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2009 Tax Software Shootout: TurboTax vs. TaxCut

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In the world of tax preparation software, the big players are Intuit’s TurboTax and H&R Block’s TaxCut. You have smaller players like TaxACT, but the two biggest in terms of branding and market share have to be TurboTax and TaxCut. They battle each other each year but when you really get down to the basics, both products offer the same thing – tax preparation that won’t cost you hundreds of dollars.

Don’t buy the commercials that say you have to go to a tax preparer because you can’t ask the box. A friend of mine once walked into a branch of H&R Block and had her fairly straightforward taxes prepared for $350. She didn’t have any special circumstances whatsoever! Her problem was that she didn’t know how owning a home would affect her taxes. She heard needed to itemize, had no idea what it meant, and that cost her $350. Fortunately for everyone else, you don’t have to know much to prepare your taxes with software because the software will do it for you. I don’t fault H&R Block, they’re a business and they need to keep the lights on, but she could’ve gone with software and saved herself some serious coin.

So, which company should you go with? Intuit’s TurboTax or H&R Block’s TaxCut?

TurboTax vs. TaxCut

Free “Simple Returns/1040EZ” Package:

According to their respective homepage, only TurboTax offers a free option for “Simple Returns/1040EZ,” TaxCut will charge you $19.95. The “Simple Returns/1040EZ” has nothing to do with income level, it refers more specifically to how complicated your taxes are and what additional schedules you’ll need to include. If you use the standard deduction and don’t need much help, then you can get your taxes done for free at TurboTax. If you need to itemize, you’re stepping up to TurboTax Deluxe, which costs $29.95. You can use TurboTax’s Package Chooser tool to find out which one you’ll have to use.

If your AGI is less than $56,000 a year, you qualify for the IRS’s Free File program.

Winner: TurboTax – Free is better than $19.95 (though their free doesn’t include step-by-step guidance).

Other Packages:

TaxCut has three basic packages – Basic, Premium, and Home & Business (then each has a version where you get state filing included). TurboTax has similar versions, a Deluxe, Premier, Home & Business. Here’s how they stack up price-wise head to head:

Package TurboTax Price TaxCut Price
Basic/Deluxe: $29.95 $19.95
Premier: $49.95 $34.95
Home & Business: $74.95 $79.95
Business: $109.95 N/A

It appears that if you have itemized deductions and investments, TaxCut’s Premium Federal E-file package is going to be the best for you because it’s $5 less than the equivalent TurboTax Premier product. If you plan on filing state through the software, TaxCut has a Federal & State package for only $15 more. If you use TurboTax Premier, adding a state package is an additional $34.95!

Winner: TaxCut – If you’re not going to be able to take advantage of TurboTax’s Free edition, you can save a few dollars by using TaxCut to prepare your taxes. If you plan on doing your state taxes and efile with the software, the difference in price begins to shrink. You can get state preparation through TaxCut for an additional $15 but you pay $19.95 to efile. With TurboTax, you pay an additional $34.95 but efiling is free. The original difference of $30 really comes out to be

Federal e-Filing:

With any of their respective tax preparation packages, you get at least one Federal e-file free; with TaxCut you get 5 Federal e-files free.
Before you get too excited, the IRS doesn’t charge you for E-filing through their Electronic Filing System either so the preparers aren’t paying the fee for you, they’re simply not charging you a fee.

Winner: Toss-Up – TaxCut’s 5 free Federal e-files is nice, only if you need them. I’d only need one.

State Tax Preparation:

To complete your state forms using TurboTax, it’s $25.95 per state if you used their Free Federal Edition; it’s $34.95 per state if you used any other one (Basic, Deluxe, Premier, Home & Business). Up to three State efilings are free though.

TaxCut offers Federal as well as Federal + State packages. On the Federal only packages, preparing a state return will be an additional $29.95 each. With any package, state e-filing will cost an additional $19.95. It’s important to find out whether or not your state charges for e-filing. For example, Maryland’s state iFile system is absolutely free. There’s no reason why I should pay $19.95

Winner: TurboTax – You might pay more up front for tax preparation but you get free Efiling.

