With the start of tax filing season, competition among the top tax software companies heats up with ubiquitous ads. Even the recent Super Bowl audience was fair game.
That’s where Tax Act touted its “totally free” federal e-filing service and TurboTax showcased its free live tax advice. Obviously, price is a big factor when deciding which tax software is best. Other considerations include brand recognition, ease of use, software features, support services and multiple computing applications, says Doug Kelly, an industry analyst with IBISWorld research.
All of the major tax software providers offer free basic preparation for easy returns. Costs typically increase for downloading the software package instead of completing returns on the provider’s website and for filing more complicated returns. These might include homeowners with children and multiple deductions, investors, self-employed and small business owners. Filing state taxes incurs an additional fee.
While nearly half of the states offer free online filing, the main software providers charge from $10 to $30 depending on the publisher and package.
To help you navigate through the best do-it-yourself tax preparation software on the market, we spotlight four popular publishers and what sets them apart.
TurboTax (Basic: free; Deluxe: $29.95; Premier: $49.95; Home and Business: $74.95. State taxes: $27.95 and up.)
Pros: One of the oldest tax software providers — part of a larger financial software company — is the top contender according to several online tax and consumer reviewing organizations consulted for this article.
TurboTax’s online deduction finder was cited by NextAdvisor.com independent research company in its recent review of online tax preparers
More than any of its competitors, TurboTax is promoting its social networking presence, Kelly says. Most notable is the company’s free access to its live online community for answers from tax experts and other customers.
The company is keeping up with the industry trend toward expanded technological integration by providing free video conferencing. TurboTax customers also have access to the parent company Intuit’s other financial service offerings, such as QuickBooks and Mint.com, Kelly says.
“It’s pushing its cross functionality. It’s trying to be a one-stop shop for consumers to prepare their taxes and manage their money.”
Cons: TurboTax has stricter free filing income requirements than other providers. And it has received mixed reviews on how easy it is to use, depending on the complexity of the returns.
2. H&R Block At Home (Free federal; Basic: 19.95; Deluxe: $29.95; Premium: $49.99; State: $27.95 and up)
Pros: The country’s largest retail tax preparer continues to integrate online tax preparation services into its traditional business offerings. For that reason, H&R Block is the only software that comes with free access to in-person — not just virtual — help and advice from tax specialists at its nationwide offices, Kelly said.
New this year, H&R Block At Home’s free edition will import last year’s tax data even from other software providers.
The company also is promoting its free audit support and representation from an enrolled agent, according to its website. “If the IRS finds a discrepancy, H&R Block will represent you in front of the IRS,” Kelly explains.
Cons: The company has received some complaints about its smartphone applications, Kelly said. It’s challenging for any company to adapt services to mobile platforms while also keeping up with the speed at which technology is changing, he said. “Bugs still need to be worked out.”
3. TaxAct (Basic: free; Deluxe: $9.95; Ultimate: $17.95. State: $14.95 and up.)
Pros: Least expensive option. TaxAct pays any penalties or fines you may incur due to improper filing fees, according to Lifehacker’s review of tax preparation tools. Both of TaxACT’s federal 1040 products, the free Federal Edition and the Deluxe edition, include Audit Assistant, a tool that guides users through an audit. If users need additional help, they can email TaxAct for free help or call the company (Deluxe users receive free phone help upon product payment, and free edition users can purchase phone help for the entire tax year for a one-time fee of $7.95).
Cons: Not as many service offerings as its more popular competitors. Consumers also may be annoyed by the regular reminders to upgrade to Deluxe to receive extra features and access to previous year’s returns, writes Lifehacker, which blogs about technology trends.
4. CompleteTax (Basic: free; Deluze: $29.95; Premium: $39.99. State: $29.95).
Pros: The no-frills approach to tax preparation is fine for those accustomed to filling out their forms by hand. This software offers many of the same features as the other players, including the maximum refund guarantee. The service asks basic questions up front to cut down on unrelated questions later, NextAdvisor reports.
Cons: Only offers an online version with no download option. Stricter free filing requirements. Not as easy for the inexperienced tax preparer. Interface has been called dated. One reviewer reported getting stuck in the program.
Have other tips on the best tax preparation software? Leave us a note in the comments below.