The right tax program could save you thousands in payments. But which software is right for you?
This year, it took me a lot longer than I would have liked to complete my tax return. But, to be fair, that’s because I sampled several different online tax preparation options and evaluated each on its merits.
My tax prep marathon covered three of the most popular programs: TurboTax, TaxAct, and H&R Block. There are plenty of less popular options (such as TaxSlayer, eSmart Tax, and FreeTaxUSA), but these three are by far the most popular.
Here’s what I found.
My Tax Situation
I’ve run this comparison for several years in a row. As my tax situation has changed, so have my experiences. For instance, during the 2014 tax year, I moved across state lines and therefore filed two state tax returns. My reviews will note how each platform handled or reacted to specific aspects of my tax situation.
For the most recent run, in 2016, I used a modified version of my actual tax situation for all three programs to ensure an apples-to-apples comparison. The highlights:
TurboTax, H&R Block, and TaxAct all have a maximum refund/minimum tax liability guarantee, or your fees are waived. Luckily for them, my federal and state tax liabilities were identical with all three. However, there were significant differences in the cost of the services, as well as variations in the amount of time it took to prepare my taxes with each.
Free (More Zero): free federal and state filing for simple to moderately complex situations (including Schedules A and B); Basic: $29.99, improved functionality and convenience for simple to moderately complex situations; Deluxe: $34.99 to $54.99, for self-employed and retired filers; Premium: $54.99 to $74.99, for investors, small business owners, and others with complex situations. For higher-priced plans, state returns generally cost $36.99 apiece.
- Time Spent Preparing: 93 minutes
- Version Used: Premium. After beginning with the Free (More Zero) version, I was prompted to upgrade to this package while completing the Income section, after indicating all the forms I’d need to complete my return. H&R Block recognized the complexity of my situation and showed me the upgrade screen, advising that my return couldn’t be completed with a lower-priced plan.
- Total Cost: $91.98
- Cost to Pay for Service With Your Refund: $34.99 to pay with your federal refund, $13 to pay with your state return.
H&R Block is one of the most popular online tax preparation programs. Plus, it’s backed by a network of more than 10,000 brick-and-mortar tax prep locations. But filing online may be more convenient than schlepping down to the local office, and it’s almost certain to be cheaper. The software uses an interview-style process that takes you through your taxes step by step, ensuring that you don’t miss any important forms or schedules.
Before I even began my return, I found something to like about H&R Block’s online tax filing program: I didn’t have to create an account to begin my return. I later discovered that I could complete my entire return without creating an account, though I couldn’t actually file it or save it for completion at a later date.
The first time I used H&R Block, I was happy to learn about the company’s refund bonus, which boosted your federal refund’s size by up to 10% (5% for Free and Basic plans, and 10% for Deluxe and Premium plans) when you accepted it as one or more gift cards to well-known retailers such as Target, Kohl’s, and Best Buy. This year, I was saddened to find that the refund bonus has been discontinued. You can still get your federal refund on a reloadable prepaid debit card – just without any extra cash.
Once I began my return, my experience was mostly positive. I have found some questions and information to be confusing, at least relative to the clear, simplified explanations offered by TurboTax. For instance, in 2015, when I indicated that I had gotten married during the tax year, I was shown a filing options chart with these explanations:
Instead of auto-selecting your filing status based on your answers to a series of questions (like TurboTax), H&R Block requires you to interpret this information and make your own decision. While some filers won’t have a problem doing so, that extra step could make many novices uncomfortable.
Along those lines, the income section is particularly challenging and could be overwhelming. It simply listed every IRS income form and asked me to select the ones that applied to my situation, and “if you’re not sure if one applies to you, check the box anyway and we’ll work on it together.” Yes-or-no questions about each type of income would be smarter and less time-consuming, potentially preventing inexperienced users from selecting inapplicable forms.
On the bright side, the last page of each section included a succinct, clear summary of the information I’d entered. If anything looked amiss, I could go back to the appropriate page and edit the erroneous information with one click. Since I started as a guest, each section also ended with a request to create an account, which I was able to decline each time.
Though I never hit a major snag during the preparation process, I was impressed by the “Help” button on the left sidebar. When clicked, it produces a popup window that lists popular help topics in question form and featured a search bar for less common items. This makes it easy to get clarification without having to exit the return or open a new window.
