Here comes tax season again, when you must decide whether you want to take the do-it-yourself route or hire somebody to prepare your tax return for you. However, the question isn’t that black and white. There’s a middle ground.
You can use one of several tax preparation online apps and software programs if you choose to prepare and file your own taxes. H&R Block, TurboTax, and Jackson Hewitt are among the most popular. The program you choose can depend on your personal financial situation and how much you want to spend.
- TurboTax and H&R Block offer various tiers of tax prep programs. You select one based on the complexity of your tax situation. More complicated means more cost. Jackson Hewitt used to do that too, but as of February 2021, the company has opted for a one-size-fits-all package.
- H&R Block and TurboTax have free editions for the simplest returns.
- The most expensive programs for more complex tax situations range from $50 (Jackson Hewitt) to $85 (H&R Block) and $90 (TurboTax).
H&R Block offers 4 tiers of online tax preparation programs for the 2021 filing season: Free, Deluxe, Premium, and Self-Employed. The company also offers options of varying support from its tax professionals: do it yourself with the help of a tax pro, upload your documents for a tax pro to do it for you, or make an appointment to sit with the tax pro who is doing your taxes.
The Free online edition should suit you just fine if you have only W-2 income and/or unemployment income, and you rent your home. You can use this edition to add dependent info too. A free state return is included.
The Deluxe online plan, H&R Block’s next tier, is designed for homeowners, investors, those with retirement income, and those who’ve made contributions to health savings accounts. It offers support for stock and other investment sales, and it also covers home-mortgage interest deductions, charitable giving deductions, and all other itemized deductions if you don’t want to claim the standard deduction. It costs $30, and that includes support for most Form 1099s, free tech support, and a “drag and drop” feature that permits the free importing of current and past-year data. Plan to spend an extra $37 for each state return filed.
The next plan is the Premium online tier, coming in at $50. This should meet the needs of freelancers and independent contractors who may have more than one 1099 but with deductible business expenses of less than $5,000, and it also accommodates investors who own rental property or have sold stock. Again, each state return is an additional $37.
H&R Block also offers a Self-Employed online edition to serve the more than 60 million freelancers, independent contractors, and other self-employed taxpayers, including the estimated 1 in 10 Americans who rely on gig work for their primary income. Among its features are an import of Uber driver tax information and full support for common tax situations faced by self-employed individuals. This product costs $85 plus an additional $37 for each state tax return. Like the Premium version, the Self-Employed edition also includes support for rental property owners.
Finally, you can choose to add H&R Block’s Online Assist to any program package, starting at $40 for the Free and Deluxe editions and topping out at $145 for Self-Employed Online Assist. State returns are $37 per state across all program tiers. In addition to all of the features and services included in the four tiers, this add-on allows for a tax professional’s review and double check of your return, as well as officially signing the return before filing it for you.
All programs include live technical support if you run into a problem, along with a screen share feature that allows you to show where you’re having difficulty. H&R Block offers the ever-popular W-2 capture feature, so you can simply snap a pic of your form without entering all that tedious information by hand. And you can import your old returns if you did your taxes with another software provider in previous years.
TurboTax is thriving, not just due to its aggressive ad campaigns but also because Intuit, prior to acquiring TurboTax, had established itself as a do-it-yourself financial solutions company with QuickBooks, the popular accounting software. TurboTax also contains convenient features for QuickBooks users.
It offers a basic Free online edition that, like its competitors’ free products, is generally suitable for only the simplest tax situations and returns. A state return and e-filing come free with this package as well.
TurboTax is the only one of these programs that lets you seamlessly import from the accounting program QuickBooks.
TurboTax’s lowest paid tier, the Deluxe online package, is its most popular. It can deal with all manner of tax credits and deductions, and it’s offered for $40. Each state return costs an additional $40.
TurboTax’s Deluxe plan also maximizes mortgage interest and property tax deductions, and it offers a “deductible service” that can help you organize charitable donations and value them correctly. It searches more than 350 sources of tax deductions and credits, and covers freelance and 1099 income, along with simple expenses.
The $70 Premier online plan is what you’d use if you have investments. It also covers rental property and related tax implications. Each state return filed using this option will set you back another $40.
With the Premier edition, TurboTax searches for more than 400 deductions and credits, and covers stocks, bonds, cryptocurrencies, and more. You can automatically import your investment data from any of the over 300 participating financial institutions. This edition is equipped to handle over 1,500 trade transactions, which should cover the most robust investment portfolios, and can support more than 2,000 cryptocurrency transactions in a single upload. Finally, it offers personalized guidance to determine which type of investor you are and properly review your return.
The Self-Employed edition is the upper end of TurboTax’s online programs. Designed for small business owners and sole proprietors, it costs $90. This package lets users import data directly from QuickBooks, a significant advantage. You might have asset depreciation and Schedule C income as a small business owner, which would make the Self-Employed edition a necessity.
You can easily import your 1099-MISC using a picture from your mobile device. The Self-Employed version also gives you access to a TurboTax product specialist who can guide you through preparing your return. This edition not only searches more than 450 deductions and credits; it also shows you all the potential deductions for a new business to ensure the maximum return on your startup expenses.
TurboTax Live includes upgraded online versions of Basic/Free (plus $50), Deluxe (plus $90), Premier (plus $140), and Self-Employed (plus $170) that let you consult with a certified public accountant (CPA) or an Internal Revenue Service (IRS) enrolled agent (EA) for help and advice. Included in each package is a review by a CPA or an EA to make sure you received all deductions and that your return is done right. You can upgrade to TurboTax Live from within any tier, or you can opt for TurboTax Live Full Service, where a dedicated tax pro does it all—prepares, signs, and files—for you. For those who start their taxes by mid-February and choose the Free edition, TurboTax Live may be available as a free upgrade (instead of $50) to those with super simple tax returns if you file by Feb. 15, 2021. Check the website for deals.
You’ve probably noticed Jackson Hewitt cubicles in the superstore if you’re a Walmart customer. Jackson Hewitt has nearly 6,000 locations, and around half of them are inside Walmart stores. The company also offers an online filing platform.
Jackson Hewitt used to offer three online tiers as well: a free option for those with simple returns who only claimed the standard deduction; a $30 Deluxe edition geared toward homeowners, parents, and retirees; and a $50 Premier edition aimed at small businesses, the self-employed, and anyone with an income over $100,000. However, for 2021 the company has streamlined its offerings.
Now there is a one-size-fits-all $50 package for your federal return and unlimited state returns (just $25 for a federal return only) that offers “one simple price, for all types of filers.” Of course, for a simple return, $50, or even $25, does not beat free. Nevertheless, the addition of unlimited state returns at no extra cost does make this a bargain in many taxpayers' circumstances.
Online vs. CD/Download vs. In-Person
All tax preparation platforms discussed in this article are online. H&R Block and TurboTax also have CDs as well as downloadable software. Only Jackson Hewitt and H&R Block offer in-person filing, though TurboTax has added a new feature, TurboTax Live Full Service, that allows you to meet one-on-one with a “tax expert” via a live video call. Generally speaking, CD/download versions are the least expensive and in-person filing is the most expensive. As features and services offered vary, direct comparison is difficult.
All these packages include selling points, such as maximum refund guarantees, free e-filing of federal returns, and 100% accuracy. The differences involve how much you have to pay to access the features you need. Jackson Hewitt’s one-size-fits-all option is attractive in many circumstances, but only TurboTax and H&R Block offer federal and state returns at no cost for simple returns. If you use QuickBooks, TurboTax’s QuickBooks integration, available in its Self-Employed option, may be a compelling feature.