By Rob Pegoraro
Washington Post Staff Writer
Monday, March 14, 2011; 1:51 AM
You can count on three things in modern American life: death, taxes and tax-prep software.
There's no escaping the first, few of us can weasel out of the second - and the hideous complexity of the tax code makes the third an inevitability for many of us with finances too complicated for a 1040EZ but not tangled enough to require a tax accountant's services.
But although you might need a program to comply with a basic civic obligation, you won't have a wide range of choices. The market has congealed into a duopoly, with Intuit's TurboTax (www.turbotax.com) owning the bulk of it and H&R Block's Block at Home (www.hrblock.com) grabbing much of the rest.
For this year, the Web versions of TurboTax and Block, both far more popular than their older, disc-based releases, don't incorporate major changes. TurboTax remains the better choice, although if you've learned the ways of Block and have tax data from last year's version to import, you should stick with it.
But after trudging through their deluxe versions, each $29.95 including federal e-filing, I saw irritating design flaws that a more competitive market might stamp out. TurboTax and Block at Home each try to simplify tax tasks by importing some data online and then interviewing you to collect last year's income and expenses.
TurboTax has historically held a big lead in its ability to download the contents of some forms. This year, the Intuit application offered to download my Washington Post W-2 (except The Post doesn't provide the log-in information requested) and could also collect data from one local bank and four mutual fund brokerages (American Funds, E*Trade Securities, Fidelity and Vanguard). Block supported only E*Trade and Fidelity.
TurboTax's interview path generally follows the outline of a 1040, beginning with your name and address and then marching through categories of income and deductions. Block wanders a little, starting with its offer to import data, then collecting personal info, then hopscotching from wages to interest to business income to investments.
The two will try to sell you more expensive versions - even though I found their deluxe editions sufficient for two employed adults, one (adorable!) dependent, a smattering of investments, a tiny freelance business on the side and the deductions and credits available to charity-minded homeowners.
Both applications could streamline their interviews. Block can take too long to collect the relevant numbers, while TurboTax presents too many single-question screens after it has gathered the appropriate figures. For example, Block needed five screens to handle annuity income reported on a 1099-G form; TurboTax eight.
TurboTax's biggest flaw, however, is its inexcusably dumb handling of date fields. If you use a single digit for a month or day, it deletes the slash you'd type next - turning "12/1/2009" into "12/12/009" - and then squawks about the error it created.
With all of our income entered, the two programs were $3 apart - probably because Block already factored in a credit for foreign tax paid on one of my wife's mutual funds.
Block looked worse once I moved on to deductions and credits. It incorrectly said the child-care credit is limited to children who have lived in your home for at least six months of the tax year; the IRS says this six-month rule doesn't apply to a child's birth year.
And the DeductionPro site it offers to estimate your charitable donations is a nightmare of inept Web design. It fails if your browser blocks pop-ups, loses data if you don't follow the right path, requires constant scrolling up and down, and makes you download a file to your computer before uploading it back to the main Block site.
TurboTax didn't steer me wrong with its advice on deductions and credits, and the sites's ItsDeductible calculator doesn't require leaving the page or shutting off a basic browser feature. ItsDeductible also gave about a 40 percent higher estimate for the value of donated clothes.
The two programs finished quite close, with TurboTax's estimate of my bill only $5 below Block's. TurboTax was better overall but far from ideal. Each deserves competition.
That could come if the IRS, which already knows what's on your W-2s, 1099s and other forms, lets you log into its own site, confirm that data and plug in additional info before computing the bill. But tax-prep companies - having already defeated some state attempts at direct filing, including Virginia's last year - will fight that with the tenacity of a lobbyist defending a precision-engineered tax credit.
Or we could craft a simpler tax code that treats taxes as the bill we owe the government, not a game to be won or lost. But the odds of that seem even lower than the IRS cutting out the middleman. As I was saying: death, taxes, tax-prep software.