TurboTax vs. H&R Block: Which Tax Prep Software Is Best?
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Summary:
TurboTax and H&R Block are both popular choices for tax preparation, offering user-friendly experiences and affordable filing options. This article delves into the comparison between TurboTax and H&R Block and examines their features, costs, and user-friendliness to help you decide which tax software suits your needs best.
Tax season can be stressful, but with the right software, it becomes a smoother process. H&R Block and TurboTax are two renowned tax preparation services known for their user-friendly interfaces and affordable options. In this comparison, we’ll explore their features, costs, user-friendliness, and more to help you make an informed choice.
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H&R Block
H&R Block, established in 1955, provides a straightforward tax filing experience. Its four online filing options cater to specific needs:
- H&R Block Basic: Free for federal and state filing, suitable for new filers or simple tax returns.
- H&R Block Deluxe: $35 for federal, $37 for state, ideal for maximizing deductions, including forms for homeowners.
- H&R Block Premium: $65 for federal, $37 for state, designed for investors and rental property owners, with additional forms.
- H&R Block Self-Employed: $85 for federal, $37 for state, tailored for small business owners and the self-employed, including Schedule C.
For those not comfortable filing taxes online, one notable feature is H&R Block’s physical locations, offering in-person filing starting at $89 for federal returns. The Deluxe option at $50 is sufficient for most filers, but freelancers or small business owners may need to opt for the Self-Employed plan at $110.
TurboTax
TurboTax, which rolled out in 1984, stands out for its user-friendly design and (almost chatty) guidance throughout. It walks you through all your options so you don’t need to worry about forgetting something important, and it asks for feedback to improve the user experience going forward.
TurboTax offers three standard filing packages, with the option to upgrade to live assistance:
- TurboTax Free Edition: Free for federal and state, suitable for simple returns using Form 1040.
- TurboTax Deluxe: $39 for federal, $39 for state, caters to homeowners and deduction maximization.
- TurboTax Premium (formerly Self-Employed): $89 for federal, $39 for state, suitable for investors and rental property owners, as well as self-employed workers and small business owners.
Similar to H&R Block, TurboTax’s Deluxe option at $39 covers the needs of most filers. The company lacks physical locations but does provide live access to tax experts for an additional cost.
TurboTax vs. H&R Block
Cost is one important factor to consider when choosing a tax software. Both services align pretty closely in pricing, although H&R Block is a bit less expensive. H&R Block also has a slight advantage with its free option. Both services do offer a free filing choice, but H&R Block’s option covers more forms, making it a smarter choice for those who qualify for the free tier.
However, while both are user-friendly, TurboTax generally takes the lead with a simpler and more straightforward interface. Its interview-style approach and encouraging phrases contribute to a (relatively) stress-free filing experience.
Ultimately, the choice between H&R Block and TurboTax depends on individual preferences. H&R Block’s advantage lies in broader coverage in the free tier, while TurboTax excels in simplicity. Specific financial circumstances and the option of physical filing may further influence your decision.
Is tax prep software safe?
As always, the safety of your personal and financial data is critical. While online tax filing is considered secure, users should be aware that some of their information may be shared with other platforms, cautions Harrison James, an attorney at Wisner Baum, who filed a class action lawsuit against H&R Block, Google, and Meta for sharing taxpayer data without user consent.
“It’s important to be aware that a 2023 U.S. Senate report named H&R Block, as well as TaxAct and TaxSlayer, for recklessly sharing tens of millions of taxpayers’ sensitive personal and financial data with Google and Meta, without users’ consent and without disclosing that they were doing so,” says James.
Pro Tip
“TurboTax was not named in the Senate report, but users should still be very cautious with TurboTax’s permissions page. You can absolutely choose ‘no’ in the part of the process where TurboTax asks if they can share your data, even though they tell you it will make things easier. Telling them not to share your data won’t hinder your ability to use their service.” — Harrison James, attorney at Wisner Baum
Tips for choosing a tax-filing service
Tax season is an opportunity to evaluate your overall financial picture, and as your situation changes, so will your tax preparation needs. Usually, as time goes by, your taxes get more complicated, but depending on your situation (e.g., if you’ve recently downsized), you could also find you have a less complex tax return.
Here are a few tips for how to choose a tax-filing service:
- Gather all of your tax documents before deciding on the best way to file your taxes.
- Carefully assess what your needs are in a tax preparation software package.
- Consider more budget-friendly options such as TaxAct, TaxSlayer, or Credit Karma.
- Talk to more experienced friends and family members for advice on how they file.
- If you have a particularly complicated tax situation (or simply feel overwhelmed), consider hiring a professional to file your taxes for you.
Pros and cons of filing with TurboTax or H&R Block
FAQ
Can I use the free options for complex returns?
Both H&R Block and TurboTax’s free options are suitable for simple returns only. For more complex situations, you will need to upgrade to a paid plan.
Are there alternatives to H&R Block and TurboTax?
Yes, there are plenty of different tax preparation tools available. More budget-friendly options include TaxAct, TaxSlayer, and Credit Karma. If you have more complicated returns, you might want to engage the services of a tax professional.
Key takeaways
- Consider H&R Block for broader coverage in the free tier.
- Opt for TurboTax if you’re looking for a simpler and more user-friendly interface.
- You can also explore more budget-friendly alternatives like TaxAct and TaxSlayer.
- Complex tax situations may require help from a tax expert.
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