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The Best Online Tax Services

We put four popular tax preparation services -- TurboTax, TaxACT, H&R Block and CompleteTax -- to the test. Find out which one is best for you.
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BOSTON (TheStreet) -- Online tax preparation and off-the-shelf software packages are now solidly mainstream. The Internal Revenue Service estimates that as many as 95 million people will e-file this year.

Taxpayers with adjusted gross incomes up to $57,000 can use the IRS's

Free File

, a service the agency developed with a coalition of


preparation companies.

Even though more than 70% of taxpayers can use the free program, those with higher incomes or more complex returns will need to pay for an upgraded service. With these customers in mind, we put four popular tax sites through their paces.


TurboTax was last year's best selling tax software and its parent company,


(INTU) - Get Free Report

, says its customers received more than $33 billion in federal refunds last year. Online and desktop versions range from $14.95 to $99, depending on their features.

TurboTax is robust and easy to use. For a basic return, you will probably fly through the entire process in about 15 minutes. The more complex your tax situation, the more confusing the program can get and the more important its advice features become. Built-in guidance for more than 350 possible deductions and credits is included, along with an "Audit Risk Meter" that identifies common triggers -- like a home office and rental property -- and recommends ways to minimize your risk.


TaxACT was created by

2nd Story Software

, a company formed by the one-time team behind TurboTax. This service is the least expensive of the sites we tried. The federal edition is free and the most expensive variation, the Ultimate Bundle, is only $17.95. All products include unlimited e-mail and Web support and video tutorials.

As an added feature, TaxAct can use your return information to prepare a college financial aid worksheet, a bonus for parents. Interview questions link to tips and extra information from J.K. Lasser's

Your Income Tax

, among other resources.

Using TaxACT is a bit like ordering dim sum. Even though there are many categories you can click, expand and fill out, these features are on demand. You can select only the menu items you need and the program does a good job of steering you.

H&R Block

H&R Block

(HRB) - Get Free Report

offers the usual slate of tax products, ranging from simple and free to complex and data-heavy. Both online and physical software are available at a range of prices that reflect their features.

New for 2009 is a version called Best of Both. Taxpayers who spring for this $99.95 product can complete their filing online and submit them to an H&R Block tax professional, who will review, correct and certify the return.

The online service guides users in reporting investments, dividends, home sales and retirement income. Targeted advice, based on occupation, is offered for reporting self-employment income. Specialized categories -- "Life Changes," "Military Service and "Disaster Relief" -- help customers with special tax considerations.

Users are entitled to one live session with an H&R Block adviser, and the company will assign an agent to represent you if you are audited.



isn't the prettiest of the programs, but it may be the best for more complicated returns.

We found ourselves initially put off by the fact that the mere act of reporting self-employment income required an upgrade to the top-tier, $50 premium version. But while other programs are capable of doing more for less, CompleteTax proves itself worthy of the extra cost.

While all the tax software we looked at do the same thing, we found that CompleteTax felt more professional, although it did take us longer to work through than its competitors.

The verdict

All the programs we tried got the job done with little pain. Our favorite, however, was CompleteTax. Even potentially complex situations, such as home foreclosures, retirement plans and business income oddities, were tackled in a logical, easy-to-understand way. It effectively handled every creative scenario we could concoct.

If your finances are straightforward, our runner-up, TaxACT is definitely worth a look. It's as robust as the rest of the field, but sports the most competitive price. If you're going to maximize your refund, why not start with shaving a few bucks off preparation?

There's no reason to avoid the other services. If you are being dragged into the world of binary-based tax preparation, the brand name cache and human backup offered by H&R Block may make you more comfortable.

We also have to single out TurboTax for the most comprehensive and creative slate of support offerings. We were particularly enamored of its

interactive calculators

, especially the TaxCaster 2009 and Life and Events Advisor. You can't file anything using TaxCaster, but the simple, streamlined set of buttons and sliders was fun to use and gave an accurate estimate of what an estimated liability/refund would be as variables were adjusted. Its polished user interface would benefit the flagship product.


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-- Reported by Joe Mont in Boston.