Summary

Let’s take the most common scenario, John, who will use the Premier/Deluxe versions of the software because they have a fairly straightforward tax situation. John will prepare the taxes online and John will e-file both federal and state returns. This is how much John would expect to pay:

  • TurboTax: $29.95 Deluxe + $34.95 Deluxe State + $0 Efile = $64.90
  • TaxCut: $49.95 Premium Federal/State + $19.95 State Efile = $69.90

For what is likely the most common scenario outside of Free Edition, TurboTax is cheaper than TaxCut by $5. If you don’t plan to Efile your state return, then TaxCut wins by by $15.

Other Factors:

Both companies have been around for many many years, tweaking their products, and learning from their mistakes. I think one advantage they have over the other competitors is that they are huge brands with the backing of enormous companies willing to spend money to produce the product possible. You cannot go wrong picking one of these two products because they’ve gone through a lot of research, development, testing, etc.

That being said, people like a winner and PC Magazine Editor’s Choice was TurboTax 2009 because it had a better step-by-step system than TaxCut. I think the two products are similar but I also didn’t do an in-depth review like PC Magazine and their trained staff did.

Winner: TurboTax

Like I said before, you can’t go wrong with either product but TurboTax is $5 cheaper and they were selected as PC Magazine’s Editor’s Choice – that makes them inch ahead of TaxCut to take the trophy in this year’s tax software shootout.

What’s your vote? TurboTax or TaxCut? Or do you rock the dead tree 1040?

{ 82 comments, please add your thoughts now! }

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82 Responses to “2009 Tax Software Shootout: TurboTax vs. TaxCut”

  1. jmk says:

    I’ve always used TurboTax and will again this year. I have a somewhat complicated tax return, and TT is far far better than no software. Unfortunately, it is very disappointing that TT always has so many ERRORS and things that are simply WRONG. If you have a straighforward return, you won’t see these problems, but if it is complicated these errors will trip you up. I’ve repeatedly informed TT but they never fix these problems.

  2. Mary says:

    I don’t usually post comments, but seeing as so many people don’t realize the advantage of efiling as a former licensed tax consultant I will tell you this…1. When you efile your probabilities of being audited significantly drop. 2. It reduces your margin of error. 3. It reduces the margin of error for IRS employees who may enter your data wrong. 4. You get a refund a lot faster. 5. You don’t risk your papers getting lost or stolen by mail. 5. You save a tree and a stamp =)

    • KC says:

      You left out one important factor:
      Speed. That can work for you or against you. If you efile you can expect your refund in about 2 weeks (I’ve had it done in less but your mileage will vary,especially if you are counting on it) if you directly deposit your refund.

      If you owe money, wait until the due date and mail a check, it will take the IRS a week or 2 to deposit the check.

  3. Sally says:

    I’ve used TaxCut for years, and though I really like the software, I have 2 problems with it. First, the software won’t allow you to adjust the fonts, and as my eyes age this has become a significant problem. And it annoys me, because most of the screens use very little of the available space. I’ve suggested this change to TaxCut, but they are very nonreceptive. Second, the software won’t save a .pdf of the return. You have to keep the software for each year on your computer if you want to bring up past years’ returns. True, you can scan the printed forms, but not everyone has scanners at home. Every year I consider changing to Turbo Tax, but TaxCut imports my history, which makes it easier to do subsequent tax years. This year I’ll probably make the change, since an “upgrade” to my computer means I have to start over anyway.

    • George says:

      Sally,
      Just a note here, Taxcut will import previous years data from either Taxcut or TurboTax formats. Not sure if TurboTax can import previous Taxcut records. Also, as Allen states, you can download any number of programs that will save your return to PDF format. (Print to PDF)

    • Dave says:

      I used Turbotax for years and then a few years ago switched to H & R Block software. H & R is not as easy to use, but since my data easily imported and I could save a buck I kept using it. However, I’m tired of it as it is not user friendly so I’m switching back to Turbotax, even though it will cost a little more.

      Regarding the font size, you’re right. MOST companies don’t understand the need to address this. Most of the people developing this stuff don’t think in terms of aging. They miss the point that the largest group of people are the baby boomers and as they age they will need accomodation both in size of things they view and also in the contrast of colors to make viewing easy. What will probably happen is that the companies that become user friendly for those with aging vision will become the preferred companies these people purchase from.

