TurboTax 2011 Review: My Experience and Comparison With TaxACT

I just finished filing my federal and state income tax returns (again) using TurboTax Deluxe Online edition. This is the 2nd part of my series comparing the three major tax preparation websites: TurboTax, H&R Block At Home, or TaxACT.

You can see my TaxACT 2011 review here.

Tax Situation
Again, here’s a quick summary of our personal tax situation.

  • Married filing jointly, subject to state income tax
  • Both with W-2 income, as well as self-employed income (Schedule C).
  • Interest income and dividend income from bank accounts, stocks, and bonds (Schedule B).
  • Contribute to retirement accounts (401ks and IRAs).
  • Capital gains and losses from brokerage accounts (Schedule D).
  • Itemized deductions (Schedule A), including mortgage interest and charitable giving.

Retail Price
Although their website shows a “retail” price of $49.95 for TurboTax Deluxe, anyone who visits the site will at most pay $29.95 for Federal including e-File. TurboTax State is $36.95 including e-file. If you are a Vanguard Flagship Services or Asset Management Services client, you get a TurboTax Online Federal Deluxe + State + efile for free. All other clients get discount of about 25% off; you must log in to get your discount. There is also a Federal Free Edition available if you have a very simple tax return – no itemized deductions, investment income, but remember that State is $27.95 extra in that case.

TurboTax Premier offers “additional guidance” for investment income from stocks and bonds and also rental income. However, I had the usual stock and bond sales and was able to complete my return without upgrading to Premier. I did not feel I needed any extra guidance, but if you do it will run an extra $20 for a total of $49.95. Finally, TurboTax Home & Business ($74.95) offers “additional guidance” for self-employment income including dealing with business expenses. However, if all you have is a couple of 1099-MISCs to report as I did, you can get by with Deluxe.

User Review


With all these tax sites you can start your return for free, and only pay when you file. Since I had already input all my tax data into TaxACT.com, I simply opened that up in a web browser tab side-by-side and start filing things out. The Q&A interview questions are in roughly the same order, but there are enough differences to make you jump around a bit.

Import from TaxACT & H&R Block at Home
Last year, I used TurboTax for my tax return. Thus, this time around TurboTax had all my old tax info pulled up immediately. Filing status, dependents, address, DOB, SSN, etc. They also had all my old W-2 and 1099 providers to reduce my data entry needs a little bit more. For example, all my Employer Tax IDs and addresses were pre-filled. This did feel rather convenient, and it helped make sure I didn’t forget any 1099s from old bank accounts.

However, as a result I was never asked if I wanted to import a previous year’s return from another provider like TaxACT or H&R Block. Perhaps someone can shed some light on this in the comments?

W-2 and 1099 Direct Import from Providers
One of the strengths of TurboTax is that you can directly import your W-2 and 1099 information from a number of partner providers. However, the W-2 part didn’t really impress me. Our W-2s came from Ceridian and we had to enter some sort of username and password which I’ve never set up before. It was faster to just type in the 10 numbers and get on with it.

1099s were a different story, at least for me. I was able to provide my Vanguard username and password and have my 1099-INT, 1099-DIV, and 1099-B data imported in seconds. Other partners that I was able to use included Betterment, Chase Bank, Capital One 360 (Sharebuilder), and Pentagon Federal Credit Union. USAA, TD Ameritrade, E-Trade, and Wells Fargo were also available. For those with a lot of transactions, this is a great time-saver.

In addition, after comparing with my TaxACT data, I found that I had made a data entry error of $300 with one wrong digit when manually entering all those capital gains and losses from stock sales. The TurboTax import would have help me avoided that mistake, which I don’t think I would have caught otherwise.

Finally, a cool feature is that if all your accounts are linked to the aggregation site Mint.com, you can simply log into your Mint account and have all your available forms imported with one login (Intuit owns both TurboTax and Mint).

The Small Stuff
This time around, I did notice that TurboTax has something called “Flags” that are the same as Bookmarks with TaxACT that allow you to mark confusing questions to come back to. The icon is small and there is no text, so I probably would have missed it again if I wasn’t looking for it. A minor positive I noticed is that TurboTax automatically enters commas when you reach thousands (ie. 3,459 instead of 3459). It helps with data entry, as I have already shown that I am error-prone!

A minor negative is that TurboTax had many more server delays where the page would not load or would be blank and I had to refresh the page. I did not have any such problems with TaxACT, which I was using simultaneously on the same internet connection and computer.

Foreign Tax Credit
After everything was entered, there was a difference of less than $50 in my total calculated refund between TurboTax and TaxACT. After some research, I found that it was due to my treatment of my foreign taxes paid as a deduction vs. credit. TaxACT appeared to be more aggressive and just allowed me to take it as a credit, while TurboTax seemed to require more information and otherwise steered me towards taking it as a deduction. This was partially my own fault, but the two questionnaires definitely had a different approach. In the end, I got everything to match up between them. (Take the credit if you can.)

