Joeleann Bensinger of Lake Dallas, Texas, had always used TurboTax to file her return. But last year she decided to shop around. “With a simple return, it’s pretty easy to comparison shop the online tax preparers,” she says. “I prepared my return with both TurboTax and TaxSlayer and found that TurboTax got me the most back, so I went with them.”
For many people, the agony of collecting receipts and itemizing deductions is painful enough that the thought of also comparison shopping for an online tax preparer seems like more effort than it’s worth. So, like Bensinger, they stay with the same software or online preparer year after year. However, with the ever-changing tax law, increased awareness of security and tax-related identity theft, and a new range of products (and fees), 2015 might be the year to shop around.
Here are some of the key features to consider when comparing online tax preparation platforms.
Is It Safe?
TurboTax’s recent, albeit short-lived, troubles with fraudulent state returns cast renewed focus on the safety of online tax preparers. Once it was determined that its system hadn’t been hacked, and the problems were coming from the outside, the company implemented new security measures within a matter of hours. But that came after several states suspended e-filing through the popular online tax preparer — though all resumed accepting returns soon after.
When representatives at H&R Block were asked how they kept their customers safe, Eric Roebuck, senior product manager, and Gene King, the company’s director of corporate communications, said they use a sophisticated verification process to protect filers. “We require, and have always required, the two-step authentication process,” King says. “We’ve also always required customers to actually have an accepted e-filed federal return prior to e-filing your state return. Why this is important, is that it means that there’s a search on the federal side to verify these are legitimate returns. Without that, a person could steal my information and file it in 19 states.”
Jessi Dolmage, a customer engagement specialist at TaxACT, says her company also proactively monitors all returns for signs of fraud. When asked how TaxACT keeps its customers safe, she wrote in an email, “As always, we continue to work closely with the IRS and state agencies to prevent and detect tax return and refund fraud. We recommend taxpayers use strong passwords and check email for confirmation of account activity.”
Is It Convenient?
A streamlined mobile experience is handy, but for true convenience, it’s important to look beyond tax-filing apps at each platform’s unique features.
For both the persnickety and the truly curious, H&R Block offers a Refund Reveal feature, which shows precisely how each action or deduction impacts a refund. Its competitors simply show a refund or amount owed. “Most people love seeing their refund amount going up or down, but don’t really know what makes that number move,” Roebuck says. “With the Refund Reveal feature, I can see exactly how adding my daughter as a dependent, or entering my wife’s income, affects my overall return.”
TurboTax also launched a new feature this year, TurboTax Personal Pro, which will help match filers with credentialed tax professionals throughout the country. Similar to a matchmaking service, filers can either choose one they like, or allow TurboTax to pair them based on their unique tax situation.
Colleen Gatlin, a senior manager in corporate communications of TurboTax’s parent company, Intuit, says, “[TurboTax Personal Pro is] a great alternative for the millions of taxpayers going to national tax preparation stores who want the expertise of a credentialed tax pro — CPAs/[enrolled agents] — combined with the convenience of going online.”
Want to test-drive platforms? Try one this year and a different one next? How easily information is imported (and exported) might be something to consider. TurboTax and H&R Block easily import information from other providers for free, while TaxACT offers it at the Deluxe product level, for which they charge $12.99 for federal, and $7 for state returns.
“We obviously love returning users and all their information is there from last year, although of course you have to update the W-2s, etc.,” Roebuck says. “Even if you’ve made the mistake and used somebody else last year, you can still come back and we’ll get you a good jump-start.”
What Does It Cost?
Each of these three providers offers a free federal return, although state returns, and the features of each, vary widely. For H&R Block, the state return is $27.99, although it’s running a (short) promo for $9.99. TaxACT offers a state return at $14.99. Following its recent suspension, TurboTax offered a brief no-cost state return promo, but now its rate has returned to $27.99 per state. These are, of course, beginning prices, and they increase depending on the complexity of a return, if additional forms are needed and other factors.
Important to factor into the cost is how much support will cost, both during filing and in the case of an audit. In addition to transferring documents, the upgraded TaxACT Deluxe ($12.99 federal, $7 state) will get you tax guidance via unlimited phone support, extra explanations, tips and money-saving strategies. All H&R Block clients, at any level, receive free audit support and will have in-person representation in the event of an audit. While completing their return, TurboTax customers can opt to purchase audit support (i.e., insurance) through a contracted third party.
Added Bonus?
After all the hassle of preparing your taxes, finding the right software or online tax preparer and completing what Roebuck calls “the tax experience,” it might be nice to have a little something extra. Both H&R Block and TurboTax customers can opt to receive all or a portion of their refund via a retailer gift card, and will receive an added 10 percent bonus for doing so. With H&R Block, customers can choose from 40 retailers, while it’s only Amazon for TurboTax filers.
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Which Online Tax Preparer Is Right for You? originally appeared on usnews.com
