ZDNet's Ultimate Tax Software Guide for 2008
Say hello to tax preparation software.
Instead of taking last year's finances and dumping them on the desk of a tax preparation specialist or a CPA -- for a hefty fee, generally -- consider using tax software. This year it's even easier to do your taxes, thanks to improved interfaces, importing features, online services and increased competition among the contenders.
In other words, doing your taxes can be a breeze, provided you've got all your forms on hand. Here's the lineup of the software -- online and boxed -- vying for your attention:
Intuit TurboTax
Good for complicated returns or those who need hand-holding. TurboTax is the grandaddy of all tax programs, and the most full-featured. This year, TurboTax comes in six flavors online and four boxed flavors, plus state fees:
Online:
- Free Edition: For simple returns, particularly the 1040EZ, but also handles 1040A and 1040. Straightforward -- no hand-holding, but it will check for all tax credits you're eligible for, including higher education. If you're not sure if your taxes are simple enough for this, start here: the program will "upgrade" you if you need a more fully-featured version for your return. Service + federal e-file free; state e-file $25.95 extra. [read more]
- Basic Edition: Intuit downplays this version because it's effectively the Free Edition plus hand-holding wizards and walkthroughs. If you have a simple return but need assistance, this is the one you need. Service + federal e-file $14.95; state e-file $34.95 extra. [read more]
- Deluxe Edition: Most customers select this version of Turbotax because it also accounts for owning a home, charitable donations and medical expenses. Service + federal e-file $29.95; state e-file $34.95 extra. [read the review] [check prices online] [read more]
- Premier Edition: All the features of Deluxe, plus stocks, bonds, mutual funds and rental properties support.Software + federal e-file $49.95; state e-file $34.95 extra. [read more]
- Home & Business Edition: Everything in Premier, plus support if you're a business owner: sole proprieter, consultant, contractor or single-owner LLC. Includes freelancers. Service + federal e-file $74.95; state e-file $34.95 extra. [read more]
- Business Edition: For a very small minority of users; Business Edition serves corporations, partnerships and multi-member LLCs. Service + federal e-file $109.95; state e-file $49.95 extra. [read more]
(You can compare the versions here.)
Boxed Software:
- Basic Edition: Software + federal e-file $29.95 plus above state fees.
- Deluxe Edition: Software + federal e-file $59.95 plus above state fees.
- Premier Edition: Software + federal e-file $89.95 plus above state fees.
- Home and Business Edition: Software + federal e-file $99.95 plus above state fees.
The Bottom Line: TurboTax is the most expensive software, but it's the most fully-featured. It's fast, straightforward, and the hand-holding text is clear and understandable. If you want to knock your taxes out fast, it's worth the money. If you already use other Intuit software (Quicken, Quickbooks, etc.), it's a no-brainer, as TurboTax will import data with one click.
[Go to ZDNet reviews of TurboTax software]
H&R Block TaxCut
Good for simple tax returns or those who need live support. If TurboTax's specialty is complicated tax returns, TaxCut handles the other side of the spectrum, excelling at simpler returns, with easier ways to eventually talk to a human being (one dressed in H&R Block green, that is). It also offers more returns per "installation" than TurboTax, five versus one, which is important if you file several individuals' taxes.
On the other hand, it doesn't have the importing features of TurboTax, and takes a little longer to complete. This year, TaxCut comes in five online flavors and four (two premium) software flavors, with varying state fees:
Online:
- Free Federal Edition + E-file: For simple returns in a straightforward fashion. Service and federal e-file free; state e-file $29.95 extra. [read more]
- Basic + E-file: For simple returns with a bit of hand-holding. Service and federal e-file $14.95; state e-file $29.95 extra. [read more]
- Premium + E-file: For those who have itemized deductions and investments; includes a free session of tax advice from a tax advisor. Service and federal e-file $39.95; state e-file $29.95 extra. [read more]
- Signature: Everything in premium plus unlimited tax advice and a final review from a tax professional. Service and federal e-file $79.95; state e-file $29.95 extra. [read more]
- Online Office: The online equivalent of a CPA -- full tax preparation by real people, with unlimited year-round advice. Service and federal e-file $99.95 and up; state e-file $29.95 extra. [read more]
Boxed Software:
- Basic Edition: Software + federal e-file $19.95; state e-file $19.95 extra for each used; state e-file $29.95 extra for reach return filed. [read more]
- Premium Edition: "Premium + Federal + E-file" software + federal e-file $34.95; state e-file $19.95 extra for each used; state e-file $29.95 extra for each return filed; "Premium + Federal + State + E-file" software + federal e-file $49.95; state e-file $19.95 extra for each return filed. [read the review] [check prices online] [read more]
- Home and Business Edition: Software + federal e-file $79.95; state e-file $19.95 extra for each return filed. [read more]
The Bottom Line: TaxCut's screens are easy to read, but just a hair more jargon-y than TurboTax's. Where TaxCut excels is live support, and H&R Block offers "Worry-Free Audit Support," where an tax professional will help defend your return against an IRS audit, included in the price of the software. If you dig personal interaction, or you're already an H&R Block customer, this is your pick.
[Go to ZDNet reviews of TaxCut software]
TaxACT
The Chrysler in the Tax Preparation Software Big Three. Inexpensive with strong technical support, it's generally stripped of the user-friendly wording and tools of TurboTax and TaxCut. On the other hand, it's as straightforward as it gets. It offers one free federal return ($7.95 for each additional). This year, TaxACT comes in three online and four desktop flavors:
Online:
- Free Edition: Simple and complex returns with simple, straightforward interface. Service + federal e-file free; state e-file $13.95 extra. [read more]
- Deluxe Edition: Adds data import and non-cash donation support. Service + federal e-file $9.95; state e-file $7.00 extra. [read more]
- Ultimate Edition: The Deluxe Edition with state e-file. Service + federal AND state e-file $16.95. [read the review] [read more]
Desktop Software:
- Free Edition: Simple and complex returns with simple, straightforward interface. Software + federal e-file free; state e-file $13.95 extra. [download via ZDNet] [read more]
- Deluxe Edition: Adds data import, non-cash donation support, calculators and unlimited preparation of federal returns. Software + federal e-file $12.95; state e-file $13.95 extra. [read more]
- Ultimate Edition: The Deluxe Edition with state e-file. Software + federal AND state e-file $19.95. [read more]
- Home and Business Edition: The Ultimate Edition plus federal business return e-file and partner/shareholder allocations. State + federal AND state e-file $44.95. [read more]
The Bottom Line: If you're a bargain hunter and don't mind running into a little accounting jargon here and there, this software is for you.
[Go to ZDNet reviews of TaxACT software]
Free Federal E-File
One more thing to note: The IRS offers free federal e-file for everyone regardless of income, and free software preparation for those who made less than $56,000 per year.
You can access that service here (or simply use the "free" versions of software listed above, made available via a contract between the IRS and the software manufacturers).
What about the states, you ask? Well, each of the 50 differ in who gets free e-filing. Here's a list of the states; click the link to go to their e-filing system (strikethroughs mean there is no income tax for that state) and read their limits or requirements:
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire (see comment below), New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, District of Columbia.
Conclusion
And if you'd prefer something else altogether, check out TaxSlayer and CompleteTax, two more options for both free and premium filing.
» Image Gallery: Intuit TurboTax versus H&R Block TaxCut, in screenshots