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 TB and contains his thoughts about H&R Block's At Home Premium Federal product. Here's review #1 if you're interested.
When FreeMoneyFinance offered the opportunity to get a review copy of a tax program and all we had to do was write a review of it, I have to say that I jumped at the opportunity. Not because of the price, but more from the thought that the exercise would motivate me to get this task done sooner (as I have been known to be in the April 15th, midnight parade at the post office) and it would allow others to get something out of this otherwise thankless routine. My history with tax software is long, looking through my archived files I can find tax files back to 1996. There was one year, the first year that we owned rental real estate, where I thought an accountant would be a good idea…$1,100 later and I was determined to be using tax software the next year and going at it alone again! I keep detailed and organized records, it is just a matter of filling in the blanks, so that fee seemed way out of bounds… So, I knew this year was going to be another tax software year, might as well help out too.
My Form
My personal (tax) situation is filing the 1040 long form. We file married, jointly, with kids and all of the deductions, exemptions, and allowances that this offers us. I am employed, so there will be W-2 income, 401k, and Dependent DayCare Plans. My wife was working part of last before embarking on the noblest choice of becoming the Chief Operating Officer of our Home, so she will have W-2 income, and 401k as well as a 401k rollover to contend with. (As a sidenote, this has been a great blessing to our family and I would actively encourage anyone with a family to at least explore the idea of having one parent at home!) I have a print design and prepress side business focusing on trade association magazine layout that generates 1099/Schedule C income. We also have Schedule K-1s from a family real estate limited partnership. On the deductions side, we do itemize to take advantage of savings offered mainly by mortgage, property taxes, charity, and sales tax deductions (as we live in a state without income tax and do not have to make the choice of the state income tax deduction or sales tax deduction).
The Program
The program sent over was H&R Block At Home Premium. I sit down to download the program, and right after I sign into H&R Block’s website it takes me to the Welcome screen to start doing taxes! It is right here that I realize that this is an online program, not a download…
I almost did a U-turn and ask out of the opportunity. I am basically a control freak, I just do not like having my data stored outside of my system. Clouds are great--when you need rain, not when finances and computing are involved. As I went round and round with the notion of the online tax system, I eventually got over my reservations by rationalizing that it was one less resource hogging program running on my computer (especially considering I would only be using it for a few days), updates would happen automatically on their servers instead of constantly having to check and download them to my system, and let’s face it, so much of our data is already out there, are we really kidding ourselves thinking that we can control it? So off I went on the adventure!
Step 1 – Start Up / General Navigation • 2 minutes
H&R Block At Home Premium presents with a polished, clean interface that one expects from one of the market leaders. Maybe it shouldn’t, but having a high-quality look and feel serves to reinforce that this is a financial tool and it does speak to their experience and professionalism in the world of tax preparation. As I mentioned above, being an online version, there is no time spent downloading, installing, setting up, and then updating the software, so I am already several minutes ahead of where I would be in past years. I also have to mention that I REALLY appreciate not having a bunch of video answers and ‘tips’ to navigate through! Competing products have done this in the past, I guess they think that it adds value to watch someone read the comment to you. I find it slow and boring, and I am sure that it is resource intensive, especially when streamed over the internet connection required.
The navigation look and feel is very similar to installed tax software that I have used in the past and navigating through the various sections is easy—Clicking the “Take Me To” link produces a map with links that allow you to jump other sections. One functional ‘deficiency’ - I was not able to ‘jump ahead’ in the program, in essence skipping parts that I may not have been ready for (like the K-1s). You have to go through the section in the Interview first. This may be good in that it avoids situations where you skip ahead and then never return to the skipped over portion. But when you have everything ready to go except the K-1s (which happen early in the income section), it tends to stop you dead in your tracks until this missing information is secured. This situation is noted and addressed in the “Get Answers” section, but I still found it to be suboptimal. There is also a progress bar at the bottom, right above the copyright information, which will give you an idea of how close you are towards completion. I will note however, it seemed to spend all of its time at 75%, so it was not much of a help or motivator, your mileage may vary.
