It is tax time once again and as our various tax documents have been arriving in the mail over the last month I have been getting primed to use my normal tax software.
This is when it hit me it would be a good time to do a review of Turbotax vs Taxact and H&R Block, but when I started diving in I realized that this was not as simple of a choice as it used to be.
Not only have the big three been getting closer to each other in features, but other tax services have popped up to compete with the most popular tax prep software services.
To help with your search we will look through all of what have become the main line services and then I will categorize what I think to be the best tax prep service for specific needs that people have.
The Big Three Turbotax vs. H&R Block vs. Taxact
There is no doubt that these three services are the most popular tax preparation software services in the country. The question is which one matches up as the right service for your needs.
TurboTax
TurbotTax has earned its reputation as one of the best ways to do your taxes online or with a downloaded software package. The original tax software was developed way back in the 1980’s and has been helping people with their taxes ever since.
What sets TurboTax apart from all the other software is how easy it is to use. While the main competitors have really closed the gap in usability over the last 10 years, TurboTax has still kept its mantle as the king of tax prep software.
The one disadvantage to TurboTax is price. The ease of use, support, and name recognition allow TurboTax to charge a premium price for their premium product. If you have realatively simple tax returns, but need to itemize your deductions then you may want to check out TaxAct. However, for anyone that has more complicated taxes that they want to do themselves, TurboTax should be your first stop.
TurboTax Features and pricing include:
- Free for simple filers 1040A and 1040EZ
- Import returns for previous years from H&R Block or major competitors
- Guidance for life events deductions
- 1040A and 1040EZ Smartphone app
- Phone support for complex questions
- Searchable database for help with confusing information
- Store and access tax return for six years (deluxe and premium edtions)
- $0-$89.99 for federal returns
- $0-$36.99 for state returns
H&R Block
H&R Block has been doing taxes for people for decades. Their network of approximately 12,000 bricks and mortar office locations gives them the edge as the most customer friendly. Not only can you do your taxes through the online service, if you are feeling uncertain, you can pay $40 extra to go into a branch and get that additional help.
Those who spring for the deluxe or premium versions will also have chat support. This means that an online tax professional will look at your return and offer advice at no additional charge.
For any technical problems, both the Deluxe and Premium editions come with phone support. All of these features make them the most customer friendly even if the software is slightly harder to use that TurboTax.
The other major features included and prices for H&R Block online filing are:
- Free for simple filers 1040A and 1040EZ
- Import returns for previous years from H&R Block or major competitors
- Guidance for life events deductions
- 1040A and 1040EZ Smartphone app
- Searchable database for help with confusing information
- Store and access tax return for six years (deluxe and premium edtions)
- $0-$54.99 for federal returns
- $0-$36.99 for state returns
TaxAct
TaxAct has been competing with TurboTax as long as I can remember. They have found their place in the market by offering a very good product at a much lower price than the other two of the three tax software giants.
The interface is not as user friendly as Turbo Tax and the customer support is not as good as H&R Block, but they are both adequate and not a knock on TaxAct.
The only downside to TaxAct is that none of the three packages include audit defense. The software does offer you the option to purchase purchase audit defense from a separate company.
- Free for simple filers 1040A and 1040EZ
- Import returns for previous years from H&R Block or major competitors
- Guidance for life events deductions
- Phone support for complex questions
- 1040EZ Smartphone app
- Searchable database for help with confusing information
- Store and access tax return for six years (deluxe and premium edtions)
- $0-$30 for federal returns
- $0-$25 for state returns
Other Top Tax Prep Software Services
With such a large market of people now doing their taxes through downloadable or online tax software many new competitors have popped up to compete. These are the most popular of these other tax preparation services that have surfaced over the last several years.
FreeTax USA
FreeTax USA has been around since 2001 and was started by a CPA who put together a team of professional software developers. The best feature of the software is that there is no limitation to the tax forms available, no matter which plan you choose.
