Trying
to do a tax return while lying on the couch, iPad balanced on my chest
and a basketball game playing in the background, was admittedly
distracting. My eyes kept drifting from the alternative minimum tax to
the screen — which felt right, because I like the Los Angeles Lakers
about as much as I like the I.R.S.
The
fact that I could toil on a return in such laid-back circumstances
shows how far tax preparation programs have come. The three major
companies — TurboTax, H&R Block and TaxACT
— now offer online products and apps that enable you to bounce back and
forth between your computer, your tablet and your smartphone as you
work on your return. And this year’s tablet apps represent an important
advance: They let you fill out your return by tapping and swiping
through interviews about your life circumstances, income and expenses.
If you reach a point where you’d rather use an old-fashioned keyboard,
you save your work, switch to your desktop or laptop computer and pick
up where you left off.
For
this review, I tried TurboTax Home & Business, H&R Block
Premium and TaxACT’s Ultimate Bundle. Based on my experiences, all three
work fine for a family with a house, an investment portfolio composed
mostly of mutual funds and additional income from freelance work. The
strengths by which each maker has distinguished itself endure. TurboTax
was headache-free — everything I had to do within the program was
intuitive and worked without a catch. H&R Block offered the easiest
access to tax advisers and, in my nonprofessional opinion, the best
advice. TaxACT remains a bargain.
When
I was using the programs in late January, TurboTax was charging $80 for
Home and Business and $37 for each state return. H&R Block was
charging $50 for Premium and $37 for each state return. TaxACT was
charging $20 for its Ultimate Bundle, which includes a federal and a
state return. (These prices can change, and downloadable versions cost
more.)
My
guess is that technophiles will prefer TurboTax, worriers will
gravitate to H&R Block and the thrifty will opt for TaxACT. My
experiences may explain why.
TurboTax
The
biggest time saver offered by all three programs is the ability to
import personal and financial information. TurboTax has long excelled
here. This year, I imported a PDF of my family’s last return to
TurboTax’s cloud without problems. From there, I jumped into the
interview questions. Thanks to the import, there was little information
to type besides this year’s numbers, and many of those could be pulled
in electronically. TurboTax can import information from more than one
million employers and financial companies, said Colleen A. Gatlin,
spokeswoman for Intuit, the company that makes TurboTax.
TurboTax
also provided the best smartphone app. Ms. Gatlin said the phone app
had nearly all the same features as the online program, including the
option to file an itemized return. (The phone apps for H&R Block and
TaxACT allow only for simpler returns.) I couldn’t test every feature
of the TurboTax app, but I used it enough to annoy my wife — playing
with our return in the grocery store and restaurants — and I was
impressed by how easy it was to use. People who don’t itemize can use
any of the three to file.
A concern about TurboTax this year might be security, given the news on Feb. 6 about attempts to use the program to file bogus returns.
At the time, Intuit temporarily suspended the electronic filing of
state returns after seeing an uptick in suspicious filings. Ms. Gatlin
said that the attempts had not resulted from the breaches of Intuit’s
security, but rather from identity thefts elsewhere, and that normal
filing had resumed within about a day.
When
I review tax software, I try to test the company’s customer service by
posing a question about the tax consequences of an unusual situation my
spouse and I face. This time, it was her sabbatical from her job as a
professor. I asked whether we could deduct the travel and lodging
expenses from her stints at two universities far from home.
TurboTax offers several kinds of assistance. First is its online community, AnswerXchange,
which the website says is composed of “TurboTax support experts and
customers just like you.” (Given my near total ignorance of tax law, I’m
not sure I want guidance from the likes of me.) The community resembles
the comment string at the end of an online article or blog posting: You
can pose a question, and registered users can answer. Or you can search
previously answered questions.
