Which tax software is best for you?
ith three weeks to go until the income tax filing deadline, you may be putting off the unpleasant task by dithering over which software to use.
Do-it-yourself taxpayers face numerous potholes when navigating tax filing programs. Extra costs aren't always clearly disclosed, so you could end up spending more than you planned. Baseline prices may even rise by the time you finish filling out your forms. (All prices cited here are as of February 16.) Some programs rely too heavily on tax jargon or offload you to jargon-filled IRS documents, rather than explaining them in plain English for you.
This year, we reviewed five online versions of tax-filing programs. (You can download software versions rather than filling out your forms online, but doing so is generally more expensive unless you prepare more than one return.) We gave our hypothetical taxpayer a mortgage, some modest investments and a health savings account (HSA), an increasingly popular tool for workers with high-deductible health insurance plans. HSA account holders who take money out for medical expenses are required to report it on their tax return; failure to do this could trigger a large penalty. Here's what we found:
TurboTax
Intuit's product continues to impress with its easy navigation, clear instructions and ability to import thousands of documents from employers, investment firms and other institutions. Although other software programs also allow you to import documents, none are as comprehensive as TurboTax, which imports information from more than 1.4 million employers and financial institutions.
TurboTax handled our hypothetical taxpayer's HSA with aplomb, which wasn't true of some of the other programs we tested. Similarly, the reporting requirements under the Affordable Care Act are easy to follow.
H&R Block
This program is a breeze to navigate, and we especially like the checklists — such as a list of commonly missed tax forms to look for prior to filing your return. Block wants to make sure you have the documents you need. The program also does an excellent job of explaining the new ACA requirements.
Throughout most of our test drive, Block seemed to anticipate our questions and provide links to answers. The “Learn More” icons next to sections such as mortgage deductions and real estate taxes are clear and comprehensive.
TaxAct
TaxAct has long been popular with budget-minded taxpayers, but it's not as cheap as it used to be. If you itemize, you'll need to use TaxAct Plus, which costs $14.99, plus $14.99 for a state tax return. That's still a good deal compared with the cost of filing a state and federal return with some of its competitors.
TaxAct's summaries of income, deductions and credits allow you to review your work. However, if you realize you've left out some information, such as a charitable donation, you'll have to traverse some of the ground you've already covered before you can update the entry.
Jackson Hewitt Deluxe
This program shows some promise. We like the document checklist, and you can export previous years' returns filed with TurboTax, H&R Block or TaxAct. But aside from that, things go downhill in a hurry.
Some of the language is sloppy, and help is scarce. While filling out the section on deductible mortgage interest, we were asked if we had a Mortgage Credit Certificate but received little guidance as to what that might be. (It's a certificate offered by some state and local governments that allows homeowners to claim a tax credit for a portion of their mortgages.) In the section on individual retirement accounts, we were told that we made an excess contribution in 2015, which was just wrong.
TaxSlayer
TaxSlayer's program doesn't have a lot of frills, but it's clean and easy to navigate. You can have the program guide you through the forms, or, if you're feeling confident, skip the hand-holding and do it yourself. It's easy to review your work and make changes.
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