The difference between the two plans (Free and Deluxe) is that you receive more support when you purchase the upgraded version. This means that if you already have some tax expertise you can go with the free version and still get access to everything you need. You will have very little support, but if you know what you are doing then that will not matter.
FreeTax USA is not for everyone. This list of situations they do not cover comes from their website.
- Foreign employment income (Form 2555)
- Foreign mailing address
- Household employment taxes (Schedule H)
- Nonresident alien returns (Form 1040NR)
- Farm rental (Form 4835)
- At-risk limitations (Form 6198)
- Installment sales (Form 6252)
- Tax for children with more than $2,000 in investment income (Form 8615)
- Prior year minimum tax credit (Form 8801)
- Archer MSAs (Form 8853)
I have to hand it to them on their transparency. It makes it a lot easier to know if they are the right service for you. While the federal return is free you will have to pay
E-File.com
E-File has really simplified their service to make it easy for people with a 1040EZ filing. Of the software that I have tried E-File is probably the least intuitive and probably not quite ready for the average user. It isn’t bad per se, but after spending time with the more established tax software services I feel like they are several years behind in their offering.
Since E-File is one of the newest in this group, I think they will get better over time, but may not be the best choice for anyone this year.
ezTaxReturn
ezTAxReturn comes with a very simple model and provides reasonable service for any type of 1040 filing (including self-employed). They seem to have all their ducks in a row and are pretty comparable to the other solutions in the middle of the road category. For usability this puts them behind TurboTax and H&R Block but right on part with anyone else.
The one thing they need to fix is the ability to skip through sections. This means you have to have EVERYTHING ready before starting the process. No piecing these things together bit by bit.
The biggest problem I see is the pricing. You are not getting a premium product but the fees are higher than the software that is on par with them. You pay a flat $29.95 for federal filing and $19.95 for state returns. You can also purchase paper copies of your return, but that will cost you an additional $19.95-$34.95.
This is not bad software, it just isn’t up to the price you pay for it.
Best Tax Software by Category
If you are still confused about which service is the right one for your needs here are what I think are the best tax prep software services by category.
Best Free Tax Software
In order to be considered one of the the top three they had to include a free option for people with simple tax returns. The good news is that simple tax returns are going to work really well with any service. So if you are filing a form 1040EZ or 1040A you cannot go wrong with:
There really are a ton of options so if you return is a simple one I would just choose which one you feel comfortable with and get ‘er done.
Do You Qualify for Free Tax Preparation?
There are scenarios where you will be required to file with form 1040 and not qualify for free tax prep. If you have to answer with yes to any of the following scenarios then you do not qualify:
- Taxable income over $100,000
- You need itemized deductions – Most of us have a choice between standard and itemized deductions on our taxes. The one you choose is determined by which gets you the lowest taxes.
- Household employee taxes – If you employ anyone to work at your home (maid, nanny, landscaping, etc.) then you have much more complicated taxes than the simple forms can handle
- Non W-2 Income – This could be income from a small business, as a shareholder or partner in an S corp, unreported tips, or any other alternative sources of income.
Best for Beginners
This depends on how difficult your taxes are. If you have a more complex return with a lot of deductions or non-W2 income then I would go with TurboTax or H&R Block.
If you are just new to taxes and looking for a simple filing solution then TaxAct is going to give you all the help you need.
Best for Small Business
I really believe small business owners should be willing to pay a tax professional if their business is doing well enough to support a full time income. If you haven’t made it that far yet (like me), and are looking for something to handle your side hustle income, I have done very well over the years with TurboTax. The step by step approach and ability to jump from one section to the next makes it very simple for me to complete my taxes with a mix of W2 and 1099 income.
Bottom Line
If you choose any of the top three service we listed above you are probably going to do alright. If you need a little extra attention because of how complicate your taxes are then I recommend you go with TurboTax or H&R Block. Not only can you get your taxes done efficiently, you can also rest assured that their audit defense is top notch.
If I had a simple return where I was taking the standard deduction, I would go
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