Welcome back to tax season, I’m Jeff Battersby and I’ll be your guide for all things related to filing your taxes online. This year we’re going to look at the usual suspects, TurboTax and H&R Block. We’ll also look at TaxAct Online (last year’s newcomer), and Tax Slayer (this year’s newcomer).
When it comes to filing taxes the basics are essentially the same: You provide your financial information and the tax software uses an interview process to gather that information, minimize your tax liability, and, with some luck and good data, maximize your refund and reduce your stress level.
All of these online services offer various try-before-you-buy options that let you fill out your forms and then pay when it’s time to file. It’s important to note that all these app also charge more money the closer you get to tax time. We’ve included some links to paid versions on Amazon, so before you buy anything, make sure you’re purchasing the right package, and the correct OS version.
After last year’s tax season, and after entering my information into each of the services I reviewed, TaxAct is where my personal buck stopped for filing my taxes. Why? TaxAct is a one stop shop for everything you need. Whether you’re filing something as basic as a 1040EZ/A or you need to file taxes for an S Corp, LLC, or tax-exempt organization, TaxAct handles it all.
If you do all your filing with TaxAct it’s easy to import forms such as your K-1 into your personal taxes once you begin filing them. You can file all these taxes under a single TaxAct ID, so you don’t need to create an account for your business and a separate individual account, plus you can create individual returns for dependents who need to file their own taxes for work performed during the tax year.
The TaxAct interview process offers no surprises. If you previously filed with TaxAct you can import information directly from from a prior year return. TaxAct can also import data from a PDF created using any other filing method. You can connect to most payroll services to add a W-2 to your return, although not one of the tax apps I looked at can import W-2s from Paychex, which uses some type of proprietary system that none of these services is allowed to access. Fortunately, TaxAct can import a PDF version of your W-2, even if it’s a photo snapped with your phone.
TaxAct uses a responsive web design that can be used on all your devices without compromising features or functionality. I used the app on everything from an iPhone 6s to my 27-inch iMac and found them all easy to use and did not feel that I was compromising any capabilities or features while using a smaller device.
This year, an important TaxAct’s features change benefits low-end tax filers, who in most apps discover that filing for free often means filing with compromises or filing with surprise payments at the end. Free filers using TaxAct can file state and federal returns for free, and can contact support without having to upgrade. Additionally, all users have free access to seven years worth of prior year returns and you can print them for free.
TaxAct ranges from $0 for both federal and state filers of 1040EZ and 1040A to $70 for complete federal and a single state for Premium users. Premium users are typically those filing a Schedule C with their income taxes. There are no fees for importing prior year taxes and you have access to all of TaxAct’s education and support features.
H&R Block is the only tax app you’ll find that literally has support available (for a small fee) in your neighborhood. I live in a city of fewer than 15,000 people and I can walk to downtown and into a local H&R Block office if I need to get help. Fortunately, the H&R Block web app makes everything simple enough that you won’t have to make that walk.
If you’ve previously used H&R Block, what you’ll find with the new version is that the interface continues to be refined. 2016’s interview process is easy to follow and information on the page is concise and clearly organized. If you used last year’s version of H&R Block the interview process consists mostly of updating and verifying information you entered last year. Did you get married, divorced, move? Each of those events can result in changes to your tax liability. Informing H&R Block of these changes is as simple as adding or removing checks from boxes.
If you didn’t use H&R Block last year, you don’t have to enter all your information manually as the web app can import all your personal data from a PDF of last year’s return. But, even if you’re technically a free 1040EZ/A filer, the import feature requires that you update from the free edition to a paid version of the service.
As you edit or update information, H&R Block does some spot checks to see whether or not your information needs to change or be updated. For example, if you have dependents listed that are within a particular age range (say, 19-24), H&R Block will test to see whether those listed as dependents actually are dependents. For example, a 22-year-old who is not attending college and made over $4,050 cannot be listed as a dependent, even if they live in the same house as you. H&R Block will pull that person from your list of dependents after you answer a few questions.
Basic filings with H&R Block are free, although if you want to take advantage of support and import options you will have to pay about $30. Premium filers will pay up to $90 when filing both federal and state returns.
Intuit’s TurboTax is the 800-pound gorilla in the world of online tax prep. It is the best known, has a reputation for ease of use, and has the most visually appealing interface of all the web-based tax prep apps. But you can plan on paying a little more for filing your taxes with TurboTax, too.
From the start, TurboTax tries to make you feel good about something few of us feel too good about, by assessing your level of comfort with occasional question about how you feel. The way I felt after selecting each of the “Good, Not so good, Don’t ask” options was not better about doing my taxes, but ever-so-slightly “marketed” into believing that I was in the best place possible for getting my taxes done. Also sprinkled throughout the data entry process were offers for other add-on features, such as Intuit’s Max Assist & Defend. Expect to be upsold as you prepare your taxes using TurboTax.