Upselling and Price Tricks?
There are some upsell attempts during the tax return to upgrade to Premier or Home & Business, however it was only a couple times and didn’t feel overly pushy. At the end, the price total was as expected with no bogus charges. There was a final pitch for a product call Audit Defense for $39.95, which provides you “professional representation in the event of an audit” and covers both federal and state returns. As before, I am not convinced of the quality of such representation.

Recap
In the end, I felt that TurboTax.com showed why it remains the best-known and popular tax software. That is, it covers all of the tax aspects about as equally as well as the others, perhaps with a bit more thoroughness (anality?). However, where it separates itself is the importing of data from financial institutions. It is indeed more expensive – for most people TurboTax will cost $30+ more than TaxACT – but if it saves you both time and effort in data entry (and potentially prevents errors), then I can definitely see how people would be willing to pay a premium.

There is also the familiarity factor. I definitely kept feeling the benefit of using it last year and again this year. It compared all my 2010 and 2011 numbers side-by-side, which was nice for us financial geeks. It also remembered little things like my old IRA basis, so I wouldn’t have to look it up again. On the other hand, if my return was simple and would not benefit much from automatic importing, I would probably rather stick with TaxACT.

Comments

  1. Juggler314 says:

    it’s worth noting that turbotax does have a freedom edition which allows free state filing if your AGI is <31k, or you are active military or you qualify for the EIC. Just make sure the upper right corner says "freedom edition" rather than "federal free file". There's no way to switch to the freedom edition if you find you've been in the wrong edition and get to the end…you'll have to start over! (this happened to me last year doing my GF's taxes…they make it (purposely in my opinion) hard to find the freedom edition vs the "free" edition.

  2. I have used Turbotax for the past 10 years thru Vanguard. One thing about Turbo online that was a negative was, when I was going thru the review process, it required me to complete an entry on 1116 for foreign tax credit. There is not enough info to really know what it is asking for so I entered what I thought was needed. Upon further review and research I realized that was not the correct entry. Turbotax online will not allow the entry to be changed. The downloaded version will. I submitted it as is and it was accepted by the IRS.

  3. I’ve also used TurboTax for many years now and am generally satisfied. As my tax situation has become more complex over the years it has usually kept pace.

    Something new they are offering this year is the ability to get online chat advice from a “tax professional” for free. In prior years you just had to ask the community or search for a similar question someone had asked prior. I have some craziness going on this year with Roth conversion and recharacterization, and I wanted to double-check how to enter into the software a recharacterization that occurred in January. The online help agent gave me two consecutive incorrect answers, telling me I would enter that on my 2012 taxes next year. I knew this was wrong because it would result in me paying tax on the recharacterized conversion this year, and only after researching my question for the third time did their agent come back with the correct answer and tell me how to input it into the software. So I’m not particularly impressed with their tax help.

  4. Glad this works so well for you guys. I refuse to buy anything from Intuit after suffering for the last year with Quicken after many years of Microsoft Money. Just can’t see how it lacks so much basic functionality, speed & navigation and would be real nervous about it handling the more complex tax aspects. Apparently their best minds and programmers do Turbo Tax, not Quicken!

  5. I have used TurboTax for about 8 years now and using the same version year-to-year has many benefit, such as remembering old information. I believe TurboTax also keeps your old returns available for you to review and download. This has come in handy for me when I was younger and less organized. (You mentioned a similar feature in your TaxAct review as a negative due to privacy concerns).

    As with prior years, State Farm Bank offers free Deluxe TurboTax for customers with a checking account. I have avoided closing this account and held about $100 in it for about 3 years now just to continue getting this benefit. http://www.statefarm.com/landing/turbo-tax-11.asp

  6. I agree TurboTax is the better solution, thanks for the tip on foreign tax credit.

    I had a question on where you split your articles between what shows up on the blog front page, versus which parts of the story are behind a click. That question is how do you choose? Seems like this entire story pretty much shows up on the front page, as do many lately. Wondering if that is a conscious choice on your part. I do usually come at your site via RSS, but would prefer to be able to go home and scroll to other stories. Just curious mostly.

  7. Joshua,
    I tried Quicken and did not like it so I have stayed with MSMoney which can be downloaded for free from MS. Also found an app to do updates. http://microsoftmoneyoffline.wordpress.com/2010/02/12/java-app-to-update-quotes/
    It works well.

  8. Is anybody concerned that you give TurboTax accounts passwords and that they store all your personal data on their servers (for your convenience, of course).

  9. Where are all of you guys making all of this foreign income? I didn’t think that was that common?

  10. It’s foreign tax paid by mutual funds, isn’t it? I need to see if I have any of that…

  11. @Derek – Yes, foreign taxes paid on foreign income via dividends on international funds and ETFs like VEU. It should be noted on your 1099-DIV, but you still have to choose how to claim it.

    @DaveM – More like a lazy choice on my part. I clipped some of the more recent posts to make it easier to scroll, I agree it’s probably better. I just hope readers notice that there is more to the post and read the whole thing.

    @Juggler314 – Good tip on Freedom version for lower-income filers.

  12. @john – I think it’s a valid concern, to be weighed with the convenience factors. You can choose to use the downloaded software version instead; I don’t think they transfer any information to Intuit servers. Along with Mint, Intuit does have a lot of personal information.

