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2009 Tax Software Shootout: TurboTax vs. TaxCut
Posted By Jim On 02/01/2009 @ 12:41 pm In Taxes | 82 Comments
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?
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).
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|
|Home & Business:||$74.95||$79.95|
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
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.
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.
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:
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.
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.
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?
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 Email: mailto:?subject=http://www.bargaineering.com/articles/2009-tax-software-shootout-turbotax-vs-taxcut.html
 Intuit’s TurboTax: http://www.bargaineering.com/articles/r/turbotax.php?tag=2k9shootoutTurboVCut
 H&R Block’s TaxCut: http://www.bargaineering.com/articles/r/taxcut.php?tag=2k9shootoutTurboVCut
 TaxACT: http://www.bargaineering.com/articles/r/taxact.php?tag=2k9shootoutTurboVCut
 TurboTax’s Package Chooser: http://turbotax.intuit.com/tax-tools/chooser/online.jsp
 IRS’s Free File program: http://www.irs.gov/efile/article/0,,id=118986,00.html
 Maryland’s state iFile system: http://individuals.marylandtaxes.com/filinginfo/efile.asp
 PC Magazine Editor’s Choice was TurboTax 2009: http://www.bargaineering.com/articles/pc-magazines-2009-editors-choice-turbotax.html
Thank you for reading!