Major rivals' tax-preparation software get test drive
By Sandra Block
USA Today
There are two reasons why most of us use tax preparation software to do our taxes: It's faster than filling out the paper forms, and it's cheaper than paying someone else to do the job.
So this year, H&R Block, which makes TaxCut online and desktop software, has decided to appeal to folks who are already irritable about their tax bills and don't want to spend a lot of money to file their returns. Block has streamlined its products, making it easier to figure out which of its programs to buy. And the price for its top-of-the-line product is 25 percent cheaper than the premium TurboTax software, made by Block rival Intuit.
So in comparing products from the two tax preparation giants, we focused on whether TurboTax, the market leader, is worth the extra money. For folks with a lot of complex deductions, self-employment income, or investment returns, the answer may be yes. But our test drive of a relatively straightforward return - common deductions, income listed on W-2 forms, with a small amount of interest income - found that TaxCut delivered the same result, in about the time it took to do the same return on TurboTax. Here's a closer look at what we found:
TURBOTAX
We tested the TurboTax Deluxe Deduction Maximizer desktop product, which is a step above TurboTax's Basic program but isn't as extensive (or expensive) as its Premier Investments package. The program promises to "scour your return for deduction opportunities," a reassuring thought for itemizers who fear they might miss a money-saving tax break.
New this year is a feature that lets taxpayers decide how much hand-holding they need. In the deductions section, for example, you can choose between "maximize my deductions" and "find deductions myself." The former will walk you through dozens of possible deductions, just to make sure you don't miss anything. With "find deductions myself," you're shown a list of deductions and credits, and you can select the tax breaks that apply to you.
On a couple of occasions, we needed to go back and change something we had entered earlier. TurboTax's system allowed us to make these revisions with a minimum of confusion.
Taxpayers who are new to TurboTax's desktop products may be surprised to discover that when they finish preparing their returns, e-filing costs extra. You'll need to shell out $14.95 to e-file a federal return and another $14.95 to e-file a state return. That brings the cost for preparing and e-filing a federal and state return on TurboTax Deluxe to $74.95. And if you want someone from TurboTax to represent you in an audit, that costs $34.95, plus $5 for a state return.
TAXCUT
This year, Block simplified its product line. Instead of forcing taxpayers to decide whether their tax returns are "basic" or "deluxe," everyone who buys TaxCut desktop software gets the premium version. Prices are based on add-ons, such as state returns and e-filing.
This one-size-fits-all approach risks information overload for filers with simple returns. And occasionally we found ourselves responding to obscure questions, such as whether we received inmate income last year (we did not). For the most part, though, the program was easy to navigate. It includes a helpful breakout of recent tax law changes, including the phone tax refund.
As with TurboTax, none of TaxCut's programs allow you take advantage of the split-refund option. Taxpayers can, however, deposit their refunds in the H&R Block Easy IRA offered by H&R Block Bank.
In this year's tax preparation test drive, TurboTax provided a smoother ride. But TaxCut will also get you to your destination, for a lot less.
