While most people avoid doing their taxes even once if it wasn’t legally required and IRS tax evasion fraud wasn’t an issue, as the Frugal Guinea Pig, I did them three times this year, testing the services of TaxACT, TurboTax, and H&R Block At Home.
I’m a big tax nerd (I took the H&R Block tax class for fun), so it’s probably easier for me to do my taxes than it is for the average bear. Still, in evaluating these programs I tried to keep in mind what might look unusual or confusing to others. Fortunately the tax preparation software helped me out by presenting stuff so confusing that even I couldn’t decipher it. The sites often made it difficult to determine where to enter data, and one even took away $21 of my state refund for no good reason.
I’ll share the full experience I had with each company, including how thorough, frustrating, and user-friendly I found the sites.
I addressed the following tax items in each run-through:
- 3 W-2 forms
- A small business with a $460 loss this year
- A 1099-MISC unrelated to the business
- A home office
- A charitable donation
- Student loan interest
- A 1099-G for last year’s local tax refund
- Withdrawal from a retirement account (i.e. 401k or Roth IRA)
- Time spent preparing: 1 hour, 2 minutes
- Federal refund result: $343
- State refund result: $25
Right off the bat I am annoyed by the videos. They automatically start when the pages load, even on the opening registration form. Eventually I just turn off my speakers. The system offers to import my prior year return (saved in a normal PDF), but the import fails. On the next page, it offers me an upgrade to TaxACT Deluxe for $9.95 with “Life Tips” guidance, before I had even entered any information.
I go to enter my first W-2, and I get another prompt to upgrade to Deluxe so that I can use its automatic W-2 import feature. This feature doesn’t seem worth the $10 fee, and more importantly they don’t explain how they’ll get my W-2 information. I’m left to assume the data comes from the payroll companies, but one of mine was processed by the federal government, so it won’t be in there anyway.
I find the W-2 form clunky. It’s supposed to look like a “real” W-2, but the since all W-2s aren’t standard, the attempt at helpfulness fails. It is nice, though, that they provide drop-down menus for many fields, reducing typos. The form works fine, but it’s just a design nightmare. To finish up I have to click “Close,” rather than “Save” or “Next,” which makes me nervous that it’ll erase everything I entered in.
Again, I get the prompt that I can get a bigger tax refund with Deluxe. Why not just come out and say, “Our basic version stinks! It’s not even worth using!”
The Schedule C interface for small business expenses is very thorough – perhaps too thorough. I’m going through each expense category line by line, which I’d probably consider a waste of time when I’m stuck inside doing tax prep on a Saturday afternoon. Also, TaxACT frequently misses the chance to ask preliminary questions that could have cut out long lines of questions. They could have avoided a lot of “Wha?” moments, like when it tried to depreciate a house I don’t own.
I face a few incomprehensible paragraphs about the alternative minimum tax, all of which are unnecessary since I’ve already responded that I didn’t pay the AMT last year. Then it asks if I want information on reducing an underpayment penalty I don’t owe.
At the end of the process, it asks if I want to pay $7.95 for data storage services (not deleting my stuff off their servers until next year), and I think to myself, “Doesn’t TaxACT say they can import prior year returns from PDF?” When I recall that it didn’t work on my earlier attempt, I wonder if that’s why they’re selling this now. Finally, it tells me that the IRS says I have to give consent so I can see all of their refund options, which makes me nervous. I wonder if perhaps they are running my credit or something, but can’t find anything nefarious. TaxACT lets me get my refund in the form of savings bonds or prepaid cards or some other things, which is about a three out of ten on the nifty scale.
TaxACT made it tough to figure out what to do with my 1099-MISC form. I eventually had to create a second business just for that, forcing me to spend more time going through all the expenses it didn’t have. The rest of the forms were easy enough to figure out what to do with, though somewhat annoying to enter. At least I was able to get all my stuff done without actually upgrading. Whatever delights the Deluxe version may hold, Schedule C was included in the basic, free version.
TaxACT frequently uses tax vocabulary the average person is not going to know. Even I don’t know what “excess accumulation” is without staring at the ceiling for a moment. The average taxpayer will be baffled, so cutting down on the advanced vocab might be helpful.
Basic was free, $9.95 for Deluxe, $14.95 for state. TaxACT is the cheapest option, but if you’re a tax novice – or if you just really, really hate doing your taxes – you may find it worth it to spend a little more on another option.
10 of 10. It was pretty exhaustive, especially considering I didn’t upgrade.
5 of 10. None of the annoying factors were intentional. The system just didn’t have very good internal logic and asked me about many things that it then said I didn’t need.
