Tax-preparation software from TurboTax and H&R Block have drawbacks, benefits

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By Rob Pegoraro
Washington Post Staff Writer
Sunday, March 14, 2010

Tax-preparation programs are an unnecessary evil.

We don't need special software to pay other bills, but our elected representatives' perpetual tinkering with the tax code makes paying for our share of government so mind-numbingly complex that most of us must outsource the math.

It's alarming and maddening, then, if you cannot count on two different tax applications to yield the same figure. But that's what happened in both last year's review of tax-prep programs and in this year's test.

At least this time around, the two contenders were only $13 apart, and that's good enough for government work.

Once again, I tested Web-based versions of software -- they easily outsell stand-alone programs -- from H&R Block and Intuit, the Pepsi and Coke of this business. H&R Block At Home Online Deluxe (http://hrblock.com), formerly known as TaxCut Online, and Intuit's TurboTax Online Deluxe (http://turbotax.com) each sell for $29.95 and run in any new Web browser, using an interview approach to collect your numbers before spitting out what you owe or are owed. You don't have to pay for either until you file, either online or by printing out forms.

If you employed one of these programs to do your taxes last year and didn't hate the experience, you should stick with the same application. Each program will use last year's data to pre-fill some forms, and you also won't have to learn a new interface.

But if you're starting from scratch, go with TurboTax, which beats Block in its ability to download tax data for you and calculate charitable donations. In my test, TurboTax also yielded the bigger refund -- but I'm not sure exactly why, or whether that number is correct.

Then again, I'm not sure the IRS does either.

TurboTax does best in the early stages of tax preparation, when it can download tax-form data from what Intuit says are some 270,000 employers and 100 financial institutions. Although I couldn't fetch W-2s for me or my wife, TurboTax did collect 1099 forms from four investment companies, saving a non-trivial amount of data entry.

TurboTax can also import data from Intuit's Quicken program -- but not Mint.com, its Web-hosted personal-finance software.

Block added a similar feature to its Web application only this year and covers far fewer sources, none of which applied to us. It can also bring in data from Quicken.

If you have any sort of side business, TurboTax makes the work of adding up business expenses go by much faster; Block required six pages just to collect the details of a depreciable asset and threw around a lot more accounting argot in the process.


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