Intuit's TurboTax Retains Its Crown--Barely

H&R Block's TaxCut for 2005 makes a strong showing as well, and 2nd Story Software's TaxAct continues to be an appealing option for people with simple returns.

Yardena Arar and Tony Lima

Every year the creators of the three major retail tax software packages (H&R Block's TaxCut, Intuit's TurboTax Deluxe 2005, and 2nd Story Software's TaxAct) sally forth with claims that they have made their products even easier to use. This year, TurboTax leads the gang of three, but TaxCut follows very close behind.

TurboTax

Our shipping copy of the TurboTax Deluxe 2005 program ($40) made working on different parts of our return at different times easier than ever; the new version also outdid its predecessor at eliminating questions that didn't apply to us. As usual, the Basic version ($20) lacks a state return; the Premium version ($70) includes one state return, as well as the ItsDeductible deduction-finding tool, and has beefed-up aid for handling sole proprietorship issues and investment income.

Intuit dropped mail-in rebates this year, but its prices haven't gone down anyway: On top of laying out $40 for the software, which includes a single state return, you have to pay $15 each to cover state and federal e-filing. The included ItsDeductible was formerly a $20 add-on, but otherwise Intuit is just pocketing the amount that it used to send in rebates.

H&R Block

H&R Block's value-priced TaxCut products continue to edge closer to TurboTax in both level of tax help and ease of use. TaxCut's streamlined interface requires fewer clicks than before to perform the same tasks. The three main versions of TaxCut--Standard ($10), Deluxe + State ($30), and Premium + State ($50)--correspond to but cost less than TurboTax's Basic, Deluxe, and Premium editions. Unlike TurboTax, TaxCut includes state returns on the installation CD. The Deluxe + State version that we tested offered a mail-in rebate for the $16 federal e-file fee, but you are on your own for the $16 state e-file fee. Both Deluxe + State and Premium + State come with DeductionPro, a donation evaluation tool that is not as comprehensive as ItsDeductible.

Block's tax software products come bundled with rebate offers that (depending on the edition) pay all or part of the cost of Microsoft Money 2006 and Kiplinger legal software. In addition, Block promises TaxCut customers free audit support, in the form of an IRS-certified Block tax pro who will coach or even accompany (but not legally represent) you in an IRS audit--a nice security blanket for nervous filers.

TaxAct

Once again, people who need minimal tax guidance will find a great deal in 2nd Story Software's TaxAct: The $20 TaxAct 2005 Ultimate Bundle includes the Deluxe federal software ($13 if purchased separately), software for one state return, and free federal e-filing; add $8 for state e-filing, and you're all set for $28 (compared to $70 for the TurboTax package and $62 for the prerebate Block equivalents). However, TaxAct comes up short on issues such as depreciation of specific business assets: Because categories are so broad, figuring out a cell phone's depreciation lifetime (for example) turned out to be unduly hard.

For detailed reviews of all three tax software packages, see "It's Tax Time: We Review the Boxed Software"; for a survey of Web-based tax preparation services, check out "Online Tax Prep: An Upgrade Year."

Features Comparison: Pricier TurboTax Is Still Tops

Intuit drops its rebate without lowering its price, but this easy-to-use app is worth the extra cash.

TAX SOFTWARE	PCW Rating	Federal e-file fee	State	State e-file	Cost with state and federal e-file
Intuit TurboTax Deluxe 2005 $40	91 Superior	$15	Free download (one state)	$15	$70
Bottom line: Best tax help and useful new navigation tools compensate for price premium and Intuit's marketing schemes.
H&R Block TaxCut Deluxe + State $30 <1>	88 Very Good	$16 (full rebate available)	Free on CD (one state)	$16	$621
Bottom line: A strong runner-up that's easier to use then ever, plus the company offers hand-holding in the event of an audit.
2nd Story Software TaxAct 2005 Ultimate Bundle $20	77 Good	Free	Free on CD (one state)	$8	$28
Bottom line: This budget offering is a great deal for people with simple tax returns, but its tax advice is a bit limited.
<1> Prior to $16 rebate.