Another point worth mentioning: H&R Block began advertising its association with IBM’s Watson artificial intelligence engine in early 2017, in time for the 2016 tax year. It’s not yet clear how impactful Watson is, as most of its work happens behind the scenes, but it’s likely to make H&R Block’s tax prep process smoother and more natural-feeling – a welcome alternative to what is sometimes a clunky endeavor.
After checking my federal return for accuracy, I immediately began on my state return. More accurately, the program immediately whisked me into the state section, automatically importing all relevant information from the federal return. The state preparation process unfolded in similar fashion to the federal return, except with state-specific questions.
During the 2014 tax year, when I’d lived in two states, I found it simple to fill out my second state return. H&R Block remembered that I’d moved during the year, and the software automatically brought me back to the beginning of the state return process after completing the first.
Every year, before filing, H&R Block has checked my entire return for accuracy again. I was able to view my federal and state returns, print my estimated tax vouchers for the coming year, and specify how I wanted to pay the tax I owed. (Had I been eligible for a refund, this is where I would have been asked how I wanted to receive it.) All in all, the process ended smoothly, and in less time than the other two options here.
- Try Before You Buy. H&R Block allows you to begin to complete your return (though you cannot file) without creating an account, saving time and hassle at the beginning of the process. I was able to complete my entire return without creating an account – though if I hadn’t been able to do it all in one sitting, I would have been forced to create an account to save my partially completed return. TurboTax and TaxAct require you to create an account immediately.
- Solid Importing Capabilities. H&R Block may have discontinued its refund bonus for refunds loaded onto prepaid gift cards, but it’s made up for that disappointment with vastly improved importing capabilities. For the 2016 tax year, you can import prior-year returns from virtually any online tax prep program, except (oddly) H&R Block itself.
- In-Person Support During and After Filing. H&R Block has a network of more than 10,000 branches across the United States, making it easy to switch from online to in-person preparation if needed. TurboTax and TaxAct don’t have such support. H&R Block also offers free, in-person audit support for all online filers, a key perk for folks who worry that they might be audited. TurboTax and TaxAct make you pay for audit support and don’t offer it in person.
- Low-Priced Plans Aren’t Great for Complex Situations. H&R Block’s free plan has gotten considerably more generous over the years, but it’s still not suitable for complex tax situations involving investment or small business income. I don’t have the most complicated tax situation in the world, and I still had to upgrade to the most expensive H&R Block plan. The obvious contrast here is TaxAct, which allowed me to complete my entire return with the free version.
- Refund Bonus Discontinued. I was disappointed to discover that H&R Block stopped its refund bonus for the 2016 tax year after years of offering up to 10% back to customers who took their refunds on prepaid gift cards. H&R Block was the last major online tax prep provider to offer this perk, so it appears that the refund bonus is dead – at least, for now.
- Inflexible Navigation During Preparation. H&R Block requires you to complete your return in order and doesn’t let you jump past uncompleted sections if they don’t apply to your situation. Several times during the process, I found myself clicking through multiple irrelevant questions. By contrast, TaxAct lets you skip inapplicable questions right away.
4.2 out of 5 stars: I like H&R Block’s relative ease of use, moderate pricing, and robust customer support. My experience was straightforward, with none of the bugs that plagued my TurboTax return and without the overwhelming detail inherent in TaxAct’s interview process.
However, H&R Block could streamline its internal navigation to allow users to jump back and forth within their return, and perhaps take a page from TurboTax and implement a more intuitive interview process. In general, H&R Block is suitable for people who have some tax filing experience and comfort with the basic contours of the process, including choosing the appropriate filing status and selecting the right forms.
See our full H&R Block Review for a complete analysis.
Federal Free Edition (Absolute Zero): free state and federal filing for simple situations (including EITC); PLUS Edition: $29.99, improved functionality and convenience for simple situations (only available as upgrade from Federal Free); Deluxe: $34.99 to $54.99, for moderately complex situations; Premier: $54.99 to $79.99, for investors and landlords; Home & Business, $89.99 to $114.99, for small business owners and others with complex situations. For higher-priced plans, state fees generally range from $36.99 to $39.99.
- Time Spent Preparing: 95 minutes
- Version Used: Home & Business. I began with the Federal Free version which quickly proved insufficient for my needs. I actually upgraded in steps: Each time I provided an interview answer that couldn’t be handled with my current version (for instance, indicating that I had received a 1099-MISC and thus had self-employment income), TurboTax prompted me to upgrade to the cheapest version that could handle it. I was eventually shepherded into the most expensive plan.
