There are three major tax preparation software packages on the market that most do-it-yourself tax preparers will use – TurboTax, TaxACT and H&R Block. Comparing these three options to find the cheapest can be a real chore. Each has several editions with varying features. As a result, it is important to compare competing editions between the providers, not just to look simply at the lowest overall price that any seem to be offering.
What is vitally important in selecting the least expensive tax software is making sure that you get the right one based on your own individual income tax situation. Each of these providers has a very attractive “free” package. But with two of them, they charge for a state return. The one totally free option is only for very basic returns. It won’t help those who have a complex tax return.
To help you sort through this mess, let’s take a look at the offerings of all three companies, as well as the individual editions, and the charges related to each. Note that the costs listed below are for the online versions of each tax software. The cost for the downloadable versions is listed at the end of the article.
TurboTax
TurboTax is highly regarded in the self-prepared income tax universe, and it is the most popular tax software. But it has five different editions, and you have to choose the right one for your tax situation. Otherwise, you’ll need to upgrade.
Here are summaries of all five editions:
Free Edition
This version is for simple tax returns, such as Forms 1040EZ and 1040A. It is free for both federal (including the Earned Income Credit, or EIC) and state returns. There is also no fee paid to TurboTax, as the name implies, and no fee to e-file. But just in case you’re thinking this is the way to go, remember that this edition is very basic. Essentially, it does none of the work that TurboTax is so well-known for.
For example, it does not transfer your information from a previous year. It also doesn’t provide online access to all tax returns on file, or search for deductions and credits. Still, for simple returns, it is the only free option available.
Deluxe
This is TurboTax’s most popular edition, and it provides most of the services the product is known for. It is recommended if you have tax deductions, as the edition is specifically designed to maximize those deductions. The cost is $34.99, and the e-file is free. There is an additional charge of $36.99 for state returns (per state). So if you have to file in your state, you’re really looking at $71.98 – and that’s assuming you don’t have to file for more than one state. Check out the TurboTax Deluxe Edition here.
Premier
This is the TurboTax edition you will need if you have taxable investments or rental property. It does everything the Deluxe version does, but it adds sale of investment securities, automatic calculation of cost basis for investments sold, and preparation of Schedule E for rental properties. The cost is $54.99 and includes free e-file.
It has the same additional charge for preparation of your state return(s), at $36.99 per state. Plan that you’ll have to come up with $91.98 for this edition if you have to file in your state. Check out the TurboTax Premier Edition here.
Self-Employed
This edition does everything that the Premier edition does, but it also adds preparation of Schedule C (sole proprietors). It maximizes business tax deductions and depreciation, and also reports income and expenses from S-Corporations, C-Corporations, partnerships, and multi-member LLCs (but not the actual returns for each). The cost for this edition is $89.99 including free e-file. And once again, many of you will have to add in the per-state charge of $36.99, bringing the actual cost to $126.98. Check out the Self-Employed Edition here.
TurboTax Business
While TurboTax used to offer this edition in an online version, it is now software/download-only. They have instead improved the Self-Employed edition that I just mentioned, making it a viable option for even more filers. If you have a more complex return and need the Business edition, though, you will need to download it this year.
This is the edition for small businesses other than those using a Schedule C. It includes preparation of returns for small S-Corporations, C-Corporations, partnerships, estates, trusts, and multi-member LLCs (this is different from, and more complex than, the capabilities of the Self-Employed edition above).
So, if your business takes one of these forms, you’ll need this edition. The cost is $149.99, which includes free e-file, but once again there is a $36.99 per state charge. The true price is then $186.98.
Related: Do You Need a Sole Proprietorship, an S-Corp, or an LLC?
With each of the editions, you start the process for free and just pay when you are done and ready to file.
TaxACT
TaxACT works much the same way as TurboTax, in that it has multiple editions. In the past, it had a confusing array of editions and bundles. Recently, however, they have greatly simplified their production into three editions.
Free Federal. The free edition from TaxACT is limited to simple returns filed on Form 1040EZ and 1040A. It is free for both your federal and state returns. The free edition also includes free e-file with the IRS. Check out the TaxAct Free Edition here.
Plus: The next level up is ideal for home owners and investors, as well as those itemizing their deductions. It costs $27 for the federal return and $33 for the state return, bringing the total to $60. Check out the TaxAct Plus Edition here.
