It's that time of year again. Tax time. "Tax" may not be a four-letter word — but for some of us, it's about as close as it gets. Unless you're getting a refund, in which case, feel free to jump around, roll in the money and consider buying that flat screen you've been longing for. Or stick it into your IRA and take an additional deduction.

So, short of packing up that box full of receipts and dumping it on the desk of your local overworked accountant, what's the easy way out? Better yet, what's the cheapest way out?

When it comes to DIY taxes, you have a few basic options:

Sort-of-Cheap: You can purchase popular desktop tax software like Turbo Tax or H&R Block's At Home offerings. Then you run the disk, install the program and let it walk you through the process of filling out the forms and filing your taxes.

Cheaper: You can create an account with the online tax services offered by Turbo Tax or H&R Block and let them walk you through the process of electronic filing one step at a time.

Cheapest: Use the Government's Free Federal E-Filing Service via the IRS site, Turbo Tax or H&R Block. Not everyone qualifies for this, and you'll still have to pay to file your state taxes. You can check out this link to see if you qualify. (Hint: Your AGI must be less than $58,000.)

So what's the difference between desktop software and online software?

You get the same basic experience whether you purchase physical tax software or use the online version of the same. However, the online version requires fewer steps, slightly less time and it's cheaper.

Benefits of Filing Online vs. Using Physical Software

  • Online tax programs automatically import the previous year's information. No hunting for last year's info. You just log in, and go.
     
  • Online tax programs automatically update when changes are made to the tax laws. You can be certain you are getting the most up-to-date, correct guidance possible, every year. If you purchased the physical software you will need to re-purchase the updated software next year.
     
  • If your computer blows up, your tax information is still available. Just log in to your chosen service and retrieve it.
     
  • If you want to apply for a home or car loan, you can log in, and re-print your tax returns as proof of income. No more tearing your house apart to try to find last year's copy of your returns.
     
  • You don't have to decide in advance which of the online software programs you need. Both H&R Block and Turbo Tax help you determine which version of their online software you need to complete your returns correctly. It simplifies the process considerably.
     
  • With online tax services you can begin filling out your tax returns for free. You are not charged until you submit your returns. This allows you to log in, complete your taxes and correctly anticipate either your return, or the amount of money you will owe before you are charged for anything.

Round 1: Price Battle!

H&R Block vs. Turbo Tax (Online Services)

H&R Block Online Offerings
Free Edition: $0.00
Basic: $19.95 (Basic)
Deluxe: $29.95 (Investments)
Premium: 49.95 (Self Employment)
Best of Both: $79.95 (Expert Review)

Turbo Tax Online Offerings
Free Edition: $0.00 (if you qualify)
Basic Edition: $19.95 (Basic)
Deluxe: $29.95 (Deduction Finder)
Premier: &49.95 (Investments)
Home & Business: $74.95 (Self Employment)

Clear Winner: It was neck and neck until we hit the "Investments and Self Employment" categories. Then H&R Block delivered a wicked left hook that knocked Turbo Tax against the ropes. H&R Block Deluxe handles issues that you have to purchase Turbo Tax Premium to get access to.

Wanna Save Even More?

You can also price compare the computer software for Turbo Tax and H&R Block at Amazon.com, or subscribe to our Best Deals Newsletter where we list the ongoing discounts for you.

Mama Always Said: Money Doesn't Love you Back...and Neither Does the IRS!

H&R Block may have been the clear winner in round one, but who will win the war? Round two brings on a Features Battle! What are you really paying for? Will you be lost in an endless maze of questions and possible deductions because you tried to save yourself $25 on the Deluxe Edition?

Before we begin round two, let's quickly hear from the contenders. We asked them: What, exactly makes your products so special? Why are you the best? Why do you deserve to win the business of these worthy consumers?

In this corner we have Turbo Tax Representative Angela D'Arcy:

TurboTax is affordable, simple and guarantees the biggest possible refund to users. Turbo Tax asks users a series of questions to ensure they are able to take advantage of all the appropriate deductions. There are over 350 possible deductions and Turbo Tax makes sure users don't overlook any of these. We help users get the full value of all charitable donations. ItsDeductible® (built into TurboTax Deluxe, Premier, and Home & Business) gives you resale values for over 1,000 commonly donated items, so you can take the biggest deduction possible.

(H&R Block says: All H&R Block At Home online and software products provide 100 percent accuracy and the maximum refund guaranteed.)

