(Adina’s column has been moved to tomorrow because it’s Valentine’s Day themed.) One of the great things about blogging for more than a year — particularly in a genre as repetitive as personal finance — is that I have a liberal license to rehash old content. A new year means a new review of my favourite online tax preparation software, Turbotax. While this post isn’t a copy and paste job, it certainly echoes my review of the 2012 Canadian TurboTax from last February. Your author should note that he was given an online license to facilitate this review, and has no idea why he just switched to writing in third person. This free software didn’t impact my opinions.
I’ll start by saying what I did last year, but in a lot fewer words: I love TurboTax’s interview format. It’s an incredibly smooth ride. While I didn’t get a copy of Quicken to review, I believe the claim that it integrates well with TurboTax. I prefer the TurboTax slip input system over the one offered by H&R Block’s online service. I also like the tax advice service (although its availability has changed this year; more on that in a moment).
Continuing with the theme of repeating myself, here are two important tips for saving money on TurboTax:
- Before you use TurboTax, spend a few seconds and get a 20% off coupon regardless of the suite you’re using. As I write this on Saturday, I googled for a moment and found a plethora of links offering 20% off. Here’s one. It means the Premier edition is $26.39 rather than $32.99.
- Students with a household income of less than $20,000 get to use TurboTax for free.
So what has changed? The drawbacks. TurboTax continues to have the same Achilles’ heal: cost. But, frankly, the situation has gotten a bit worse.
With the Standard Edition you no longer receive the free live tax advice that I heralded in 2012. You need to pay an extra $15 to get it. This service is still free, however, with the Premier and Home and Business editions which are used by people with tax situations that are much more likely to generate questions. (Also, rather than 24 / 7 around tax time, the advice service is now only available from 7am to 1am. OK, not a lot of people do their taxes at 3 AM. But the idea that it was available is what impressed me; while I don’t go shopping at Wal-Mart in the middle of the night, I like the idea that I could.)
I also think that H&R Block’s offerings have become relatively more competitive than last year. The company has a single $29.99 software solution (which is more than the TurboTax Premier edition with a 20% off coupon, but way less than the Home & Business edition). The big benefits are that you can prepare multiple returns (up to 16) at no additional cost and it comes with free “Audit Assistance”. Their online version is even cheaper at $15.95 but, if you are preparing multiple returns, you need to pay for two licenses; after that, up to 20 returns are free. Further, the online edition lacks free audit assistance. If your only concern is getting the cheapest tax preparation, and you have income that would require you to use TurboTax’s “Premier” or “Home and Business” edition, then I have to recommend H&R Block’s Online Tax Program for 2013.
For other situations, my recommendation stands: TurboTax is the best choice. This is just me putting Intuit on notice that they need to offer new value through innovation or stay price-competitive, because if they stagnate and their competition improves much more, I won’t be able to label their package “superior”. TurboTax’s moat is a lot more shallow this year than last so I really hope they have big plans for 2014.
And, just to prove that I’ve actually learned a thing or two in the last year, here’s another caveat. As ControlYourCash says:
“From a taxpayer’s standpoint (that’s you), you either want to be safe on shore with TurboTax, or out past the breakers with a CPA who sends you Christmas cards and itemized bills. It’s in the middle, dealing with a preparer who barely knows more about taxes than a lay person does, where you get clobbered.”
(In Canada, that’d be a CA or CGA or CMA, and he was obviously referring to the US version of TurboTax, but) I agree with CYC’s sentiment. If you’re on the path to riches and own a corporation generating appreciable revenue, spend your time building the business rather than doing taxes. Or, worse, wasting effort on DIY bookkeeping. Outsource this laborious process post haste. But for personal taxes or a sole proprietorship (why are you making tax inefficient income with a sole proprietorship? Ugh.) use TurboTax which, for 2013, remains the Cadillac of tax preparation software.
We’ve used an accountant for our business, and therefore our personal, taxes for 15 years or more. And if you have even the slightest bit of deviation away from a simple tax return, it’s worth skipping the DIY route and paying for an accountant. It’s entirely possible that they’ll more than pay for themselves.
