Tax Preparation Software Reviews

The leading tax preparation programs collect information from you, and they use that information to determine and complete the appropriate forms. They do the math for you. Because taxes and tax software change every year, and the tax season only lasts 3 ½ months, reviewers have a narrow time frame to evaluate tax preparation software and prepare reviews. Tax software is regularly updated to accommodate changes and fix problems, and users download free updates as the first step in tax preparation. That forces reviewers to consider a moving target. As an estimated 70 percent of filers will receive refunds, many people want to file as soon as they receive all the necessary income forms. For that reason, early reviews of tax preparation software are essential.

We found the best coverage of 2007 tax software at PC Magazine. In a very detailed mult-page comparison review of TurboTax, TaxCut and TaxACT, Sean Carroll walks through each program's interface and major features, completing dummy tax returns. CNet.com conducts a similar comparison in somewhat less depth. Two knowledgeable About.com guides conduct annual in-depth analysis of the tax programs. (Note that ConsumerSearch and About.com are owned by the same parent company, but have no editorial relationship.) PC World has a good review of online tax prep services, but no coverage of the desktop tax software. Consumer Reports does not review programs or services but offers general advice for using online tax prep services. A cautionary article by Mark Schwanhausser in the San Jose Mercury News also tests programs, but notes that many people may be better served by hiring a professional

We found several websites that purvey outdated reviews of tax preparation programs. Although some may appear to be up-to-date, they are reviewing programs from previous years. We consider these reviews to be of minimal value, as misinformation about a product could have financial consequences for a consumer. The top sources test tax preparation software on how well it guides taxpayers through the process with a minimum of complex jargon. Consumer reviews are very consistent with the professional reviews so far this year.

Experts say TurboTax has a better user interface and a more thorough interview process. TurboTax is more comprehensive; it has more support for tax situations that are common to a small percentage of users, such as filers who own rental property. If your return is straightforward, you might not notice a big difference between the two leading tax preparation software programs, and if you've already been using TurboTax or TaxCut, there's no need to switch for the 2007 tax year.

While all versions of TurboTax and TaxCut are recommended in reviews, TaxACT Deluxe (*est. $13) is only recommended for very basic returns (typically Form 1040EZ or 1040A filers). ). About.com guide William Perez thinks it’s the best value. PC Magazine reviewer Sean Carroll says that TaxACT improves each year, and this year offers more help with deductions than in prior years. Still, Carroll says TaxACT is most appropriate for simple tax returns.

If your adjusted gross income (AGI) for 2007 is less than $54,000, you are probably eligible to complete and e-file your federal taxes for free. Note that the free version of TurboTax is only for filers with adjusted gross income of $30,000 or less, but other services allow free filing up to $54,000 AGI. About.com's Guide to Tax Planning, William Perez, actually tested all the free filing services. He recommends and ranks eight services based on cost, ease of use, speed and accuracy, then lists services that are not recommended with brief explanations of why. Those not recommended are FreeTaxUSA, 123Easytaxfiling and CitizenTax. With so many free services available, you are likely to be eligible for one of those that are recommended much more highly, including the free online versions of TurboTax, TaxCut and TaxACT, discussed below.  ... Continued

Our Consensus Report shows how many times products are top-ranked by reviewers included in our
All The Reviews Reviewed chart.

This year, reviewers say TurboTax is best, although most also say that if you've used H&R Block TaxCut in the past, there's little need to switch. TaxCut is cheaper, but reviewers give TurboTax the edge nonetheless. TaxACT is primarily a low-cost alternative for those with very simple returns.

The Buzz

At press time, a so-called economic stimulus package has been passed by Congress and is expected to be signed by President Bush. The centerpiece of this legislation is tax rebates. This will not affect the preparation and filing of your 2007 taxes, but you must file to be eligible for a rebate. Your rebate amount will be based on what you report in your 2007 return. In case you haven't followed the media coverage, a CNN Money article, "Rebates: What you need to know" should answer your questions.