- Total Cost: $126.98
- Cost to Pay for Service With Your Refund: $34.99 federal (no option to pay with state refund)
TurboTax is another extremely popular online tax filing program. Though it doesn’t have a dense network of physical branches to back it up, TurboTax is owned by Intuit, one of the country’s best-known financial software firms. TurboTax’s plans are a bit more expensive than H&R Block’s, despite a free version that’s appropriate for relatively simple tax situations. I started with the free version, but ended up having to upgrade to Home & Business, the priciest plan – though I was fortunate to get a $25 discount on the $114.99 list price.
On the other hand, TurboTax’s interview-style preparation process is extremely intuitive, demystifying tax issues for novice filers. TurboTax also has a clean, mobile-friendly layout and a great mobile app, not to mention excellent customer support and a dynamic, user-supported knowledge base known as the AnswerXchange.
In the interest of full disclosure, I should note that I’d used TurboTax’s online tax prep software for several years before my first comparison test and was therefore already quite familiar with the platform.
However, my experience in recent years has been different – and not always in a positive way. The low point was the 2014 tax year. Had I not used TurboTax previously, I would have struggled mightily to complete my return in a timely fashion (and certainly wouldn’t have finished it as quickly as I did). I encountered various problems, including HTML errors when attempting to upgrade and random sign-outs (though fortunately without any accompanying data loss) while actively working on my return.
One of my favorite things about TurboTax is the ability to import prior-year returns from any tax prep service, as long as the return is in PDF format. This is hugely helpful for first-time TurboTax users. I also like how TurboTax eases you into the interface with helpful pop-up windows that explain key features of the platform, such as the help bar and internal navigation tools.
I easily navigated through the early stages of the TurboTax prep process. TurboTax’s questions are more pointed and easy to understand than H&R Block’s, and the platform rarely presents confusing or vague information. At the beginning of each section, TurboTax takes care to call out “less common” situations and forms, subtly directing you towards items that are more likely to apply.
The platform also places “Learn More” buttons next to items that may require explanations, such as schedules and types of income. Clicking on the button creates a pop-up window that explains the topic in detail – a somewhat less confusing solution than H&R Block’s searchable popup help windows. For filers in a rush, this is a time-saving alternative to searching the AnswerXchange.
I also like that TurboTax waits until you’re done with state taxes to review everything. This is a marginal time-saver relative to H&R Block’s federal-only and state-only reviews. However, I’ve noticed at times that when I attempt to move backward in my federal return to check something manually, I’m stymied by an HTML error. This has happened sporadically for several years and it’s frustrating.
As with H&R Block, TurboTax automatically transfers all the information from your federal return to your state return. The process for adding a second state, if necessary, is slightly more cumbersome as you have to navigate an additional drop-down menu. But that’s a pretty minor issue.
I do like that TurboTax follows your state return(s) by reviewing the entire package and assessing your audit risk with a handy thermometer graphic. This part of the process does come with a pitch for MAX audit defense package, an optional add-on that costs $44.99.
TurboTax is nothing if not thorough. The first time I ran this comparison, I was impressed that TurboTax affirmatively asked how I preferred to pay my taxes and file my returns, and that I was given a choice of which returns to file. Though it has consistently taken me longer to file with TurboTax than other tax prep problems, I do appreciate the program’s thoroughness.
- Extremely User-Friendly. TurboTax is the most user-friendly of these three programs. Its design and aesthetic are intuitive and easy on the eyes, unlike the more cluttered, less intuitive TaxAct. Its questions are both simply worded and logical, whereas H&R Block’s interview questions and explanations can be confusing. And in addition to offering a powerful app, TurboTax’s regular version is very mobile-friendly.
- Impressive Importing Capabilities. TurboTax lets you import your prior year’s tax return and supported forms from any other online tax prep system, as long as you can convert the return to PDF format beforehand.
- Good Customer Service and Help Functions. TurboTax has some useful support features, including a customer service hotline with extensive hours and a comprehensive knowledge base called the AnswerXchange. I referred to the AnswerXchange several times during this year’s filing process and always had my questions answered to my satisfaction. TurboTax users can even respond to questions in the AnswerXchange, allowing fellow users to share collective knowledge.
- Plans Are Pricey. Though it’s arguably the easiest to use (bugs notwithstanding), TurboTax is the highest-priced option of the three. This past tax year, I paid $89.99 to file my federal taxes with the Home & Business plan, compared to $54.99 with H&R Block Premium and nothing with TaxAct. For filers without razor-thin budgets, TurboTax’s other features may outweigh its steep price tag, but it could be disqualifying for more cost-conscious folks.
