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Online tax services allow you to securely prepare your IRS returns from any computer with a Web browser. This option may suit you if you need to access your data from multiple computers, want an accountant to be able to log in to check the numbers, or don't want to bother installing software. Installed applications such as Intuit TurboTax and H&R Block TaxCut may be a better choice if you have a complex financial situation or are filing multiple returns for several members of your household.
We've reviewed three of the 19 services that enable free e-filing if you gross less than $52,000 or serve in the military. You can try any of these tools at no cost until you're ready to file (see chart below). Each offers help with life changes, such as a move or a divorce. They also include assistance with new credits for long-distance telephone tax, the purchase of a hybrid car, household energy improvements, and Hurricane Katrina-related items. In our tests, both TaxCut and TurboTax Online gave us identical federal and state refunds. TaxAct, by contrast, calculated the same federal refund in the end. Initially, however, its state refund was $242 higher than the others, so we had to do some cautious backtracking to check our entries.
Intuit TurboTax Online is the most expensive, which could be worthwhile if you need to grapple with multiple deductions and investments. It walked us through entering Schedule C expenses separately, whereas its rivals left us wondering how to categorize office supplies and fees for telephone and Internet service.
Second Story Software's TaxAct can help you file federal and state taxes for just $15.95. That's all you'll need to spend if you're dealing with a basic 1040EZ or W-2, but TurboTax Online is better for managing a home-based business or income from stocks or rental properties. With state filing included, the comparable, online Intuit TurboTax Standard demands $64.95 while H&R TaxCut Premium + State costs $39.95.
Though we liked the desktop TaxCut better than the desktop TurboTax, we ran into some frustrations with the online TaxCut. For instance, it trapped us in a dead-end screen when we didn't have a state identification number on hand to describe last year's state tax refund.
Our verdict? For complex tax returns, the costly TurboTax Online is the most thorough, but save money with TaxAct if your return is uncomplicated. TaxAct may also be the best choice for students, as it adds help with FAFSA forms. To splurge for handholding with a tax adviser, you may also consider either Intuit's PersonalPro or H&R Block's Signature services.
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Intuit TurboTax Premier Online |
H&R Block TaxCut Premium Online |
2nd Story Software TaxAct Online Deluxe + State |
| CNET rating |
8.0  |
7.0 |
7.3 |
| Setup and interface |
9 |
6 |
8 |
| Features |
8 |
7 |
7 |
| Support |
7 |
7 |
7 |
| Sample refunds |
$1,231 federal; $432 state |
$1,231 federal; $432 state |
$1,231 federal; $432 state |
| Qualifies for IRS Free File program |
Yes, if you make less than $52,000 or belong to the military. |
Yes, if you make less than $52,000 or belong to the military. |
Yes, if you make less than $52,000 or belong to the military. |
| Pricing with e-file |
$35 for Standard; $45 for Basic; $65 for Premier; $59.95 Personal Pro with tax adviser; extra $29.95 for state |
$39.95 for Premium + State, $79 for Signature with tax adviser |
$9.95 Basic; 19.95 Premium; $39.95 Premium + State, $79 for Signature with
tax adviser |
| Deductions tools |
Deductions Maximizer; Its Deductible, $20 extra |
Yes, DeductionPro, $20 extra. |
Yes, basic |
| Keeps running tally of refund on each page |
Yes, federal and state on separate pages |
Yes, federal and state |
Yes, federal and state |
| Import W-2 |
Yes, through ADP |
No |
Yes, through Paylocity or TALX W-2 eXpress |
| Import from software |
Quicken, desktop TurboTax |
Desktop TaxCut |
Desktop TaxAct |
| Help with deductions |
Deduction Maximizer included; ItsDeductible donations tracker costs $20 |
No |
No, $29.95 for Deduction Pro |
| Scans return for errors |
Yes |
Yes |
Yes |
| Tech support |
Free e-mail tech support; phone help beyond installation costs $9.95 per incident; phone help with tax adviser costs $39.95. |
Free e-mail and chat tech support; one tax adviser call is free, $19.95 thereafter. |
Free phone and e-mail support; $19.95 for phone help with an accountant. |
| Support in the case of an audit |
Yes, $34.95 through Tax Resources |
Yes, included |
No |
| Guarantee |
Refunds penalties and interest if you're audited. |
Refunds penalties and interest if you're audited. |
Refunds penalties and interest if you're audited. |
Read the CNET editor's take
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