3 of 10. Most people need a helpful guide, which I didn’t find. You’d need to already know what you have to do to get through it.
- Time spent preparing: 41 minutes
- Federal refund result: $344
- State refund result: $3
As soon as I register, TurboTax tells me they “Recommend TurboTax Basic or Premier for new users.” So much for trumpeting the free version! It doesn’t say why it recommends them. After I check off some life events I then see, “Based on your selections, TurboTax is the right product for you.” I certainly hope so! I find this inauspicious start even less reassuring when I learn that I won’t miss a thing, but only if I upgrade. Does that mean the free version is guaranteed to miss things?
Right away I notice in the sidebar: the “Live Community,” a place to ask tax questions and get answers. However, a lot of the questions are misspelled, inane, or need only a one word answer. Plus, the thing keeps refreshing, which is pretty distracting and slows things down. I’m left wondering who’s answering these questions: other people using TurboTax? TurboTax employees? I try to see if I can turn it off but I can’t. I try to ignore it – and the many people who love to use excessive capitalization.
When I begin to input my W-2s, first it asks just for the employer identification number. The system can find my W-2s and auto-import data, but only if I upgrade. Again, I get no explanation about how it got my information, but at least it didn’t ask for more data before telling me it could have imported everything. It makes this same offer on both of my first W-2s, but not my third, for my work for the Census. Evidently the federal government doesn’t participate in whatever database TurboTax uses.
TurboTax alerts me to possible extra penalty fees due to my withdrawal of retirement funds, which even TaxACT in its completeness didn’t mention. Minus one for thoroughness, though, because when I click a link for more explanation, the next page reads, “Under Construction – to be available in a later edition of the program.” Oops.
I start on the self-employment tax stuff, and now I am forced to upgrade because the basic free edition doesn’t support self-employment data. The upgrade to Basic costs $19.95. Home and Business costs $74.95! The page doesn’t explain the differences in what each edition offers, nor does it ask me to upgrade again at any point, so presumably it handles a Schedule C just fine.
Finding the business code for my business is usually a real pain, but on TurboTax it’s surprisingly easy, using a normal search box to help search for terms in the code’s description. Fast and painless. In prior years I have filed as 99999, Uncategorized, because I couldn’t find anything good among the morass. The system catches me when I type in the wrong numbers for my home office square footage. However, I’m a little concerned when we go through the home office tax deduction stuff a second time – I hope it doesn’t include two forms in the final package.
Next, TurboTax provides a nice list of different kinds of income and forms that I might have. I just go down the list and start providing answers for each specific element. It’s much more efficient than going through all of them!
All of the questions about deductions are pretty straightforward: Did I pay childcare expenses? Did I pay a mortgage? I can easily figure out what I need to fill out and what I can skip. At the end, it asks a terrific question: Have you entered all your tax forms? This is great because many people, myself included, sit down with a pile of tax forms and figure we are done when we are out of forms. So if you have forms left, here is your chance to go back and figure out where they go.
At the end, I hit a strange snag. When I run through my Ohio state taxes, somehow my refund goes down $21. I log out, log back in, and run them again, but I can’t figure out why it’s different. Being a nerd, I’d like to see the forms, but it won’t let me print them out until I pay for the service, so I’ll never find out why my state refund fell. Also, the payment options don’t seem to include the choice to pay out of my refund, just by credit card or by applying for the TurboTax credit card.
TurboTax was very easy to use, especially for simpler taxes, and I felt pretty confident that the average person would have had a smooth ride. It didn’t repeat questions or tell me about things that didn’t matter for me. But there wasn’t much of a way for me to check the system’s math or find out why my state refund decreased. The well-designed interviews made providing answers very easy, and the system can find the right forms even if you don’t know exactly what you’re looking for. It did a particularly terrific job handling the 1099-MISC, giving me several options such as side job or one-time job, which it then used to figure out if this required a Schedule C or not. In the other online software programs, I had to just know that I needed another Schedule C.
$19.95 for Basic, $36.95 for state with Basic.
8 of 10. I was pretty confident that it’d gotten everything I needed, but it didn’t ask much in the way of double-checking. I still have no idea where my extra $21 went, and there’s no option to check the forms before filing.
2 of 10. It was pretty good about avoiding unnecessary questions and showing me irrelevant questions and choices. I didn’t end up talking to this program very much – as in asking it “What are you doing?” – and the forms made data entry easy.
10 of 10. This interface was intuitive and very easy to use. It’d be a great option for someone who has no idea what to do with it.
