Sign of the times: Most people who use software to prepare and electronically file their income tax returns now opt for Web services, as opposed to the desktop products that pioneered the category. Intuit TurboTax, H&R Block At Home (formerly TaxCut), and 2nd Story TaxAct are the major providers of online tax preparation, and they continue to refine their offerings with features that ease the pain of data entry and help decipher IRS jargon.
Which tax service should you use? If you’ve tried any of them in the past and have been satisfied, there’s no compelling reason to switch, especially since sticking with the same provider generally makes importing data from last year’s return easy. (Support for importing files from competitors varies; check with the sites.)
If you’re new to Web-based tax preparation, H&R Block At Home and TaxAct can handle most returns and are both very easy to use—plus, they’re less expensive than TurboTax. But Intuit’s service offers the best data-import functions (especially for brokerage accounts, which is a major consideration for investors) and also has first-rate support options, including a lively online community where you can find helpful answers to your questions about taxes in general or the software in particular.
Since all of the services let you begin returns without having to enter credit card info, you can always try before you buy. But while all three tout their no-cost versions, don’t count on a freebie unless your return is extremely straightforward and doesn’t involve itemizing deductions: You’ll get little or no help, no support for data import, and lots of upsell attempts (plus, you’ll still have to pay to complete your state return, unless you’re lucky enough to be filing in a state that doesn’t collect income taxes).
Speaking of freebies, however, remember that if your 2009 income was $57,000 or less, you probably qualify for free Web-based tax software through the Free File program, which you can access only through the IRS Free File site. And there’s no income restriction on free filing via electronic forms.
Click on the links below to review the individual reviews of each service.