I
dutifully filed my question, and a community member, who called herself
TurboTaxNatasha, responded to my inquiry within an hour. She suggested
that a sabbatical might count as nondeductible “educational travel.” I
pointed out that my wife’s sabbatical was primarily devoted to research,
not sipping sauvignon blanc in the south of France. TurboTaxNatasha
waffled: “I recommend that your wife speak with her employer or contact
the I.R.S. directly.” I wondered how “help” from TurboTax could entail
instructions to call the I.R.S. That seemed more akin to punishment —
especially since the tax agency has warned that this year’s telephone wait times could top 30 minutes.
I
then tried TurboTax’s phone assistance — and inadvertently misdialed
the software help line. Eventually, I ended up in the right place and
reached a TurboTax representative who identified herself as Bonnie P. We
chatted for about 15 minutes. She quizzed me and concluded that the
sabbatical expenses were probably deductible — they were work-related
and seemed necessary — but added that she knew of no applicable I.R.S.
regulation.
H&R Block
Getting
an answer from H&R Block proved easier, which highlighted the
company’s strength. H&R Block uses its nationwide staff of tax pros —
it operates a chain of more than 11,000 tax preparation shops — to
backstop its online customer service.
As
with TurboTax, you’re encouraged to start by searching a repository of
previously answered questions. If that doesn’t work, you can click on a
box taking you to an online chat or a phone number. I opted for the web
chat and soon reached “Young L.” Young pointed me to a passage in the
2014 I.R.S. Publication 17 tax guide. It explained that a professor’s
expenses relating to research and teaching, including travel, often can
be deducted, but the wording did offer a little wiggle room for the
I.R.S.
That’s
not the only way H&R Block distinguishes itself. The company also
offers customers the promise of in-person representation by an H&R
Block expert, at no additional cost, in the case of an I.R.S. audit.
Audits are rare — the I.R.S. does in-person examinations of about only 1
percent of returns — but the guarantee is like an insurance policy: a
major relief if needed. TurboTax charges Home and Business customers $60
for this service, and TaxACT charges $40 for all filers. Both require
that you buy it before filing your return.
Otherwise,
H&R Block’s software worked much like TurboTax, though not as
smoothly. For reasons unclear (the fault could have been mine) my
browser, Safari, froze as I was importing last year’s return to the
H&R Block website. I quit and signed into my online account again,
and the pertinent information was there.
Tax
filing will be different this year because of the Affordable Care Act.
For the first time, people must provide their health insurance
information on their returns, so all three programs include this topic
in their interview questions. If you have employer-provided insurance,
you simply answer a few yes-or-no questions, no matter which program you
use.
H&R
Block also has added an informative feature called Refund Reveal. All
three programs keep a running tally of your tax payment or refund as you
answer their interview questions. With H&R Block, if you click on
that amount, you see a breakdown of what’s contributing to your total.
TaxACT gives a less detailed tally.
TaxACT
TaxACT provided the most improved experience this year.
In
the past, I’ve occasionally found it more difficult to use than
TurboTax or H&R Block, and once in a while its instructions would
confuse me. This year, the online program wouldn’t import the PDF of
last year’s return. When I tried, I got a message saying the upload had
failed, which meant I had to type everything in. But beyond that, its
offering and apps worked just as well as the others.
Like
TurboTax and H&R Block, the program asks questions about your
circumstances and finances. There is a difference, however. The
interview seems to mention farming more often, perhaps reflecting the
company’s roots in the Corn Belt. (TaxACT is based in Cedar Rapids,
Iowa.)
I
emailed TaxACT, too, with my question about the sabbatical expenses.
One of its helpers, Jeff, emailed back within four hours. He didn’t
confirm that we could get a deduction, but he did provide a critical
piece of information, explaining the I.R.S.’s definition of ordinary and
necessary business expenses.
Finally,
TaxACT’s prices continue to impress. For a federal and a state return,
it would have cost my family nearly $100 less than TurboTax — recall
that TaxACT’s Ultimate Bundle is only $20. If you fret over the portion
of your paycheck that’s given to Uncle Sam — and who doesn’t? — it might
be worth a try.