Step 2 – Import • 6 minutes
The first task offered is to import last year’s tax file. I was able to import my TurboTax 2009 file. I thought that this was an added bonus, importing competitor’s files types. The system also offered to import my 2010 W-2 information. It was the weekend and I could not find (or figure out) what the login/password combination was for my work, and I had to enter my wife’s manually anyway, so I ended up just skipping this feature. I did try to import the information from my brokerage, but was not successful. Not sure as to the reason behind this, but it did strike me as odd. It did mention that importing can be done during other steps of the program, as you come to them. For my experience, I did not come across opportunities to import within the details sections, but I was not searching them out either.
Step 3 – Personal Info • 4 minutes
Quick and Easy! Mainly this was verifying the import of last year’s return was successful. Curiously, on the dependents page, SSN was not showing, just their name, like it had not completely imported. Clicking on edit to add this (as it is required by the IRS) and all of the information is suddenly populated. It is almost like H&R Block wants you to click on edit to validate this info, but it is not well documented and not as intuitive as the Self/Spouse info page.
Step 4 – Income • 50 minutes
Ahh, the part everyone likes, money made. And here is where you get to tell Uncle Sam how much you earned in 2010. This section follows the now typical interview format, with the system having you fill out the information received on W-2s, 1099s (with all varying suffixes), business income, rental income, K-1 information, etc. There is a running total in the upper right that shows your refund or owe amount. I personally am not real fond of this running total feature, as it causes a bit of freak out until deductions are entered in, but others like it and I cannot say when exactly would be a good time to start showing it, so for now I just am not a fan. Also, as you go through the various screens, there is a “Get Answers” section just below the Owe or Refund box that has content appropriate questions that you can click on and get quick answers. It is like a quick FAQ for each section that you are working on. Most of the time the process is straight forward and these can be ignored, but it is nice to have a quick answer when you are feeling unsure.
For me, much of the same information used last year was able to be transferred through the import process, and it found (and checkboxed) my small business information, so that came through. Surprisingly, the import routine did not pick up the K-1 information from last year and I had to check that box to enable the entering of information in this section. Additionally, none of last year’s K-1 information came through during the import process and it had to be entered manually.
While not a complete list, other noted and disclosed deficiencies listed by the system that may affect a number of users were the absence of handling:
- 1031 Exchanges
- Installment Payments from Property Sale
- Net Operation Loss Carry Forward
- Passive Activity Loss Limits/Carry Forward (Form 8582)
Unfortunately, I do have Form 8582 Carry Forward Losses from Prior Years. The program notified me that it could not account for this form and offered a referral link to a “Tax Professional” in one of their H&R Block offices. Not really my cup of tea. Fortunately, the program does allow you to proceed forward with the understanding that the IRS may determine that the return is “incomplete” or “incorrect”. I did do some research later and found that the H&R Block installed software product allows a more complete set of forms, which then struck me as odd why they would try so upsell a self-service user to the office environment rather than just upselling the downloaded product (perhaps with a little conversion routine to bring the online data into the downloaded software?).
At the end of the income interview section there is a quick recap of where your income is coming from and in what amounts. There are buttons to jump to any of these sections to revisit and make changes if needed, or if they are good to go, then it is time to move on to Deductions.
Step 5 – Deductions • 29 minutes
Finally! Here is the section where we can start chipping away at what seems like an enormously large figure that I “owe”. This portion continues in the interview format and tends to be more straight-forward than the Schedule portions of the tax form, so overall it feels easier and goes quicker.
The one section that, while technically handled correctly, was not presented in a way that added to the believability factor was the sales tax deduction. In this section you choose your state from a dropdown list. The next step has a dropdown for county (locality) and a place to enter your local sales tax rate. First, the county dropdown just shows “N/A” for my location. Okay, then don’t image it on the screen, it just adds to the potential for confusion. After entering my local rate and clicking the next button, it brings you back to the summary page, where you can add a second state if need be (move situations). The issue here was that it shows my state and then my local sales tax rate next to it, all on one line. This made it appear that it was only calculating the local portion of the sales tax deduction. A quick trip to www.irs.gov and using their sales tax deduction calculator showed that H&R Block At Home Premium was, in fact, correctly calculating the entire sales tax deduction.