Because I’ve previously used TurboTax, my interview process consisted of updating information about my life during the past year: Marital changes? Contracting work? Unemployment? All of these types of changes and more can lead to changes in your tax liability, so these quick checks of major events lay the groundwork for how TurboTax will attempt to save you money.
As you add information to TurboTax you’ll get immediate feedback on your tax liability. This is both a blessing and a curse, because sometimes the information comes too soon. For example, enter information from one W-2 in a two W-2 household and you may be greeted with a warning that you owe the IRS money, which may not be true. A little more patience on the part of TurboTax may lead to fewer tax-related heart attacks.
I’m happy to report that TurboTax now let’s you start a return using the mobile app and, if you discover that you need to upgrade to a paid version, your data transfer without an issue. This was not possible in prior year’s versions of the mobile app.
Federal and state filings are free if you file 1040EZ/A forms, but what appears to be free may add up to money as soon as you want to add a 1099 to your return. The max you’ll pay while filing a single state return with TurboTax is $107, for users who mix both personal and self-employment income and expenses. But there’s an additional benefit for self-employed folk: You’ll get a year’s-worth of Intuit’s excellent QuickBooks Self-Employed as a part of the package, which is well worth the extra money.
This is the first time I’ve looked at TaxSlayer and right from the start the process was a little off-putting. Once you create an initial user account you’re asked to enter your Social Security number and sign your name to agree to the terms and conditions. If I weren’t reviewing this software, that would have been enough for me to close the browser window and take my business elsewhere. I’m happy to read and comply with a license agreement when creating a new account, but don’t collect my personal information until after I’ve agreed to your rules and regs. I’d like to be able to look at your software before I let you see my private information.
Once you’ve created a TaxSlayer account, you walk through an interview process that starts with the option to upload a PDF of last year’s tax return to get your data entry started. Importing my return worked reasonably well, but there were some interesting incorrect entries, chief of which was converting the “B” in Battersby as a “3”. I found similar text recognition issues in other areas of the app as well, so it’s necessary to double check to make sure all your imported data is correct.
TaxSlayer’s interview process is less of an interview than it is a step-by-step filling of forms with responses that seemed odd given the data I’d entered and what the other three apps had done with the same information. Two examples: One of my dependents from last year is no longer eligible to be my dependent this year based on her income and the fact that she is out of college. TaxSlayer kept her as a dependent. Example 2: When entering W-2 information TaxSlayer gave me a warning that differing amounts in the federal and state wages boxes were not allowed in New York. The amounts in those fields was exactly the same. I triple-checked. The error still occurred. If collecting my SSN as part of the the license agreement hadn’t already put me off, this would have been enough to have me looking elsewhere for filing my taxes.
Overall I found the TaxSlayer interview process to be a hot mess. Telling the app that I had a business led to a page with a ton of text and a box for me to enter my “signature”. This signature page was a very unclear agreement to send my tax information to TaxSlayer so they could let “TaxSlayer make me aware of ‘TaxSlayer Books’, an easy-to-use bookkeeping solution that could save you money and make your recordkeeping [sic] painless”.
What the heck?
Additionally, when entering my business name in TaxSlayer’s Schedule C worksheet, the app told me that my business name, which contains 17 letters and spaces, needed to contain at least 3 characters that are letters or numbers. Seriously. A hot mess.
The price for filing state and federal forms using TaxSlayer ranges from $0 to $57, but I do not recommend using TaxSlayer. Too many red flags to engender even the slightest bit of confidence in TaxSlayer. I’d have more confidence having my taxes done by a roomful of blindfolded monkeys.
What’s best for you
TaxSlayer aside, the other three players, TaxAct, TurboTax, and H&R Block all offer excellent options for filing your taxes. You won’t go wrong selecting any of these three solutions.
TaxAct is by far the best value and offers the broadest selection of tax filing options. If you own a small corporation or run a non-profit and do your own taxes, TaxAct is the best choice for you.
H&R Block is the only solution that offers the option to take what you’ve done online and sit in front of a real human being in a real office that’s right down the street. There’s comfort in that, especially if you’re trepidatious about filing your own taxes.
TurboTax is TurboTax. Always solid, if not a bit more expensive than the competition, but if you’re a small business owner who mixes your personal and business expenses—as in, you’re working in the so-called “gig economy”—TurboTax is your baby. TurboTax Self-Employed with it’s year of free QuickBooks Self-Employed is totally worth the price of admission.