H&R Block At Home
- Time spent preparing: 27 minutes
- Federal refund result: $344
- State refund result: $24
Don’t be fooled by the time difference. I’ve used H&R Block in the past for my own taxes and for those I prepare for others, so I’m pretty familiar with the forms, and this was the third time I’d typed in my numbers. Still, I got through this program very quickly because of the way that they streamline entering forms and determining what they need to ask you.
At the beginning, the system offers me a menu of various life occurrences to check off, although some aren’t clear. It asks if I started a new job, but not if I already had a job. And it asks if I started a business, but not if I already had a business. I check off starting a new job but not starting a new business, to see if it’ll still ask me.
The first page for inputting income has a list of the forms I should have, which is a little overwhelming. But it moves through a step-by-step process asking which forms I have. I enter the data from one form after another. In the other software programs, getting the local tax refund in was somewhat confusing, but it’s just another item on the list for H&R Block, and I enter it and go along my way.
I am forced to upgrade due to the Schedule C and self-employment items. I choose the Basic upgrade, and then I’m bumped back several pages. I have to click through them again.
A little quirk I notice is that H&R Block is rounding the numbers as I type them in, which annoys me because I feel like if I could type in those decimals, the least they could do is hang onto them, and also because I wonder how much difference those might have made at the end.
At first, I like the progress bar at the bottom of the pages. But after a while, especially when I stay for 8 or 10 minutes at 75%, it just bothers me. I’m not getting anywhere, according to the bar, despite putting in tons of data. And then it jumps suddenly after submitting one page.
When trying to put in my business information, the business code finder is really annoying. I give up and put in 99999 like always. Sorry, IRS. It does, however, correctly perform the tests for appropriate home office usage, but doesn’t subsequently explain that I don’t get to take the home office deduction because the business didn’t make a profit. It also completely fails on explaining what I need to do with my 1099-MISC. I eventually give up and create a new business for it, which is fine for me because I know that’s what I need to do – but the average user unfortunately wouldn’t.
Deductions are completely confusing in this system. H&R Block has the “DeductionPro” program, which I’m sure is lovely and wonderful for things like clothing donations, but I just have a form and I want to type in some numbers! I eventually just skip the DeductionPro and enter in my numbers.
I’m finished with the federal return, and I’m on to the state. It wants me to pay $34.95, but doesn’t say if I have to pay for it now, or if I only pay for it when I’m ready to file, which the other programs did explicitly state. I hope I don’t end up paying for this!
The state return goes fine. It doesn’t ask too many questions, and I click through screens of options that don’t apply to me. The school district code finder is really nice and well designed, and I find my code immediately. I end up with a refund that is almost the same as TaxACT, which is reassuring, but makes me further wonder what happened with TurboTax’s calculation.
H&R Block at Home earned a solid “Meh.” It wasn’t as thorough as TaxACT, or as user-friendly as TurboTax. It was, however, really quick. It will get you through the boring steps of filling in the forms pretty quickly, and then you’ll have time to spend on the business of credits and deductions.
Basic costs $19.95, basic state is $34.95, and state with the free federal is $27.95.
7 of 10. It did a pretty good job, but I wasn’t always clear what it was asking for, which might have made me miss items without knowing.
4 of 10. Not too many things repeated unnecessarily, although there were some long lists of things that just looked confusing. Overall I felt it was pretty streamlined.
6 of 10. Some things were easy, and some were unclear. I didn’t have any trouble with it, but I know what it’s talking about. An average user would have had a few spots that didn’t make much sense.
Verdict & Final Word
I’m skeptical and annoyed by the “upgrades” that all of the tax preparation software programs offered, which hinted or said outright that they’d find more items and suggest more deductions than the free version. To me that’s essentially saying, “Hey, we’re going to intentionally skip some stuff unless you pay more.” In the end, it didn’t seem to make any difference, even though in both TurboTax and H&R Block I ended up needing to upgrade halfway through. It’s not like my refund suddenly jumped $100 or anything, so I have only a moral stand in this argument. You do need to upgrade in both programs to access certain schedules, which is understandable, but I wouldn’t imply that upgrading will otherwise help you.
What program will I ultimately file my taxes with? I will use TaxACT. While it was the most annoying, I found a better refund amount than TurboTax, and it’s cheaper than both TurboTax and H&R Block. I wouldn’t recommend it for the average user, though. TurboTax is great if you are not very experienced with your taxes, or just don’t want to have to think about them too hard. H&R Block is for a slightly more advanced user, and did give me a bigger refund than TurboTax.
Have you used any of these tax programs yourself? What were your experiences like? Are you going to try a different program this year?
(photo credit: Shutterstock)