Premium: This edition is designed for those who are self-employed, contractors, or freelancers. It costs $37 for the federal return and $33 for a state return. Total cost for federal+state (assuming you’re only filing in one state)? $70. Check out the TaxAct Premium Edition here. Before buying either the Plus or Premium editions, however, you must like at the Ultimate Bundle.
Ultimate Bundle. TaxAct does something a bit odd with its pricing. After running through all of the above editions with different prices, it then offers all tax forms and includes both federal and state returns in one bundle that it appropriately calls its Ultimate Bundle. The cost–$29.99. And once again, e-file is free. So for those that aren’t filing a 1040EZ (where the free edition is available) and plan to file a state return, the Ultimate bundle is the way to go. Check out the TaxAct Ultimate Bundle here.
**Home and Business Bundles. TaxACT offers three separate bundles if you plan to download their software (versus using the online version). These include filing options for a 1065 partnership return, a 1120S Sub-S Corporation, or an 1120 (C Corporation) return, at just $99.99 for each bundle. Each includes the basic package from Deluxe Federal and one free e-file. That price includes both business and personal returns, and both federal and state returns.**
H&R Block
H&R Block has five editions, and you have to choose the one that most closely matches your tax profile.
More Zero Free Edition. H&R Block offers a “free” edition designed for simple returns and first-time tax filers. Like TurboTax and TaxAct, there is also no fee for a state return. Check out the H&R Block Free Edition here.
Deluxe. This edition is recommended for those with a more complicated return, such as freelancers. It has all the features of the Basic edition, as well as the ability to add freelance and independent contractor expenses (Schedule C-EZ). You can also store your return for up to 6 years with this edition. The cost of the package is $29.74. A state return adds $36.99 per state, so the total cost for this edition (federal and state) is $66.73. Check out the H&R Block Deluxe Edition here.
Premium. This edition has all the features of the Deluxe edition, but it is geared toward investors, small business owners, and investment property owners (Schedule E). The cost for the Premium edition is $46.74. As with the other editions, a state return will cost $36.99. The total cost for the federal and state package is $83.73. Check out the H&R Block Premium Edition here.
**Premium & Business. This edition is downloadable software (not an online edition, like the three listed above). It has all the features of the Premium edition, but is for preparation of corporate (S and C corporations), partnership, LLC, estates and trusts, and even non-profit income tax returns. It also produces payroll and employer forms, and unlimited business state program downloads. The cost for this edition is $62.97, and federal e-file is free. Check out the H&R Block Business Edition here.
Worth Mentioning…
There’s a newbie to the free online tax filing game this year, in the form of an already-popular credit checking company: Credit Karma. Their new program, called Credit Karma Tax, is guaranteed to be completely free for almost all filers. The only exceptions are those filing small business returns — those filing small business expenses, however, can still use the program. You can check out our review of Credit Karma Tax here, which is brand new for 2017 (tax year 2016).
In Summary
All three vendors above have very similar editions available based on your tax situation. There is a wide variation in what each charges for their plans. TurboTax is definitely the highest priced, while TaxACT is clearly the lowest and H&R Block rests comfortably in the middle. It may come down to which program you have used in the past, and are the most comfortable working with.
Here is a summary of the costs based on various tax situations:
| TurboTax | H&R Block | TaxACT | |
|---|---|---|---|
| Simple Returns (Federal Only) |
FREE | FREE | FREE |
| Simple Returns (Federal + 1 state) |
FREE | $9.99 | FREE |
| Returns with Itemized Deductions (Federal + 1 State) |
$71.98 (Deluxe) |
$81.18 (Basic) |
$29.98 (Plus) |
| Returns with Investments (Federal + 1 State) |
$91.98 (Premier) |
$89.68 (Deluxe) |
$29.98 (Plus) |
| Returns for Real Estate Investors (Federal + 1 State) |
$91.98 (Premier) |
$102.43 (Premium) |
$29.98 (Plus) |
| Returns with Self-Employed or Small Business Income (Federal + 1 State) |
$116.98 (Home & Business) |
$102.43 (Premium) |
$36.98 (Ultimate Bundle) |
| Go to TurboTax | Go to H&R Block | Go to TaxACT |
Downloadable Versions
For those that don’t want to prepare their taxes online, downloadable versions of the tax software are available:
TurboTax: $29.99 to $99.99
TaxACT: Up to $70
H&R Block: $25.46 to $74.64 plus the cost of state returns and state e-file.
Topics: Podcast • TaxesThe post The Cheapest Tax Software of 2017–TurboTax vs TaxAct vs H&R Block appeared first on The Dough Roller.
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