And in this corner H&R Block Representative Leigh Mutert:

Only H&R Block At Home provides the guidance, support and representation of an H&R Block enrolled agent in the event of an audit. Audit support is free with all versions of H&R Block At Home — even the H&R Block At Home Free Edition.

(Editor's Note: Oohh Burn: Take that Turbo Tax! Turbo Tax does offer a free audit risk meter, but support during an actual audit is not free!)

H&R Block At Home includes access to free help and advice by our community of tax specialists from The Tax Institute at H&R Block. They have answered thousands of questions from our users and enhanced search options give easy access to questions already answered. Users can submit new questions if they don't find their answer in the community.

(Turbo Tax Says: Taxpayers are never alone when they are using Turbo Tax. Everyone's situation is different. So if you have questions, we have answers. Get product support when you need it through chat, online community, by phone, and even on Twitter (visit @TeamTurboTax.)

Well folks, as we go into the second round, it looks like the smart money is on H&R Block, and Turbo Tax is left out in the cold to cry, "I could have been a contender!" Here's the features breakdown:

Round 2: Features Battle!

Up first is Angela D'Arcy of Team Turbo Tax:

Turbo Tax Stand-Out Features:

  • SnapTax: Designed for 1040EZ taxpayers with an income of $80K or less ($100K if married). Take a photo of your W2 and the app guides you through the filing process.
     
  • Turbo Tax Basic: Transfers last year's tax info to help ensure accuracy and save you time, imports W-2 and 1099 forms from over 100,000 employers and financial institutions and offers free technical support by phone.
     
  • Turbo Tax Deluxe: Quickly searches for more than 350 deductions, gives you accurate values for your donations, alerts you to audit risks and offers tips to reduce your chance of an audit.
     
  • Turbo Tax Premier: Has everything in Deluxe plus extra guidance to help you get the most from your investments. Premier calculates gains and helps you deduct investment losses, finds tax-saving rental property deductions and guides you through reporting sales from employee stock purchase plans.
     
  • Turbo Tax Home & Business: Is designed for taxpayers who are a sole proprietor, consultant, 1099 contractor, or single-member LLC. It features everything in Premier. It also uncovers refund-boosting business write-offs, finds industry-specific deductions for bigger tax savings and helps you find the depreciation method that will get your biggest refund.

H&R Block Stand-Out Features:

  • H&R Block Basic offers automatic transfers or last year's tax information, step by step guidance and an automatic error checker.
     
  • H&R Block Deluxe features everything in Basic plus W2 importing, deduction maximizer personalized tax guidance and investment guidance.
     
  • H&R Block Premium offers free Schedule C guidance, personalized live tax advice and rental income assistance.

Ouch! It looks like Turbo Tax came out swinging that round. The SnapTax feature is just plain cool, and you can import your W2s with the Turbo Tax Basic edition. That sure beats tearing your house up because you can't remember where you stashed your W2s.

H&R Block has no snappy app, and makes you pay for the deluxe version if you want to import your employer's info.

It's time for round three — the ultimate tie breaker: Customer Loyalty!

Round 3: Loyalty Battle

We've covered some of the good, bad, and the ugly from each program. That's all great in theory, but what do users have to say about their favorite tax software?

Turbo Tax User Wendy Zdrodowski currently works for The Suites Collection. In the seven years that she's been using Turbo Tax she's been un-employed, then employed full time and also had self employment income on the side. She's purchased a home using a tax credit and cashed in a 401(k) for living expenses.

Wendy's favorite things about Turbo Tax are:

  • Plain language questions — there is a LOT of jargon in the tax rules, and the software "interview" is really very easy to follow
     
  • Retaining info from previous years — it makes data entry less involved, and when you have multi-year issues like I do it remembers them for me. In addition, when I was buying my home, I had to work with several different bank employees and brokers. All were equally good at losing my paperwork, so being able to re-print my tax documents from any computer was a very handy thing.
     
  • Flexibility — I have used the same Turbo Tax program to file for the past 7 years through a variety of tax situations (home buying, home office and self employment, cashing in a 401k, etc) and it's worked for all of them.

We tried to find some loyal H&R Block customers, but couldn't find anyone who was willing to let us quote them. We know you are out there though — probably in droves! So if you are reading this, represent please! Leave us a comment below and tell us why you like using H&R Block's tax software!

 

 

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