Monday November 23, 2009 12:12 PM ET
SmartMoney
Published March 7, 2007  |  A A A
Taxes by Aleksandra Todorova (Author Archive)

How Do TaxCut and TurboTax Match Up Head-to-Head?

LIKE MOST NORMAL FOLKS, I don't much enjoy doing taxes. Yet, like millions — more than 20 million in 2006, according to the IRS — I've been doing the job on my own, using tax software and filing online.

Granted, I've been blessed with a simple 1040EZ situation: a single filer with no taxable investments other than a savings account, no mortgage or other real estate assets, and a single W-2 from my employer, Dow Jones & Co.

But this year my taxes are getting a major makeover. I bought an apartment in April, got married in May, and in August, my husband and I left our rental apartment in New Jersey for our new place in Manhattan. To boot, I brought in a little extra income from freelance reporting and my husband's job as a consultant means he either travels on business, or works from his home office.

Do I dare do our taxes now?

Honestly, I'd rather be getting a root canal. But it's not like I'm facing an exclusively complex situation. More than 2.2 million couples got married in 2005, according to the National Center for Health Statistics, the latest calendar year for which numbers are available. That same year, 7.4 million people moved to a different state. And last year, 7.5 million bought a home, according to the National Association of Realtors.

So my editors at SmartMoney.com and I decided this was the perfect time to test the two leading tax software programs — Intuit's TurboTax and H&R Block's TaxCut — back to back. With the competition getting fierce as more people than ever e-file, we wondered: Will one program be easier to use than another? Will I get the same tax bill or refund with both?

Using my real federal tax return — see the sidebar for details — I ran into some interesting discrepancies, especially when it comes to relatively new tax laws, such as the option to deduct state sales tax instead of state income tax.

And yes, I got different refunds. Here's the TaxCut-TurboTax face-off.

Tax Snapshot
Filing Status: Married, filing jointly.

Dependents: None.

Joint income: More than $100,000, which puts us at greater risk for an IRS audit.

Retirement savings: My 401(k) and Roth IRA, my husband's traditional IRA (his employer doesn't offer a 401(k) plan, so he qualifies).

Taxable investments: A high-yield savings account with roughly 10-months' worth of living expenses.

2006 events: Bought a home, moved to a different state, got married.

Complicating circumstances: Because we bought new construction, we paid city and state tax on the purchase, which would normally be a seller's expense.

Itemized deductions: Mortgage interest; charitable contributions; home office deductions.

State returns: New Jersey, New York

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User Comments
Posted by: ckarwo
Here's the current score:
Turbotax $4800 refund.
CPA First Attempt $6900 payment.
CPA Second Attempt $1100 refund.
CPA Strike Three $???????.
I personnally like the Turbotax outcome the best but if this is incorrect how would they protect themselves from a class action lawsuit from the millions of users like us? With such wide a variation of results between program & CPA, I do not know who to trust or believe.
Posted by: ckarwo
Newly married, smart enough,(Ph.D. & Attorney),we now have a complicated mix of employed and self employed tax considerations. Still do not understand tax prep but we painstakinly entered all our data into the premium Turbotax Business edition ($93)with care and precision, and had an answer in 2 days. We also paid a profession Business CPA $400. It has been 5 weeks and still have no convincing answer from the highly reccommended 'pro.' To see the current score see the next post.
Posted by: hornetking2
For everyone that has all these problems with complex situations, why are you filing your own returns??? Get someone who knows what they are doing.....The programs are much cheaper than seeing a professional, but they don't fill out the return for you. You have to know where your information goes and they do the math. If you would rather pay $50 than $150-$200 to go to a professional, remember that you get what you pay for.
Posted by: feste
[CONTINUING] All work not saved when the failures occurred was lost accompanied by much gnashing of my teeth and less-than-delicate language. A number of calls to the vendor took lots of time and provided no solution. Frustrated, I then bought Turbo Tax and will stick with it. [END]
Posted by: feste
I switched to TaxCut this year after using Turbo Tax since the 1990s. I use TaxCut on my standalone home computer. I found that I had to manually save my work frequently because I kept failing with a message stating that using the product required that I be the 'Administrator' (which I, the sole user, am). [SEE NEXT MESSAGE (500-character limit)]
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