Article updated Tuesday, December 22 at 7:30 am PT with corrected pricing information.
Tax time. We're dreading it as much as you are, but the fact remains that soon after we ring in 2010, we'll be paying for 2009.
In anticipation of the 2009 tax season, we've gathered some preliminary information about tax prep software for the DIY tax-doers among you. There are noteworthy changes to H&R Block's and Intuit's software, the two developers that take up the lion's share of the tax software market and the two we therefore focus on in our coverage. The prices of some applications in the two product families have crept up $10 but others remain steady compared with last year.
If choosing among multiple products weren't confusing enough, you also get to determine if online or desktop apps are the way to go. To that end, we've rounded up pros and cons for these two tax prep approaches.
Taxes are complicated, and the software offerings are no different. We tried to keep information simple and organized in a chart below, but with extra charges for state returns and extra e-file submissions, it's easy to get lost. Keep in mind that this is a preview, not an exhaustive comparison, and that we'll return in early 2010--after we get our own forms in the mail--with in-depth reviews on some of the software products mentioned here.
H&R Block At Home
Don't bother looking for H&R Block's TaxCut to prepare your 2009 taxes. You won't find it. Sixteen years after Snapping up TaxCut from Kiplinger's, H&R Block is girding its own brand by doing away with TaxCut and renaming the product H&R Block At Home.
Like last year, H&R Block's tax return software lineup includes both online and desktop products, including an all-free, online version. For the 2009 return, H&R Block has turned its Signature service that it piloted for the previous two years into a product called Best of Both. Best of Both ($99.95) combines the online version of H&R Block At Home Premium with a review from an H&R Block tax professional, who will also file the return for you after you approve their suggested changes to your initial return.
In addition to the dramatic product name changes, H&R Block boasts a brighter, redesigned interface. The company also says it overhauled the language of the interview, removing confusing tax jargon and hopefully making the tax return process clearer. Many of the explanatory videos also got a redo. In some cases, H&R Block added more videos, for instance on hybrid cars and education-related credits.
H&R Block's 2009 At Home products can now also import W2 forms from an employer and 1099 forms from banks, an improvement over being able to import data only from the previous year's tax return.
H&R Block also added more detailed guidance for specific occupations that may have extra tax credits or complications--like teachers, salespeople, and the newly retired.
Intuit, too, has been busy reformulating its online and desktop tax software offerings from the previous year. Significant changes include the ability to flag a page to return to later--like if you need to look up a social security number, but aren't ready to interrupt your workflow to get up and find it. TurboTax also introduces error reporting as you go. You can ignore the error flag, of course, but tending to potential problems as they arise in the interview process can make the final error check smoother and shorter.
Intuit has also included numerous smaller enhancements, including a tweaked interface that adds more visuals, a few more items that would trigger your higher risk level in its Audit Risk Meter, and all-new recommendations to help you plan for next year's tax return. TurboTax software for 2009 take the Federal stimulus package into account, flagging deductions and credits that could apply to you.
H&R Block At Home 2009
|Name||Online or desktop||Price||Includes||Extras|
|Federal with e-file: Ideal for 1040 EZ||Free||Online||Free||1 federal e-file; basic forms for a simple, personal tax return||State an extra $29.95 each. $19.95 for each State e-file.|
|Basic||Desktop||$19.95||1 federal e-file||State an extra $29.95 each. $19.95 for each State e-file.|
|Federal with e-file: More help with deducations||Deluxe||Online||$29.95||1 federal e-file||State an extra $29.95 each. $19.95 for each State e-file.|
|Deluxe||Desktop||$29.95||Does not include State (ideal if your state doesn't require a return)||$19.95 for each State e-file.|
|Deluxe (+State)||Desktop||$44.95||State return; 5 federal e-files.||$19.95 for each state e-file.|
|Federal and state e-file: Investments, home ownership, self-employment, rental property||Premium||Online||$49.95||1 federal e-file. 1 session live tax advice ($19.95 value); Schedule C guidance||State an extra $29.95 each. $19.95 for each State e-file.|
|Premium (+State)||Desktop||$59.95||State return; 5 federal e-files.||$19.95 for each State e-file.|
|Federal and state e-file: Personal and small business||Premium & Business (+State)||Desktop||$79.95||State return; 5 federal e-files.||$19.95 for each State e-file.|
|Federal and state with Pro support||Best of both||Online||$99.95||Premium online return with an H&R Block tax pro's review. The tax pro files for you after all corrections are made.||State an extra $29.95 each. $19.95 for each State e-file.|
Intuit TurboTax 2009
|Name||Online or desktop||Price||Includes||Extras|
|Federal with e-file: Ideal for 1040 EZ||Basic||Online||$14.95||1 federal e-file; basic forms for a simple, personal tax return||State an extra $27.95 each for free edition only. $19.95 extra for State e-file.|
|Basic||Desktop||$24.95||5 federal e-files||$39.95 for up to 5 printed State returns. $19.95 per State e-file.|
|Federal with e-file: More help with deducations||Deluxe||Online||$29.95||1 federal e-file||1 State return an extra $36.95 each, including 1 State e-file.|
|Deluxe (+ State)||Desktop||$59.95||State return; 5 federal e-files.||$19.95 per State e-file.|
|Federal and state e-file: Investments, home ownership, self-employment, rental property||Premier||Online||$49.95||1 federal e-file||1 State return an extra $36.95 each, including 1 State e-file.|
|Premier (+State)||Desktop||$89.95||State return; 5 federal e-files.||$19.95 per State e-file.|
|Federal and state e-file:Personal and small business||Home & Business||Online||$74.95||1 federal e-file||1 State return an extra $36.95 each, including 1 State e-file..|
|Home & Business (+State)||Desktop||$99.95||State return; 5 federal e-files.||$19.95 per State e-file.|
TaxAct is one of the better-known budget alternatives to self-prepared tax returns. As with TurboTax and H&R Block At Home, TaxAct offers online and downloadable products with a variety of pricing plans for Federal and State returns.
Prices range from $14.95 for a free, simple Federal e-file (1040, 1040A, & 1040EZ) plus the cost of a State return, to a $19.95 download package that includes a Federal and State return. While buying an online State package gets you one free State e-file, additional e-file access levies a $7.95 charge (compared with about $20 for extra State e-files for both TurboTax and H&R Block At Home).
Online versus desktop tax prep
In addition to thinking carefully about the level of guidance you'd like with your tax prep software, you'll also need to decide if online or desktop software is right for you, and if you prefer to e-file or snail mail a printed form. Your return may come in as few as 8 days versus 6 weeks if you e-file. Keep in mind that you can purchase additional e-filing rights using any online or desktop package, but desktop software may include a greater number of Federal e-files. State e-files are almost never included in DIY tax software.
Pros of online tax prep: Convenient to start and file online; free option for simple forms; start and resume from any computer; flexibility for those without long-term access to a computer, or without rights to install programs on a Mac or a PC computer.
Cons of online prep: Costs add up (it can cost $50 extra to download a State return and e-file it; even with the free online option); price covers one individual.
Pros of desktop prep: More affordable for families (one package applies to five people); locally store data on the computer for offline access and sense of security; can download from the publisher's Web site or buy boxed.
Cons of desktop prep: Installation may take time; Mac and Windows only--no Linux support; may need to transfer over previous years' files when switching computers over time.