  4. Alan says:

    To the previous poster regarding saving your returns to PDF. You can download any number of PDF printer drivers, I recommend cutepdf. Install it and it shows up like another printer, so when you go to print your document, select CutePDF instead of your regular printer. It will bring up a dialog asking you for the filename and location to save it and voila, you have a PDF of your tax return. Hope this helps.

  5. sandy says:

    I am a taxcut user and when you are done on the “Wrapping Up” tab at the end there is a button that says “Save as PDF”. Just click that, name it and save it. The file includes a first page of info that will help me this year followed by the actual paper copy of my 1040. This is super convenient to get to when you need it – like when filling out the fafsa for college $ or if you need a quick print out. I was considering switching but think I’ll stick with what I have. I am not confident enough at this time to use the irs free file or calculate on my own so if i’m going to buy tax cut to do my taxes, i will just file thru that since it’s included. Thanks to all for the helpful comments!

  6. jim says:

    I like tt and used it for ten years, Formed a s corp and now find out tt does not offer that package ( business ) for a mac. any body know of a plan that does of if tt plans to expand to mac.

  7. Dennis says:

    My sisters husband recently died so I will be doing her Taxes this year. Her husband used TaxCut but I have always perferred TurboTax. Does anyone know if I can import his previous tax years (files) into TurboTax when I prepare 2009 Taxes.

    • Eddiy says:

      Both TurboTax and TaxCut(now renamed) have for many years included Importing their competitor’s prior year only “file” to begin filling in their forms data. I may have done this some years ago, but do not remember how successful or complete it was. Be aware the imported data is usually only non-monetary type data, so most all money or numbers info will have to be entered manually.

  8. Kent says:

    I did not find this article that beneficial in my situation. I don’t really care about the $5 difference from TaxCut, it is the $20 charge for each state that you file in that annoys me.

    A few have pointed out that some states offers free filing, but if you have semi-complex filings, they don’t have software to integrate and fill in forms like TurboTax does for every state tax as well as federal. I think it fair that TurboTax take a profit in my use of the state taxes, but think that it is rape that they charge more than $5 for the 2nd state. The 2nd state is not much more than forms, and the program will not fill in your forms properly unless you tell it that you are filing in more than one state. To do this you must pay for the extra state even if you don’t efile.

    However, it is still cheaper than accountants, so alas, I will pay my taxes and use TurboTax.

  9. BTomsic says:

    I have already purchased the TaxCut edition, now H&R Block…I LOVED the old edition, this new one is for second graders…big “HELP” signs, etc., color is not easy on the eyes. Just only hope it’s an effective as the old TaxCut now that H&R Block is running the show.
    Cost between the two doesn’t count, it’s deductible.

  10. LB says:

    I am thinking of using Turbo Tax again this year, as I have for many years. Does anyone know if the Deluxe version with State charges for the state efiling? Last year, I think I had to pay about thirty bucks to efile my state tax via Turbo Tax.

  11. KC says:

    I’ve never used turbotax. One thing that upsets me every year w/ taxcut/ hrblock is the stupid questions it asks. Why not just ask: do you own a business, do you have investments.

    I don’t have either so why do I have to jump through 17 different hoops?

    Anyone know if turbotax is better on this?

  12. Fred says:

    I purchased HRBlock (aka Tax Cut) for the third year in a row, on the same Vista based computer. I could not load the program on my computer after one hour with the help line (too chatty, no help). In the end I had to install it on my XP laptop. When I finished the Fed and tried to download the state – that would not load! The no-help desk failed to send the tax program to my email TWO TIMES (and they use your email to track you so no excuses!).
    Regardless of cost I am FINISHED with H&R Block.

  13. KC says:

    I wound up buying the taxcut deluxe. Installed and runs very quickly on my desktop which is running xp. Seems a little more streamlined, sensible than previous editions but still asks stupid questions. A quick investment / small buisness type of question at the beginning would have been real nice to avoid all those irrelevant question.

    After inputing all my info it turned out that my standard deduction was $8 less than what I could itemize. That’s with owning a home and having a heloc and some charitable contributions, etc. For $8 I’m not going to worry about keeping receipts (not that that’s at all likely) but it was not easy to go back and change, easiest to just delete a few charitable contributions from the deduction pro which was also included.

