Best for Simple Returns

Don't overpay if you have a simple tax return

If you don't have a home business, income from rental properties or a lot of capital gains/losses, experts say you probably don't need to pay $50 and up for TurboTax software. If you're among the 70 percent of taxpayers whose 2010 adjusted gross income (AGI) falls below $58,000, you can file online for free using the IRS Free File program. Major software companies -- including TurboTax, H&R Block At Home and TaxACT -- also offer free basic versions to everyone, regardless of income.

But if you want a little extra help and guidance, reviews say TaxACT Online Ultimate 2010 (*Est. $18) is a great deal. It includes free prep and e-file for both federal and state tax returns -- for at least $47 less than rival TurboTax and H&R Block At Home products.

"Compare its cost to its competitors' prices, and you might think that TaxACT was much less capable. Not true," says PCMag.com's Kathy Yakal. "TaxACT is the best buy available for the 2010 tax filing year."

In fact, Yakal uses TaxACT for her own relatively uncomplicated tax return -- "I don't have complicated investment issues, but I do have a small business that requires a Schedule C, as well as miscellaneous expenses," she says -- but she still recommends TurboTax to others (and gives it the site's Editors' Choice award) because it offers better guidance for complex topics, and it's more aesthetically pleasing.

CNET's Jasmine France tests TaxACT and says it "might be just right for tax prep whizzes who want to fly through a tax return with few distractions and minimal guidance." She notes exactly the same pros and cons as Yakal: TaxACT is inexpensive, simple and fast, and it comes up with exactly the same numbers as the pricier programs do. But TaxACT includes too much tax jargon for France's taste -- for example, the program asks her to enter her financial institution's tax ID number, but it doesn't tell her where to find it.

TaxACT also isn't as strong on importing documents as its rivals, France says. It can import W2 forms, "but only those prepared by TALX W-2 Express. It will import capital gains information from GainsKeeper.com and from a CSV file, but not other 1099 forms from your bank or brokerage." Still, TaxACT lets you import last year's tax return, "regardless of whose software you used," MarketWatch's Eva Rosenberg points out.

If you don't need software to help you file your state return, the federal-only TaxACT Online Deluxe 2010 (*Est. $10) is otherwise identical to the Ultimate version. If you really want to own the software rather than just using it online, TaxACT Deluxe 2010 (*Est. $13), Ultimate 2010 (*Est. $22) and Home & Business 2010 (*Est. $55) are available on CD or as downloadable software (the last one adds prep and filing for one business tax return). These are Windows-only. Like the Online Ultimate version, the boxed/download versions of TaxACT Ultimate and Home & Business include a free state e-file -- and they, too, cost $40 to $65 less than rival offerings from TurboTax and H&R Block At Home.

Online tax preparation costs less

If you don't need to file more than one return, and you don't care about actually owning the software, you can save a lot by doing your taxes online. Again, if you fall under the $58,000 cap for the 2010 IRS Free File program, that's one way to go. But even if you earn more than the cap, the major software companies will all allow you to complete and e-file your federal taxes for free. However, don't expect the more sophisticated features of these programs to be available in the free versions.

TaxACT offers the cheapest and most robust free online tax-prep service: It includes every e-fileable tax form. Federal e-filing is free, and e-filing your state return costs just $15. TaxACT's Free Edition 2010 also includes unlimited e-mail tax help. You can work on your taxes online, or you can download or order a CD of the software for free.

By contrast, the free versions of TurboTax and H&R Block At Home are online-only. They omit some forms, such as Schedule C for self-employment income, Schedule E for rental and royalty income and Schedule F for farm income. They also charge more than TaxACT -- $28 versus $15 -- for filing a state return. Still, if you don't need any of the omitted forms -- and you don't plan to e-file a state return -- reviews say TurboTax and H&R Block At Home are fine free alternatives.

"Don't assume that you need the full-on ultimate premium premier version" of expensive tax software, says Sean Carroll at PCMag.com. "With the exception of extra forms (and occasionally some higher-end help functionality) they're pretty much the same as the freebies, in terms of function and interface and so on."

You can access more robust versions of TaxACT, TurboTax and H&R Block At Home online as well. TurboTax and H&R Block At Home lose points for confusing pricing, however. For example, while the boxed TurboTax Deluxe 2010 (*Est. $50), TurboTax Premier 2010 (*Est. $70) and TurboTax Home & Business 2010 (*Est. $80) include preparation of your state taxes (with e-filing another $20), none of the online versions of TurboTax includes state taxes. The online version of TurboTax Deluxe 2010 (*Est. $50) might look like a great deal, the catch is that state preparation and electronic filing costs another $37 -- just $3 less than if you had bought the software and paid to e-file. The online H&R Block At Home Deluxe 2010 (*Est. $40) is similar -- not bad if you don't need to do state taxes -- but pricey otherwise, because you'll pay another $35 for that upgrade. Buying the software for your desktop would cost about $5 less, including the extra charge to e-file your state taxes.

Other companies offer online-only tax prep, but they aren't as extensively reviewed. CompleteTax 2010, a product offered by respected tax firm CCH, gets decent reviews. PCMag.com's Kathy Yakal says it works fine, but it's not as pretty or easy to navigate as the others. "Some elements of the site look good, but others -- particularly the lengthy lists of questions -- look more like an IRS form than a state-of-the-art tax preparation site," Yakal says.

CompleteTax offers a free version, but with the bare minimum of forms -- for example, there's no Schedule A, so you're out of luck if you itemize deductions. CompleteTax Deluxe (*Est. $25) is more complete, but it still lacks some important forms (such as Schedule C for the self-employed) and charges an extra $25 to prepare and e-file your state tax return. CompleteTax Premium (*Est. $40) includes most forms, and you can e-file a state return for another $10. This year, you can use CompleteTax Premium for free if you received unemployment compensation in 2010, if you owe the IRS or if you used online versions of TurboTax, TaxACT or H&R Block At Home last year.

TaxSlayer 2010 (*Est. free to $20) has gotten occasional good reviews in the past, but we found only one review of the current-year version as of this update. Testers at TopTenReviews.com give TaxSlayer a middling rating, behind TurboTax, H&R Block At Home, TaxACT and CompleteTax. They find this online tax software generally easy to use, but "we did find it harder to use than our top ranked products. For example, we could not figure out how to claim our Residential Energy Credits … It was a bit of a challenge to get all of the deductions and credits we knew we were eligible for."