Something as simple as a sideline blog earning a bit of income can raise questions like can you deduct home expenses? If so, what, and how much? What about CPP and EI? All of these things can incur or save you money on taxes.
I would beg to differ on the DIY bookkeeping though. We have always kept our bookkeeping inhouse and expect I always will (my wife does this). Nobody other than her and I have access to our finances and banking, it’s always kept up to date, and basically nobody needs to know our business or personal finance details. If we have bookkeeping questions (and we do sometimes), that’s why we have an accountant – a quick phone call resolves any questions.
So accountant, yes. Bookkeeper, no
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Some banks (e.g. BMO which, believe it or not, we’ve found to have the best business banking) allow you to setup special “read only” access. Maybe it’s because we found an amazing bookkeeper but it costs very little and, come tax time or quarterly remittances, it’s all seamless. I don’t see bookkeeping as a key competency or profit center in the business and would rather put my time into making $.
I’m planning to use ufile online again this year. I used turbotax one year because I got it free with Quicken, and that really broke up the automated transfer of past years! I like sticking with ufile and as long as it doesn’t get crazy expensive (like $30+ for one family) I don’t think it’s worth switching. I’ll need to confirm some numbers with my accountant to see how to report my income but it’s simpler than when I was doing all the sole proprietorship reporting (he’s mentioned a home office payment from the corporation that reduces taxes without having to itemize all the home expenses).
Whatever works, right? And there’s definitely a bit of an economic hostage situation when a company has your tax information and there’s no standardized file format for transferring it (although not to the extent that Jose talked about in his comment which I find disappointing).
Love the site. I’m curious as to your opinion of some of the free tax-preparing software out there? I’ve been using StudioTax for several years now and I find it very good for returns with a moderate level of complexity (RRSPs, medical expenses, disability, etc.).
I agree that TT is probably the Cadillac of tax prep software, but, well, I wouldn’t pay for a Cadillac either if a used Chevy can do the job just as well.
lol well I can’t resist an analogy involving a used Chevy. Generally I’m very against wasting money on frills, except when it comes to “pain points”. Even if it was expensive I would buy a comfortable bed (and it’s actually not pricey if you know how/where to buy the bed). Taxes are one of those pain points. But I can’t give a fair comparison because I have not checked out StudioTax; is it Canadian? If you’re interested in reviewing it, I’d be happy to review a fair, analytical review of any such package — my email is timelessfinance@gmail.com
I made the mistake of somehow (probably by not reading the T’s and C’s last year) of allowing them to auto bill me for the 2013 edition. So I’m using Turbotax again this year. I really wanted to explore alternatives because they are a bit on the expensive side but I guess I’ll have to wait until 2014. Shame on me!
I didn’t realize they were doing that in the US. I find auto-billing — without specific opt-in — to be extremely shady and I’m disappointed Intuit would engage in the practice. While I’m sure it’s expensive to maintain their cloud systems, security, support etc., the system is obviously a cash cow; I really hope they improve or cut the price next year.
I’m looking for a cut price! I did log on and cancel that autopay though.
I have been a satisfied TurboTax user since it was introduced in Canada, but this year’s version crapped out completely on me. It absolutely refused to install on my Windows 7 laptop that last year’s version ran happily on. Two hours on the phone with a chap from India. Nothing against him, he was very pleasant. However, none of his many “solutions” worked, and our conversation ended with him recommending that I try another machine. Loaded TT onto an old xp machine and entered data. All went well at first (TT’s review indicated no errors; ditto CRA’s) BUT…..when it came time for TT to create the .tax file to transmit to CRA Netfile, up comes an ominous message advising that TT had an error that I probably couldn’t fix. I should call the man in India. ARGGGGH.
I then went out and bought $60 of printer ink, printed page after page, and made a hurried trip to the post office, which I hadn’t done for a decade.
Frankly, It would have taken less time to do the whole thing on paper from the outset! I’ll be looking at alternatives for next year,.
Sorry to hear about your disappointment. I use the online system and didn’t have any problems to this extent. I would share these issues with TurboTax and ask for my money back for time and trouble.