(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.