    Going back several years they used to have a compare/ “what if” function. I have a student that I wanted to know what if I didn’t declare him a dependant, so I would know if I was better off taking the education credit or he was. Not easy, had to make changes after finding the right place to do it.

    Doing my son’s taxes, when I first started it up, it tried to up sell me to premium, which would make no sense since he can file the EZ.

    I’m 99% certain that the basic would have been fine for me but they imply only the most basic can be done on basic. Turns out the deluxe is on sale at office depot and with rebate is cheaper than basic.

    Now is the time to buy, the closer to Apr14 the higher the price goes.

    Keep in mind when navigating there are functions at the top to take you to various places in the program directly including fiile > save as pdf, so you don’t even need to finish to save in a workable format.

  14. D. says:

    Question about which “level” of tax software is needed in the following scenario:

    Married Couple:
    1 adult collecting unemployment
    1 adult working as a house keeper with (as a now) untaxed income (I don’t know if this is considered a “business” or if it is simply income. Same adult had a 2nd job.
    Medical and dental that exceed $10K

    Deluxe? Thanks

    • KC says:

      I’m pretty confident H&R Basic COULD handle it. Seems both TT and H&R both play coy with what the different levels WON’T handle. Deluxe pretty definitely can. If you try basic it would probably need to do a little more research than the deluxe (dig deeper but I’m sure the info is there, maybe not the forms)and if you have a refund coming it would probably cost more to efile (none included w/ basic 5 w/ deluxe?)than the difference between basic and deluxe.

      The last 2 weeks office depot has had the H&R deluxe on sale for $25 with a $10 OD gift card by mail = $15 net. Hopefully they’ll have the same deal this coming week unless you still have time to take advantage tonight.

      I messed up with one of my efiles, put the wrong year in for my son’s birthday on his return so the IRS rejected it. Took 5 hours for it to kick back, I was impressed. Good thing I had 5 efiles, I’m pretty sure when I refiled that used another. Glad they aren’t $15 each any more!

      One thing that the H&R does is offer several times to allow an upgrade to premium. The first time when you first start it, so if you buy deluxe and need premium I’m sure you can upgrade via internet. Don’t know what the upgrade price is so I’d guess buying premium first would be more cost effective IF YOU NEED IT but I think premium is more beneficial for investments and planning.

      Good luck D.

  15. LR says:

    I used to use TT, but I will never use it again because back, I believe, in 2002 they included some spyware in the code that reported back to Intuit without telling anyone that it was there. They claimed that it did not collect any personal information, but I will never trust them again anyway. I have used TaxCut ever since.

    • Sport says:

      I have only used Turbo Tax and have stuck with the basic even with more than average complexity like a “1031 Like Kind Property Exchange.” There really is no need for the fancy stuff. I never get the state since all the states I file in (CO,PA) not VT. are free online filing. I fill out the paper for VT (it is only 4 pages and easy) and force them to pay staff to handle, review and data enter — As you can tell, I think it is real stupid not to have a free online set up. Shame on VT.

      • KC says:

        VT only has 620,000 people, probably only half are adults or have income where they would need to file and most of the 310,000 left would probably file jointly. For a 160,000 filings it would pretty definitely cost more to set up an on line free file than it costs to have staff input and verify.

        You have a complex tax situation and said it was only 4 pages and easy. Sounds like VT has it’s priorities right to me.

  16. Anonymous says:

    Indiana is free

  17. Garnet29 says:

    Amazon.com is selling Tax Cut deluxe version for only $19.99. We used Tax Cut this year, just because of familiarity. However, I believe there are quite some bugs that need to be solved in this year’s software. As we need to itemize this year, we change some numbers back and forth. Some forms they don’t change accordingly. Some new forms even will check items that you don’t check. We contact their technical support but they can not solve the problems and ask us to re-start a new return. Duh. We will go with Turbo Tax next year.

    For those who file first time homebuyer credit, IRS only accepts paper file. So you may save the money by using their free CD.

  18. Sport says:

    PS. TT has an online forum where you can get a ton of questions answered, although know that it is still your responsibility. It is a great way to check for your understanding of the code. I have call the IRS helpers before, and they are basically useless with more complex tax questions. Here is my thought! If you want my money, please explain it in the most sensible and understandable way, otherwise I will do my best and let the chips fall. Give it your best good faith effort and only thing IRS will do is correct and collect or pay. No worries. TT software and Forum reduces lots of anxieties.

