The average cost for a tax professional to prepare a basic federal and state return was $129 in 2010. And if your taxes were a little more complex, that number would have been much more. And that’s why approximately 31% of all American households have found a cheaper solution by filing their taxes online. With the number of e-filers growing at a 15% clip since 2005, Americans have become savvy when it comes to filing their taxes. Perhaps it’s time you joined them.
But choosing the right tax software is not an easy decision. TuboTax, TaxAct, and H&R Block at Home each have something different to offer, which makes it difficult to choose which is right for you. So we’re going to stress test each of the major online tax preparation services and tell you which we think is best and why. You won’t want to miss this.
Chances are you’re one of the 22 million clients that used H&R Block last year. And that would make sense because we’re talking about a $4 billion dollar company that generates almost $4 billion in annual sales. And it’s been around since the 1940s, so no wonder so many trust the Block to do their taxes. Today HRB operates more than 11,000 offices in the United States and employs an army of some of the brightest accountants around.
And because of its brick-and-mortar business, HRB generally deferred online tax services to other players like TurboTax and TaxAct. Sure, H&R Block operated TaxCut, but that halfhearted concept was deemed inferior to its peers. So what does the largest accounting firm on the planet do about more and more taxpayers staying home to do their taxes?
H&R Block at Home was designed to appeal to taxpayers of all shapes and sizes. It’s supposed to be functional, and affordable. And when I took it for a test spin, I was impressed.
Compared to the other providers, the HRB at Home product is the new kid on the block. So some e-filers would be right to wonder about the reliability of the service. Further, its older brother TaxCut failed to leave its mark and allowed TurboTax and TaxAct to eat its lunch. So what’s the guarantee that this product will perform any better?
What I found was that there wasn’t much (if anything) to not like about H&R Block at Home. It’s been designed by some serious tax pros and is ultra intuitive. It’s cheap and thorough. Why use TurboTax, when you can use the Block at Home, which is just as good, only cheaper? Why use TaxAct when the Block at Home offers a better product that’s just as cheap?
H&R Block at Home has figured out how to walk the fine line between cost and functionality. It offers 4 price points, with its cheapest offering being free. That’s right TaxAct customers, I said free. If you usually file a 1040EZ Form, this version will be sufficient for your needs. With the free offering, you’re also entitled to free expert tax advice from the H&R Block army, free audit support and representation from an enrolled agent, free E-Filing, and a free accuracy and refund guarantee. That’s a lot of free stuff.
But if you want more (and your goal is to save time), you can pay $19.95 for the basic version. Here you’ll get to import last year’s numbers as well as step-by-step guidance to maximize your refund. With these added features, the basic version is a solid value.
And if you’re a homeowner, the deluxe version at $29.95 is a more than fair price. This offering will provide you with more personalized guidance and will search for hundreds of deductions. It also sports a mortgage interest and charitable tax deduction maximizer as well as an easy to use stock and bond gains/losses feature. Again, for the cost, the deluxe version presents a solid value.
The premium version is $49.95 and basically for those that are self-employed. This offering provides for free live tax advice, Schedule C guidance, rental income assistance, and everything else you can think of. Most folks don’t need this amount of support, but it’s good to know that it’s there.
When you start your return, you have the option to set up an account or wait till later. You can actually do you an entire return without creating a login name, which is a pretty sweet convenience. H&R Block at Home also won’t drown you with constant marketing pitches. It clearly states right in the beginning that free is good, but sometimes you need more. You won’t see another marketing message until the very end of your return.
Unlike TaxAct (which only allows you 1 life-changing event), the Block at Home lets you enter all your life-changing events so it can personalize the software. This intuitive program also tracks your progress at the bottom of the page so you can better use your time. Its interface is ultra easy to use as it provides for common adjustments and deductions yet doesn’t overwhelm you with all the uncommon stuff. But if you do need something a little more exotic, just click on the dropdown box to find what you need.
After you’ve worked through that page, the software let’s you decide if you want to itemize or use the standard deduction. The program will recommend you use the higher amount but won’t automatically select it for you. It also reminds you that due to the creation of new tax laws, the IRS won’t begin processing returns with itemized deductions until mid-February.
In the credit section, the program automatically walks you through the making work pay credit. It also tells you the most common tax penalties and gives you a summary of your return at the end. At this point you can automatically import all your data to the state form. You can easily finish your state return by answering 5 questions and paying $27.95.
H&R Block at Home has successfully struck that delicate balance between cost, features, and functionality. You’ll love the way it handles and you’ll love how you only pay for what you need. If you can get away with it, go ahead with the free version. But don’t worry if you have to pay $20, $30, or even $50 for the upgrades, they all present solid value.
How do TaxAct and TurboTax compare? Check out their reviews before breezing through our final grudge match to see who won the tax software showdown!