TurboTax and other tax software programs can really help you untangle your taxes, as we found in our latest report on tax preparation software. But before you plunk down $50 or more for this year's software, experts suggest giving the free version a try. Every major tax software company -- including TurboTax, H&R Block At Home and TaxACT -- offers a free version. You'll find the freebies on the companies' websites. Just like the pricey stuff, free tax software will ask you a series of questions to guide you through your tax return, automatically slotting your numbers into their proper forms, and then you can simply click to e-file. But what are the downsides to using the free versions of popular tax preparation programs, and are they for everyone?
The pros and cons of free tax preparation software
Experts say free tax software really works best if you have a pretty simple tax return -- or if you're really, really comfortable doing your own taxes. For one thing, you certainly won't get as much handholding as with the paid versions. For example, free tax software won't help you figure out the value of those clothes you gave to charity, and it won't let you import your W2s or other financial documents (you'll have to type in all numbers by hand).
ConsumerReports.org recommends free tax software "for filers who don't itemize." Kathy Yakal at PCMag.com recommends it only for "expert tax filers." Jasmine France at Download.com (a CNET site) recommends the free stuff "for users with very basic e-filing needs" -- although she notes that you can start with a freebie and switch to the paid version in midstream. Actually, every free version will bombard you with offers to upgrade, reviews say.
TurboTax's and H&R Block At Home's free versions are pretty stripped down; they omit some important forms (like Schedule C for self-employment income) and they're online-only (you can't download the program onto your computer -- you have to work on your tax return over the Internet). If you want to e-file your state tax return, that'll cost $28 with either program.
TaxACT Free Edition 2010 is more robust, earning it our Best Reviewed designation. It includes every e-fileable tax form, and you can download or order a CD of the free software if you like. ConsumerReports.org says TaxACT Free Edition is even comprehensive enough for business owners, and it charges only $15 to e-file a state return.
If you're going to e-file a state return, though, reviews say you might as well get the more full-featured TaxACT Online Ultimate 2010 (*Est. $18), which includes a free state e-file. But for the most polished experience, clearest guidance and strongest importing features, experts unanimously prefer TurboTax Deluxe 2010 (*Est. $50) or TurboTax Premier 2010 (*Est. $70). To find out which tax software program best suits your needs, check out our full report.