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  14. I’ve used TurboTax for the past 3 years now and love the interface! As you point ed out, although it’s a bit more expensive than TaxACT it’s well worth the extra $20-30 dollars in the time and effort it saves. Be sure to check with your bank if they offer any discounts as well…I use Bank of America and got a $20 credit ;)

  15. Any comments about online vs. installed versions? I only used the latter for many years (Deluxe CD Fed+State, store-purchased). I also tend to use the Forms vs. Interview interface since I am familiar with the forms and I think it is much faster.
    Does the on-line version have Forms interface?

    I fully agree with the many positives mentioned so far but have some
    negatives: 1. Every year TurboTax seems to run slower and slower. I would not recommend it with a Windows XP-era computer. It is running this year but painfully slow. 2. If you need more than one State, they charge ~ $35 each to download/activate!
    3. You cannot easily move all the software to a different computer (in my case I needed faster computer) unless you have lots of time to burn.
    This is why I am interested in comments about on-line vs. installed version.

    Thanks for your excellent blog!

  16. Thanks Johnathan, it is easier to scroll. Count me in for a few more page views now! Hope for your sake that extends to other readers. I understand your concern about people realizing to click through. When I in the past had a personal wordpress blog, it was fairly easy for me to tweak the blog style to have some a standard link at the end of each front page clipping. Mine said something like “Click here to continue reading [post title]. . . Again not trying to critique, just an option that might address your click-through concern, while increasing page views.

  17. I just received an email from southwest airlines; it seems turbotax is a Rapid Rewards partner, so you get 1000 points credited to your account if you file your 2011 taxes with turbo tax.

  18. I have used TT online for several years. I am a tax accountant, and can just fill out the paper forms if I wanted to, so I use as a convenience item. I decided to go cheaper and try Tax Act. Well, I got all the way to the end, to discover that TA doesn’t store your old returns unless you pay $6. Then it is only for 3 years. At that point the price delta was basically a wash with TT (minus state which I can file at the state for free anyways, which TT completely prices at rip-off levels). Total deal breaker. Went back to TT and re-entered everything.

    Both softwares did a fine job calculating the liability (the same # as my spreadsheet). I am a w-2 filer with interest, dividends, cap gains and a small bit of foreign source income (dividends). I am also subject to AMT and itemize.

  19. HAve been using TT for many years (from a simple 1040EZ to 100 page tax return this year) and it has been the best.

    This year, tax situation was a bit more complex (with IRA conversions, rollovers, wash sales, stock grants, options, etc etc). I took one entire weekend to get it done.

    To be sure, I went ahead and showed it to H&R block tax guy (using their free second look offer). He took an entire week to work on it and then showed what he had come up with – 100% agreement.

    Why wouldn’t I recommend this product to anyone?

  20. Frank Owens says:

    Be ware!
    There is nothing in the program that warns customers that if you pay for an e-mail filing and it is rejected for any reason, you cannot receive a refund from Turbo Tax for the efiling.
    This is not in the tax program, but can only be found by going to the turbox website and specifically make the inquiry.
    I have used Turbo tax for over 10 years, and I am sad to know that this smart program does not tell the cusomter that e-filing is done at your expense in case there is a problem.
    Shame on Turbo Tax for this underhanded way of making money.

  21. Anonymous Reader says:
  22. Paul Jordan says:

    @Anonymous the “Updating Partner Information” means TurboTax is updating the list of 1099 and W-2 import partners and employers available for you to import from while using TurboTax. We add partners and employers throughout the year.

  23. i just used both sites 1 for my son (taxact)and one for myself(turbo).Tax act had forms for vt state already while turbo tax said those forms won’t be ready till jan.24th? But yet tax act allowed me to file stateand it did send.Last year same thing happened and my 2 sons got there state refund in a few days while i was still waiting for turbo to have the forms ready!! any clues why or is it just turbo being slow makes no sence to me

  24. You forgot, Turbo Tax has an arbitration clause in it, and it takes away your rights under the 7th amendment to the constitution, and also forces you to keep the judgement secret.

    Doesn’t any know what’s constitute anymore, and how corporation like TurboTax is taking away your rights?

  25. I switched from TurboTax to TaxAct 2 years ago, and I have been very pleased with TaxAct. My main problem with TurboTax is that they charge too much, and the prices kept going up. They also keep pushing you to upgrade in order to get more “features”. TaxAct has a simple pricing policy, and all features are included in the basic version.

    I have reasonably complex taxes with a simple small business and capital gains. TaxAct allows me to enter everything I need easily and quickly. I do NOT use any data import features. I have wasted time in the past trying to import W-2s, and I found it is much quicker to just enter the numbers. As for my capital gains, there are too many mistakes in the information from my brokerage. Maybe after my brokerage tracks all my cost basis information for a few years, an import will work properly, but for now I have to review everything anyway. There were a few transactions that were missed completely, such as covering a long term short and selling an option. If I had done an automatic import, I might have missed those.

    Just because you have done something a certain way for years does not mean you have to keep doing it that way. Try something new and save some money.

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