- Lots of Apparent Bugs in the System. My personal TurboTax experience has consistently been rife with annoying bugs and functionality issues in recent years, which is surprising given that I’ve used it with no problems prior to the 2014 tax year. While it’s impossible to know for sure how others experience the platform, my experience could well have been representative. By contrast, I’ve never had any serious functionality issues with H&R Block or TaxAct.
- Low-Priced Plans Only Good for Straightforward Tax Situations. Like H&R Block, TurboTax’s lower-priced plans are only ideal for filers with simple tax situations. If you have capital gains income, you need to upgrade to the Premier plan. Self-employed people need to purchase the Home & Business plan, which costs at least $89.99 (and possibly as much as $114.99). TaxAct’s free plan can handle virtually everything TurboTax Home & Business can for a small fraction of the cost.
4.1 out of 5 stars: As my go-to tax filing program for years, TurboTax has built up a lot of goodwill with me. Unfortunately, the program seemed out of sorts this year, with bugs and functionality issues that tested my patience. Plus, it’s significantly more expensive than competitors, and its free plan seems little more than an afterthought.
That said, you do get what you pay for: an intuitive interview process, a great (and mobile-friendly) layout, and lots of support. It’s nice to be able to import from so many sources too. In general, TurboTax is ideal for novice tax filers as well as more experienced filers for whom affordability isn’t a top concern.
See our full TurboTax Review for a complete analysis.
Free Edition: $0 federal, $25 per state; Plus: $15 federal, $25 per state; Premium: $30 federal, $25 per state. More expensive products (up to $60 federal and $25 state) available for niche situations, like complex business ownership and trusts/estates.
- Time Spent Preparing: 105 minutes
- Version Used: Premium. In the past, I’ve used the Free version, but recent updates have rendered it unsuitable for situations as complex as mine. This raised the overall cost of filing, but it was nice not to have to upgrade midstream.
- Total Cost: $55
- Cost to Pay for Service With Your Refund: $20 or less
I hadn’t used TaxAct before the 2014 tax year, so I didn’t know what to expect. All in all, I was pleasantly surprised, and my appreciation for TaxAct has grown in subsequent years.
TaxAct uses interview-style questions that are similar, though more exhaustive and less responsive to user answers. (The system may ask you questions about specific situations that don’t apply to you, based on previous answers, whereas TurboTax and H&R Block seem to learn better from earlier responses.)
By covering just about every topic that could apply to you, TaxAct can be tedious and time-consuming. However, the program has gotten better since I’ve been using it – my time investment this past year was significantly lower than in the past.
Unfortunately for TaxAct fans, the company’s free version has gotten stingier, even as competitors (including TurboTax and H&R Block) have upped their free tax prep games. TaxAct’s free version once supported the vast majority of available tax forms and schedules, meaning it was appropriate for virtually any non-business situation. Today, it’s only appropriate for simple situations. This probably isn’t a dealbreaker, as TaxAct’s most expensive consumer version is cheap relative to the competition, but it’s still frustrating for those accustomed to low-cost tax prep.
Based on prior experience, I kicked off my most recent tax prep campaign with TaxAct’s free version. However, I quickly realized that I would not be able to handle my super-complex situation without upgrading, so I upgraded to Premium and continued on my way.
I was miffed about shelling out $55 for a program that had previously cost dramatically less, but I was heartened to find that TaxAct had gotten more user-friendly in the interim. In previous years, TaxAct has presented its questions in small, plain-font text that looked tiny on a small screen. These days, it’s not exactly mobile-friendly, but it’s brighter and easier to read than before.
TaxAct also has a lineup of free or low-cost features that can simplify and streamline the tax prep process. For instance, the price lock guarantee ensures that you never pay more than the price TaxAct quotes you at sign-up, even if the company raises its prices in the interim. The at-a-glance help feature gives you real-time advice and commentary as you work through your tax return. The bookmark feature lets you flag interview questions for review at a later time. And DocVault lets you take smartphone photos throughout the year of bills, forms, receipts, and other paper items that you might need to complete your taxes, then upload them to a secure server for reference at tax time. This is a huge help for people who take lots of deductions for charitable giving or business expenses – because of it, my business receipt folder is no longer bursting at the seams.
TaxAct’s state return section is similar to the other two services’, with automatically imported information and thorough, state-specific questions. (As with TaxAct’s federal return, sometimes it’s sometimes too thorough.) It starts immediately after you finish your federal return, though you’re free to leave it for later.
