Ever wondered what the differences are among tax software programs?
Maybe that only keeps nerds like me up at night, but there are differences. Examples: The most popular tax software is also the most expensive. And some cheaper programs charge extra for support. You get what you pay for.
As part of our six-part series, the “No-Stress Guide to Filing Your Taxes”, we already ran a checklist of tax documents to collect and a post on the best method to file your taxes (by hand, with software, or with the help of a tax pro.)
TurboTax, H&R Block at Home and TaxCut Compared
|Start and file your simple federal return for free.|
Deluxe (w/ advanced features to help with itemized deductions)
Premier (Investments & Rental Income)
Home & Business
|State Return (Basic)
State Return (Deluxe +)
H&R Block at Home
|Save 15% off list prices on H&R Block at Home.|
Deluxe (Itemized deductions & investments)
Premium (Self-employment or rental income)
Premium & Business
One state return included with all federal products except Basic ($36.95 for first state with Basic or additional states). $19.95 per state for state e-file.
|Start for free, pay only when you file.|
Federal Deluxe (Itemized)
|State Return (w/ Basic)
State Return (w/ Deluxe)
Explaining the Differences
Over the years, I’ve used each of these programs to file my taxes. (This year I hired a CPA to help with the increasing complexity of running a business.) But in years past these tax software programs handled made preparing my tax returns relatively easy if not entirely painless; after all they’re still taxes.
In comparing the best tax software programs, all three guarantee the accuracy of their calculations. The big differences among tax software programs lie in their:
- Support options
For the most part, all three programs are easy to use and provide intuitive navigation. I think TurboTax stands out in a bit when it comes to entering W-2s and walking you through questions for complicated credits and deductions. TaxAct, by contrast, does a fine job for simple returns but begins to get cumbersome when tackling advanced topics.
Tax software prices can be misleading. TurboTax and TaxAct advertise that you can file your simple, federal tax return for free. And in many cases this is true. But with TurboTax, if you want to access certain features (detailed questions to guide you through deductions, for example), you’ll have to upgrade. And in every case, you will have to pay to file your state tax return with the software or if you tax situation ends up being more complex than you imagined. That’s why it’s a good idea to figure out exactly what you’ll need and how much you’ll pay before starting your return.
In most situations, TurboTax ends up being the priciest of the three packages. But after combing over 250+ online user reviews, most think that the quality of the software and the online help (user forums etc.) make the price worth it, especially for more involved returns. TaxAct, by contrast, is much less expensive: you can file a basic federal return and a state return for only $14.95…the least expensive way to file everything. But if you want phone support, it’s an extra $7.95 (phone support is included with TaxAct Federal Deluxe, so you can file federal, state, and get phone support for $17.95).
H&R Block at Home’s pricing falls in between. They don’t offer free filing of your basic federal return. If you purchase their Deluxe, Premium, or Business package, one state return is included (meaning you can prepare it, print it, and file by mail) but they’ll charge you $19.95 to e-file the state return.
Note: With the links in this article, you can save 15% off the listed prices of H&R Block at Home. *H&R Block, TurboTax, and TaxAct are affiliates, meaning if you decide to use them we get a little bit in our online tip jar. If you choose to support us in this way, thanks!
I’m a figure-it-out-myself kind of guy, so I turn to online FAQs and forums before calling an 800 number; I can say both TurboTax’s and H&R Block’s knowledge bases are very good. From the 250+ online user reviews I read, most agree that their phone support is good, too. Reviews note that TaxAct’s phone support falls short with limited phone hours and less-helpful-than-desired responses. Again, TaxAct is a good choice for straightforward returns, but spending a bit more might be warranted for anything more complex.
H&R Block has the advantage of local offices around the country and offers a “best of both” program. For $79.95 you can begin your return online and have a professional sign your return as a professional preparer.
Both TurboTax and H&R Block include audit support in the event your return they prepared is audited. This support includes a professional to communicate with the IRS for you and explain the audit process, but may fall short of everything you might need to handle the audit (such as legal advice in some situations).
Due to the way different companies bundle and price their software, the best value for my return may not be the best for yours. TurboTax and H&R Block at Home both offer complete solutions, usable software, and full-featured support, but come at a cost. TaxAct provides an affordable option for simple returns.
What about you? Had good/bad experiences with these or other tax software programs? Need general tax advice? Let us know in a comment.
Next in the No-Stress Guide to Filing Your Taxes: Common Tax Schedules: How to Use Them and What They Mean.