  19. MW says:

    I’ve been using TaxCut because, for a few years, TT didn’t have a Mac version. I have had a few issues with TaxCut: when calculating my state return, it failed to deduct the previous year’s refund from the tax paid, causing me to pay up later. When I emailed customer service about this, the response was indifferent. When I pay big bucks for tax prep software, I expect more attention to detail, and a better reaction when an error is brought to their attention.

    Second,I track my charitable deductions on a spreadsheet. TaxCut won’t let me just enter the total; it makes me jump through hoops and re-enter the data that’s already on my spreadsheet.

    I’d be tempted to switch to TT if I could be sure that it would download data from my previous TaxCut returns. Assuming, of course,if they offered a Mac version.

    • John says:

      Your refund ’08 “balanced the books” for last year. Why do you have to deduct it from this year?

  20. MW says:

    Because common sense doesn’t apply, John!

    I pay taxes in two states, and both consider the previous year’s refunds as income when computing this year’s refund.

  21. CALou says:

    I’ve used the Mac version of TTax for at least 10 years. It seems to be more “user hostile” to use than in years past . For example… 1) no documentation; 2) Difficult (but can be done) to print just one sheet esp. if it is the screen that shows up when the state “rejects” the return and you get instructions on how to correct “rejection”; 3) Reaching a human to speak with isn’t easy like in past. In fact no tel numbers are avail. on site to do that. Also, chat is usually “unavailable” or it is difficult to find the screen when on the Intuit turbotax site.

    This is probably my last year of using TTax Deluxe

  22. jerry zeller says:

    I file federal plus 3 different states & have filed on line the last 3 years with Turbo Tax Premier. I am looking for a price break due to the fact I have to pay for 3 state filing which come to over $150.00

  23. Tony W says:

    I have used Taxcut every since it was available. Now they are called H&R Block. This new version, which excluded Microsoft for the 2009 tax year, in my opinion, STINKS. I have ran into many different problems, that is due to software design, not install problems. The major one for me is that, H&R did not reach an agreement with TD Ameritrade and some other major stock broker companies. Because of this, I can not import my stock info into the program. This means that I have to enter my stock info by hand. (name of stock, date of purchase, how many shares, date of sell, etc….) When you buy and sell as much as I do doing the year, this is a major task. I called H&R and asked if there was another way to enter the info, they stated “NO”. I asked for a refund or even a partial refund since this is less of a program than it has been in the past. (Of course, they did not advertise this situation) They said there is nothing they can do. I told them I was going to eat the cost of the program and go out and buy Turbo Tax tomorrow. And because of their lack of concern and compensation, I will never use their software again.

  24. Jan says:

    I have always bought Turbo Tax but this year I bought Tax Cut….In a word….DON’T…..
    The PDF saving format STINKS….it is not as through and Turbo Tax and I will not use Tax Cut next year.

    • KC says:

      Just curious in what way does pdf saving format on hrb stink? I had no issue with it. If steps to access was the issue, as I remember it, all you needed to do was go to file on upper left border and click to get the pull down menu then save as pdf. I haven’t used it in 6 weeks so I may be wrong on that.

      Specifics would help on all comments, to say “not as through (sic)” doesn’t help assess either. ‘through’ = thorough?

      In addition not all needs are the same so what stinks for you may be fine for others. I know hrb was fine for me.

      I have no dog in this fight, I don’t work for hrb, don’t sell tax software, I’m just trying to help assess which stands out for what reasons so someone contemplating using either has the info they need, which of course can’t be gotten from any other sources I found in my google search.

    • Henry Ellingsen says:

      I thought the PDF feature was great. You can always print a paper copy, but try to search through it for information needed. Having the same document available in PDF format and searching becomes a snap or click…..literally
      BTW I’ve been using TaxCut since the first year it was available, and it has never let me down.

  25. Henry Ellingsen says:

    Hands down, for people who don’t pay state income tax, TaxCut is the best. Online purchase of TaxCut was $14.95 for HR TaxCut basic. The cheapeast we found TurboTax Basic was at Office Depot for $24.95. Each has 5 free federal e-files. Other features are a toss up unless you consider the HR support in case of an audit to be a plus???


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