April 15 is quickly approaching, which means we all need to buckle down and spend a Saturday preparing our taxes. I prepare my own taxes, and I know all too well how hard it can be to find the right program to help out. Let's look at four online tax preparation software packages that are good places to start.
H&R Block TaxCut Online: Powerful, but not ideal H&R Block may offer its tax services in franchised locations across the U.S., but it also provides its software online. And although those who are less knowledgeable about tax law shouldn't have too much trouble preparing their taxes with the company's TaxCut Online software, there aren't enough options to justify using it if you file a complex return.
TaxCut Online is free when you e-file your federal taxes, but just like every other service in this roundup, it charges you to e-file your state taxes. With TaxCut Online, that will run you $29.95. Aside from the free edition, TaxCut Online is also available in Basic for simple returns for $14.95 or Premium for those who have more complicated returns for $39.95. Neither of those fees include the state e-file charge.
I created a fake return (without filing) to evaluate each service and found that TaxCut Online works beautifully for those who have simple returns. In a matter of seconds, I was able to work my way through wage income, interest, and basic deductions to create a return. It was quick and easy.
But when I tried to create a complicated return that featured the sale of a home, self-employment income, and investment income, TaxCut Online proved to be a relatively useless tool, at least compared to TurboTax Online. It didn't maximize my tax credits, it failed to provide me with enough control to pinpoint specific deductions like self-employment insurance, and it delivered a tax liability that was almost $1,000 higher than the figure TurboTax Online calculated. That said, its "Worry-free Audit Support" tool came in handy and its error correction feature fixed mistakes it found along the way, which certainly helps put the mind at ease.
But I can't even recommend using TaxCut Online if you file a basic return. It's too expensive. Nor do I recommend using TaxCut Online if you file more complex returns. TurboTax Online is a much better alternative.
TaxAct Online: Simplicity is kingTaxAct Online isn't nearly as powerful as TaxCut from H&R Block or TurboTax Online, but it's not meant to be. Instead, TaxAct is aimed at the taxpayer who doesn't want to pay an accountant $250 to prepare a relatively basic return.
When I first started using TaxAct, I was impressed by its simplicity. It doesn't feature all the extras you'll find in more capable products and it's obviously designed for someone who wants to get their taxes filed as quickly and efficiently as possible. If you want to find obscure tax code topics, you won't find it in TaxAct. It's simply not that kind of preparation tool.
TaxAct comes in three versions: Free, Deluxe, and Ultimate. After you e-file your state taxes (for free), it will cost you $13.95 to file federal. The Deluxe and Ultimate versions will both run you $16.95. That's a fair price for what you're getting with the software.
When I prepared my basic return on TaxAct Free edition, it couldn't have been easier. I input the wages, interest, and other data and within 30 minutes, TaxAct had my return ready to be e-filed with the government. The refund it calculated was exactly the same as the refund the other tax preparation solutions determined.
But as good as TaxAct was on my basic return, it was equally poor on my complicated return. Inputting self-employment income and expenses was too difficult, and the software's import feature, which attempts to find tax data from your banks and employers, was useless; it found nothing. Once I finally completed the return, it calculated a tax liability that was more than $2,500 higher than what I calculated with TurboTax Online. Suffice it to say that TaxAct Ultimate is best-suited for someone who has wage income, owns a home, and hasn't sold any investments over the past year. Anything more than that and the software becomes difficult to use.
Is TaxAct worth the $13.95 it charges for the basic edition with state e-file? You bet. It's simple, it's quick, and most importantly, you can't screw anything up. But if you have a complicated return, don't waste your time trying to save a few bucks on TaxAct. You'll lose more when you file your taxes.… Read more