Tax Preparation Software Review

Comparing tax-software options

More people are using tax-preparation software to complete and file their tax returns. Buying tax programs -- or registering to use tax software online -- and doing it yourself costs between $15 and $120 to prepare and e-file state and federal returns, depending on whether you choose basic or sophisticated software. Top tax software names offer stripped-down versions for free, although those include only federal tax filing, not state. In contrast, getting your taxes done at a franchise such as H&R Block or Jackson Hewitt generally costs about $200 for an average return. If you feel uncomfortable doing your taxes yourself, even with the help of tax-preparation software, ConsumerSearch has a separate report on tax preparation services.

The most reliable reviewers of tax preparation software actually do their taxes -- or a dummy tax return -- with each tax software program to see which works best. About.com's Shelley Elmblad and Macworld's Jeffery Battersby test the two biggest-name tax-preparation programs -- TurboTax and H&R Block At Home. The New York Times' Tim Gray and MoneyCrashers.com's Kira Botkin add a third program, TaxACT. PCMag.com and PC World add CompleteTax; PCMag also throws TaxSlayer.com into the mix, while PC World makes Tax Brain its fifth tested brand. MarketWatch, a publication affiliated with The Wall Street Journal, compares five tax-prep programs, and taxpayers write their own reviews of the various tax-prep programs at Amazon.com and Staples.com.

Remember that when you buy tax software,  it may say "+State" in the name, but that usually means only that it includes free tax prep software for one state -- and it almost always costs extra to e-file that state return. Every year, customers report that they were misled by these confusing software names. For example, some customers at Amazon.com who bought products called TurboTax Deluxe Federal + eFile + State 2011 (*Est. $50) and H&R Block At Home Deluxe + State 2011 (*Est. $30) were irritated to find that they had to pay an additional $20 to e-file their state returns. A far more economical solution is TaxACT Online Ultimate 2011 (*Est. $18), which does include free prep and e-file for federal and state tax returns. Reviews say TaxACT doesn't offer the high level of guidance that TurboTax and H&R Block At Home do, but they say it's still an excellent program and perfect for those who don't need a lot of hand-holding.