Step 6 – Credits • 10 minutes
The holy grail of taxes! Credits are dollars for dollar reductions in your tax bill, versus deductions just getting a portion of the dollar to remain in your pocket. These are also tougher to qualify for and tend to be narrower in focus. For our situation, portions of the Child Daycare, Child Tax Credit, and Making Work Pay Credits were in play. The only one that I was really aware of at the start was the Daycare, because of the Daycare Flex Account, so taking some time exploring and using the assistants and interview topics provided in this section is very worthwhile.
Step 7 – Taxes • 2 minutes
Coming into the home stretch now, with just a few odds and ends to tie up. This section looks at Taxes, Penalties, and Payments that can affect your return. Did you have estimated payments during the year? Did you have a refund last year that you ask to have credited to this year’s taxes? IRA or pension penalties for excess contributions, early withdrawals, minimum distributions, and HSAs as well as Tax for children under 24 with more than $1,900 of investment income appear in this section too. Luckily, none of this applied to our situation, so it was on to the next page which consisted of a table showing the breakdown of the taxes you are being assessed and what have you paid to date.
Step 8 – Federal Wrap-Up • 4 minutes
Just some final details on this page. Standard questions in check-box format like, Do you want to donate $3 to the Presidential Election Campaign fund for yourself or your spouse? Will you allow someone else to discuss this return with IRS? Do you need a change of address form? Do you want to setup estimated tax payments for 2011, or use a refund toward 2011 taxes? Quick and easy, and then on to error checking.
As for error checking, it came back quickly with no errors, which one would hope as the program is guiding you through it is calling attention to errors as they happen, not waiting until the very end. From this standpoint the program succeeds, there were a couple times that error messages prevented me from proceeding beyond the specific activity I was working on when I was in those particular sections. The one cause of concern here is that I do have Passive Activity Loss Carry Forwards (Form 8582) that the program warned me that it could not handle when I was identifying that this was an issue. I would have expected another call to action that the return may be incomplete or incorrect without that additional information at this ending point, as a friendly reminder.
Hitting next brings you to a page with your high-level figures, Income, adjustments, deductions, taxes, amount owed or amount of refund. From there you have the opportunity to transfer all of this data into the state package and continue processing your state version…for $34.95. As I mentioned at the beginning, I am in a state without an Income Tax, so I immediately clicked the link to do my state taxes. My state was not one of the choices in the dropdown, so that is about as much as I can say about that.
Final Step – Filing • 8 minutes
Following the State, there is a screen attempting to sell an added service of a professional review, and then it is on to the filing. You can choose to efile (1 federal efile is included) or print and mail. From here you now pay for the program and choose how to receive a refund (Direct Deposit or Mailed Check) or print the payment voucher. Mailing the return requires printing and mailing, where efile requires submitting your return to the IRS through the program and then checking on the acceptance in a day or two. Either way, returns will have you waiting 10 days to 4 weeks depending on how you want to receive your refund. Payments to the IRS will probably process faster.
Conclusion
All said and done in just under 2 hours. Granted that does not include time to gather the records (I like to keep a folder in filing cabinet for tax documents, so that I have them all collected together and handy when it is time to sit down to start doing taxes), and it does not include the two days of my life that I will never get back from doing the partnership return (the K-1s, which for some reason seemed harder this year).
The MAJOR disappointment was that I was not able to file with this version because of the Form 8582 Carry Forward Losses from Prior Years that are not supported. I am impressed enough with the product that I am willing to go through the process again with their installed product. Form 8582 is supposed to be supported within their installed software product, and it seems odd to me that one product would be ‘more complete’ than the other.
In the end, I would give it a solid B+, with the caveat that the return needs to be just a little less complex than my situation. There were a few nuances that could have been improved in the user experience, but nothing that was a show-stopper. I feel that my tax situation is somewhat complex, gave it a good workout, and the program almost made it. I would (and will) definitely recommend H&R Block At Home Premium to friends and family.
Fantastic review! I actually really enjoyed your writing style as well. Thank you for this.
Posted by: Nate | March 03, 2011 at 08:12 PM
did the installed product help with 8582?
Posted by: missy | April 09, 2013 at 03:33 PM