously covered during the interview steps. Past experience and the overall theme of customer comments suggests that the ease of using Turbo Tax is comparable to Tax Act and not as seamless an experience as provided by the H & R Block products.
The Bottom Line on Tax Online Products
H & R Blocks, Tax Cut gets the nod for ease of use and is the clear choice for those who like the idea of the audit support should they need it.
For those just interested in a usable product to file taxes online free, Tax Act is the obvious winner. The Tax Act Free Edition can be used to file any type of individual return and for those taxpayers wanting extra help, both the Deluxe and Ultimate Editions cost less than comparable H & R Block and Turbo Tax offerings.
With the exception of loyal past users or someone looking specifically for online tax software to be used in conjunction with Quicken, the financial management software product produced by Turbo Tax maker Intuit, there is little to recommend Turbo Tax. It is hands down the most expensive choice unless chosen for the most basic returns that can be done free online. Additionally, the Turbo Tax website mentioned that product price increases are planned for March 2010.
References:
Tax Cut. H&R Block.com Web. 10 Jan. 2010.
Tax Act. Tax Act.com. Web. 10 Jan. 2010.
Larry Darter - Larry Darter is a freelance writer and published author with three books to his credit. He is a graduate of the Univ. of Central ...
