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Software helps you file taxes without having to crack the U.S. Tax Code's 17,000-odd pages, but you'll still need plenty of patience. The market-leading Intuit TurboTax and runner-up H&R Block TaxCut are both top-notch programs that walk you through the process (see chart below). This year, we favor TurboTax for complex returns, although it costs more. The difference isn't great enough, however, to warrant switching from TaxCut if you already prefer that choice.
We used both applications for a variety of tax situations, including a simple W-2 without deductions, and in another case, a W-2 with multiple deductions as well as a home business. Both programs ask and make calculations about your finances so you don't have to deal directly with IRS forms, although that's also an option. And each app displays a running tally of estimated refunds, with a searchable help index just a click away.
We like TurboTax's new Audit Risk Meter, which highlights information that could lead to chin-scratching at the IRS. Its new audit support center provides a well-designed guide to understanding the four types of audits and sending off the necessary response letters. TurboTax also did a better job than TaxCut of flagging potential errors, such as when we entered a stock purchase on a bank holiday.
In the end, both TurboTax and TaxCut calculated that we should receive a federal refund of $564 and a state refund of $210.
TurboTax remains a bit pricier than TaxCut, which swallows the fees for state filing. And TaxCut charges $20 for DeductionPro, while similar tools are integrated within TurboTax's It's Deductible. Keep in mind that you can deduct the purchase of tax software from your taxes. And TurboTax will refund the cost of its software if it does not crunch a better refund than rival software, while TaxCut provides a 60-day money-back guarantee if you're unsatisfied overall.
Before you buy either application, consider whether installed or Web-based software would serve you best. Installed software can be a better fit for complex finances or if, say, you prefer printing and mailing forms to the IRS over managing sensitive data in a browser. That said, browser-based options use the same security measures as online banks do.
An online service will do the trick in most cases for filing a bare-bones tax return electronically. On the other hand, if you're filing for several people in a household, boxed software may cost less, while helping you to file either electronically or with paper.
Please see CNET's Tax Guide for ongoing updates.
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H&R Block TaxCut 2007 |
Intuit TurboTax 2007 |
| CNET rating |
7.8 |
8.0  |
| Operating system |
Windows 98 or later; Mac OS 10.3.9 or later |
Windows 2000 or later; Mac OS 10.2.8 or later |
| Cost |
$20 Premium Federal; $40 Premium Federal + State; $70 Premium Federal + State + e-file; $90 Home & Business |
Basic is free for simple W-2 filing; $30 Deluxe; $50 Premier; $75 Home & Business |
| Total cost to file federal, state returns electronically |
Premium (State bought separately): $50; $70 Premium Federal + State + e-file; $90 Home & Business |
$26 Basic; $60 Deluxe; $80 Premier; $105 Home & Business |
| Fee for state return |
Included |
$26 to $30 |
| Fee to file taxes |
Premium and Premium + State charge $15.95 to e-file; free with other editions
or if you gross $54,000 or less |
Free |
| Managing deductions |
$20 DeductionPro |
It's Deductible included |
| New features |
Help with foreign aid and combat pay; improved search |
Audit Risk Meter and support center; Live Community support |
| Import financial data and last year's return |
Microsoft Money, Intuit Quicken, TaxCut, TurboTax |
Intuit Quicken, QuickBooks 2005, TurboTax, TaxCut, TXF files |
| Request review by a tax professional |
Ask an H&R Block Tax Advisor; $19.95 per question via e-mail or telephone; included with $80 TaxCut Signature |
Yes $49.95; included with $100 Personal Pro |
| Download files from financial institutions |
Yes, from 2,600-plus financial institutions |
Yes, from 70-plus percent of banks |
| Import W-2 |
No, fill in by hand |
Yes, through ADP (This didn't always work in our tests) |
| Shows running tally of refunds |
Yes, federal and state |
Yes, federal and state |
| Refund with ultra-simple return |
$564 federal, $210 state |
$564 federal, $210 state |
| Investment support |
Yes, 1099 and 1098 data. |
Yes, imports data for 1099 and 1098 forms; includes access to Basis Pro |
| Tech Support |
Free, 24-7 tech support; $20 personal advice with a tax pro; free audit support if you file electronically |
Weekend hours; free telephone and e-mail tech support; $39.95 personal or $59.95 business Live Tax Advice per incident; $39.95 for audit support (must buy before you're audited) |
| Schedule C home business |
Yes, all editions; Home & Business more detailed |
Yes, Home & Business edition |
| Rental property support |
Yes |
Yes; separate $99.99 Rental Property Manager can export to TurboTax |
| Help with Alternative Minimum Tax |
Yes |
Yes |
| Scans for errors before filing |
Yes |
Yes |
| View IRS forms at any time |
Yes |
Yes |
| Money-back guarantee |
Within 60 days of purchase if not satisfied; refunds software if you're audited |
Guarantees maximum tax refund; refunds software if you're audited |
| Helps you file an extension |
Yes |
Yes |
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