Tax Software Online Review

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Tax Software Online Review

This is a review of 5 different online tax preparation software services. This will compare the different versions of the tax programs along with 4 different tax payer filing types and situations.

Tax Programs Reviewed:

  • Credit Karma
  • FreeTaxUSA
  • H&R Block
  • TaxAct
  • TurboTax

Taxpayer Situations

  • Taxpayer 1: W-2 and 1099-INT Income
  • Taxpayer 2: W-2, SSA-1099, 1099-R
  • Taxpayer 3: K-1 Partnership and 1099-INT Income
  • Taxpayer 4: Freelancer (Sole Proprietorship)

Quick Summary

After helping several people with their taxes over the years and trying these different online tax programs for each type of tax filer shown above, I have concluded that for easy tax situations with just W-2 income then any of the free software programs do about the same job. However, for more difficult tax situations TaxAct has been more consistent in correctly applying the proper deductions.

For Instance, TaxAct has correctly applied the Federal EIC (Earned Income Credit) for taxpayers whereas online programs like TurboTax and Credit Karma did not apply the EIC deduction. That ended up being a difference of over $300 extra that the taxpayer would have to pay in taxes if TaxAct was not used for that filing situation. H&R Block did not correctly apply the California Earned Income Tax Credit (EITC) which could have cost the tax filer $100 or more.

For another situation, some individuals may want to use a free solution for filing their taxes. This usually works out for individuals with just W-2 and 1099-INT income. However, if the person has interest income that is over $1,500 on the 1099-INT then they need to file a Schedule B form. The free versions of TaxAct and TurboTax do not include the Schedule B form. So in those situations it would save the tax filer more money by using the free version of H&R Block or using Credit Karma or FreeTaxUSA. In this case, FreeTaxUSA would cost a little more because even though Federal filing is free, they currently charge $14.99 for state filing.

Another situation where TaxAct correctly applied a deduction is the QBI Deduction (Qualified Business Income). TaxAct correctly applied the QBI Deduction for the taxpayer because their income threshold was below $157,500. Credit Karma, H&R Block, FreeTaxUSA and TurboTax did not correctly apply the QBI Deduction. That could be a difference of the tax payer having to owe $75 extra or more in taxes. However, there were ways to force those 3 other online tax programs to make the QBI Deduction by manually entering the income amount on the K-1 form in Box 20 with Code Z 199A.

FORMS SUPPORTED

Credit Karma is completely free for Federal and State filing for any tax situation that they support the forms for.
Forms supported are listed at: https://support.creditkarma.com/s/article/Forms-and-situations-Credit-Karma-Tax-supports-US
Forms not supported: https://support.creditkarma.com/s/article/Forms-and-situations-Credit-Karma-Tax-does-not-support-US . A couple of reasons that you may not want to use Credit Karma is that they do not currently support Form 2210 (Underpayment Penalty for Estimated Taxes) or Schedule K-1 - Estate and Trust income.

FreeTaxUSA is completely free for Federal filing and currently costs $14.99 for State filing.
Forms supported and not supported: https://www.freetaxusa.com/supported_forms.jsp

H&R Block at the time of this writing has 4 different online versions:
Free Version Forms: https://www.hrblock.com/pdf/HRB-Online-Fed-Forms/free.pdf
Deluxe Version Forms: https://www.hrblock.com/pdf/HRB-Online-Fed-Forms/deluxe.pdf
Premium Version Forms: https://www.hrblock.com/pdf/HRB-Online-Fed-Forms/premium.pdf
Self-Employed Version Forms: https://www.hrblock.com/pdf/HRB-Online-Fed-Forms/self-employed.pdf

TaxAct currently has 4 different online versions: Free, Deluxe+, Premier+, and Self Employed+.
Forms comparison for each version: https://www.taxact.com/individual-taxes/online/free/ and click on "Forms".

TurboTax currently offers 4 different online editions: Free Edition, Deluxe, Premier, Self-Employed.
Forms comparison for each edition: https://turbotax.intuit.com/personal-taxes/online/deluxe.jsp#tax-forms

CURRENT ONLINE PRICES FOR DIFFERENT EDITIONS

Credit Karma - Free for Federal and State Filing

FreeTaxUSA - Free filing for Federal and $14.99 for State

H&R Block - Compare Online Editions Here: https://www.hrblock.com/online-tax-filing/

TaxAct - Compare Online Editions Here: https://www.taxact.com/taxes-online

TurboTax - Compare Online Editions Here: https://turbotax.intuit.com/personal-taxes/online/

Last updated on April 16, 2020
Created on April 15, 2020

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