Like TurboTax, TaxAct waits until all your returns have been completed to review them for accuracy, saving some time. However, the review process is more complicated than TurboTax’s and H&R Block’s, with different alert levels (red, yellow, and green) that identify issues of varying severity. TaxAct uses these alerts to assess your overall audit risk, though it doesn’t display this risk in a handy graphic like TurboTax. You can also skip the alerts altogether. Finally, before paying, TaxAct pitches you on its Tax Audit Defense service, which costs $40 to $50, depending on your plan level.
Once you pay for TaxAct’s prep services, the platform takes care of your refund or tax payments, walking you through how to prepare for next year’s taxes (including introducing its Donation Assistant app, which can help you track and quantify non-cash charitable donations throughout the year).
As with TurboTax, I found that this part of the process dragged on a bit, lengthening an already tedious process. But I’ve always finished up without spending more than $55 to file my taxes. I think that counts as a win.
- Low Cost. TaxAct is the cheapest of the three services reviewed here. I have a complex tax situation, but I was able to walk away from my most recent filing without spending more than $55. That’s significantly less than I spend for tax prep with H&R Block and TurboTax, both of which have required me to upgrade to the priciest consumer plan.
- Price Lock Guarantee. TaxAct offers a price lock guarantee to all customers at sign-up. Once you create your account, you’re locked into TaxAct’s pricing at that moment, even if you leave your return for months and TaxAct raises prices during the intervening period. Since tax prep companies frequently raise prices close to the filing deadline, this is great news for frugal filers.
- Useful Apps Help You Keep Track of Important Forms and Records. TaxAct’s DocVault app is a useful way to keep track of receipts, bills, tax forms, and other necessary documentation that you may need to complete your return. You can add photographic records to a secure, mobile-accessible storage area throughout the year, potentially eliminating the need to file away tax-related papers for reference at tax time. Meanwhile, TaxAct has a separate app that calculates the fair value of non-cash charitable donations, a potentially lifesaving tool for filers who donate vehicles, furniture, or other valuable items. H&R Block and TurboTax don’t have such user-friendly record-keeping aids.
- Limited Customer Support. TaxAct has a helpful knowledge base and a basic customer support framework, but it lacks the robust human support of H&R Block and the dynamic, user-supported knowledge base of TurboTax. Such resources are useful for inexperienced filers and those with newly complicated tax situations, such as itemized deductions or business tax credits.
- No Refund Bonus. TaxAct doesn’t offer a refund bonus for filers who choose to receive their refund as a gift card. In fact, there isn’t a refund-as-gift-card option here at all. This could be a big drawback for folks who want to wring every last penny out of their tax refund.
- More Time-Consuming. When I first started using TaxAct, it took me more than half an hour longer to work through than either H&R Block or TurboTax. My process was lengthier primarily because TaxAct wasn’t as good at intuiting my situation – instead of asking questions specific to my needs, it asked me about pretty much anything that could be relevant. The program has gotten better in recent years, and I’ve therefore been able to cut down my prep time significantly, but it still took about 15 minutes longer than either competitor on the most recent comparison run.
4.3 out of 5 stars: I was pleasantly surprised by my experience with TaxAct. It has always been my cheapest option by far, and its functionality has improved significantly over the years, such that it’s nearly (but not quite) on par with TurboTax and H&R Block.
That said, my TaxAct return has consistently taken longer than my TurboTax and H&R Block returns, and by the end, I had grown frustrated with its thorough but tedious questions. Also, I wasn’t impressed with the support infrastructure.
In general, TaxAct is ideal for somewhat more experienced filers who know which forms they need. While I probably wouldn’t have felt comfortable using it the first time I ever filed my taxes, its low cost also makes it suitable for less experienced filers on a very tight budget.
See our full TaxAct Review for more a complete analysis.
TurboTax, TaxAct, and H&R Block might be three of the most popular online tax prep options, but they’re not the only ones out there. A bevy of other options exist, from relatively well-known providers like TaxSlayer and eSmart Tax, to lesser-known options like FreeTaxUSA.
And the federal government can help as well with free tax preparation options, thanks to the Free File Alliance (a consortium of 14 tax prep companies that offer free filing services to filers who meet certain income and residency criteria) and Free Fillable Forms, which are available to filers regardless of income or residency.
The point is, there are plenty of tax preparation options besides these three. Depending on your tax situation, you might find one that’s easier, faster, or simply less stressful to use.
What’s your favorite online tax preparation software? Let us know in the comments below.