In January I selected several readers to receive free copies of various income tax software programs. In exchange, they agreed to use the software to do their taxes and write an unbiased review. The summary below was written by FMF reader Jill and contains her thoughts about H&R Block's At Home Premium Federal product.
I recently had the opportunity to review H&R Block’s At Home Premium Federal tax preparation software. In the past, I have used both Turbo Tax and TaxAct to prepare my returns. H&R Block’s program is similar to the other two.
About Me
I’m unmarried and in my mid-20s. I have one full-time W-2-type job and also do some freelance writing for which I receive a 1099. I also earn a small amount of interest from various bank accounts and Lending Club loans, and claim an interest deduction for student loan interest. I have very little in the way of additional deductions since I have limited medical expenses and don’t have children or maintain a home office for my freelance work. Because of that, I do not itemize deductions.
My taxes are straightforward enough that I could probably do them myself by hand if I really wanted to. I have some background in taxation so I am pretty aware of the credits and deductions that apply to me. Even still, I like using some kind of at-home internet-based software to double check my math, calculate different scenarios to figure out the best ones for me, and actually file my return.
Product Overview
If you are a returning user you can start with last year’s return and make edits/additions as needed. If you are a new user, it first asks you to enter the basics like your Social Security number, birthday and marital status. You also enter information about the state(s) you will file state returns for. It then gives you the opportunity to select life events that may impact your taxes – did you buy or sell a house, start or lose a job, get married, have a child, start college, etc. Once you have entered background information, the program walks you through five additional sections to help prepare your federal return: Income, Adjustments and Deductions, Credits, Taxes and Wrap-Up. After you have completed the federal return, you can choose to complete applicable state returns. The program moves your information from the federal to state return so that you only have to answer any state-specific questions. After you have completed all of the information, you can either print and mail your tax forms or e-file.
The Good
- Check boxes at the beginning of the income section allow you to select the portions of the return that actually apply to you – if you only have W-2 income, you will only be asked to enter your W-2 information. If you tell the program that you have income from, for instance, renting out a house, then it asks you the related questions. This helps ensure that you get all information entered without wasting time reading questions that do not apply to you.
- The program clearly displays the amount you will either be refunded or have to pay for both your federal and state returns. The amounts change as you enter additional information, so you can see how each section impacts your bottom line.
- The program walks you through the return preparation process one step at a time, allowing you to save your work and come back later.
- The program provides answers to common tax questions on the right side of the screen. As you move through various sections, the questions displayed change to reflect that particular topic.
- The various income sections allow you import forms like W-2s and 1099s from certain institutions. While there are still many, many institutions that are not on the list, popular financial services institutions like E-Trade are listed. As this list expands, which I imagine it will over time, this feature could potentially save you loads of time, especially if you maintain accounts at multiple institutions.
- When you complete each section, the program summarizes the dollar amounts you entered. An “explain this amount” button explains any adjustments that were made to the amount you entered, such as for deductions that are phased out above a certain income level.
The Bad
- Unlike the income section, the deductions section asked me questions that didn’t apply to me and were kind of a waste of my time. For instance, when I told the program that I was 24 and did not say that I received disability income, it probably should have known to skip the questions about social security income or IRA distributions taken after the age of 65.
- The program was extremely helpful when it came to entering information from forms I had received in the mail or online. It was less helpful when there was not a form – for instance, I have two sources of freelance writing income. One was over $600, so I received a 1099 and entered the information when the program asked me about 1099s. But the other one did not send me a 1099 since the total amount they paid me was less than $600. I wasn’t sure where to report that income, since the program never asked me about income for which I did not have documentation.
- State filing is an additional $34.95 per state return. Many other programs include one state for free with the federal filing.
The Bottom Line
I liked the program and thought it was pretty easy to use, but feel that I can get similar services/results at a lower price. Perhaps those with more complicated tax situations such as more complicated investments, a business or rental properties might get more value out of this version.
I had major issues with H&R Block online this year. I converted a traditional IRA to a Roth and it kept telling me I overfunded my Roth for the year.
I ended up chatting with support on the website and both web sessions had their windows mysteriously close halfway through.
So then I called support and the first person I talked to was essentially 'web support' and couldn't really do anything about the website. I called a second time and the lady was very nice, but informed me that they had to run a 'system update' a week later and to try again after that.
At that point I polled my facebook friends to see what they all used. An overwhelming majority said TaxAct, but a few said TurboTax.
As a Vanguard customer, I noticed I get a 25% discount for using TurboTax, so I gave them a shot first as I thought TaxAct looked a little basic.
I was pleased with TurboTax, they were able to handle my conversion, and I think they did a great job.
Normally I'd have nice things to say about H&R Block, but this year I was very frustrated with them. They did try, responding to my Twitter posts (similar to the way Comcast handles their twitter account) but at the end of the day I couldn't get my issue resolved quickly, so I switched.
Posted by: Mark | February 28, 2011 at 09:42 AM
Mark, with regards to your comment about TaxAct, I just wanted to weigh in. I've been using them for about 6 years now to file my returns. My taxes are rather complicated due to real estate and rental properties, and I have always been impressed with the site. They let you either walk through major topics sequentially, or jump to a section and enter data directly into a form. As with H&R Block, they have a running total of refund or amount due. They also have relevant, related tax information shown alongside each topic that changes as you move through. I rarely have to check out the IRS website, and usually I find that the whole document was available on TaxAct, I just didn't look far enough. As for fees, the last couple years I have paid $17.95 which includes Fed and 1 state filing. It has been worth the price for the ease I've been able to do it.
Posted by: Russell | February 28, 2011 at 05:48 PM
I'll probably give TaxAct a shot next year. A ton of people recommended it so it's worth a shot.
Posted by: Mark | February 28, 2011 at 10:29 PM