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My friend Chris and I recently sat down to prepare her taxes and compare two online tax-prep products: the venerable H&R Block At Home and challenger TaxSlayer. If your tax return is anything like Chris'--she opts for the standard deduction and only reports income from W-2s--you'll likely finish your taxes in around an hour, as we did for each product. (The IRS says two out of three taxpayers use the standard deduction.)
And if, like Chris, you use FreeFile, the IRS' useful portal to free tax-prep software, you won't pay anything to prepare and file your federal taxes. FreeFile is available to households with 2012 adjusted gross income of $57,000 or less. Your state also may let you prepare and file your state tax form for free. The average federal and state tax return without itemized deductions cost $143 to prepare last year, according to the National Society of Accountants, so unless you value your free time at more than $143 an hour, you may find it worthwhile to try the DIY options. (For other DIY advice, check our Income Tax Guide.)
TaxSlayer's benefits and bugs
Chris and I thought both products offered decent guided, step-by-step directions that made the job fairly seamless. Like other tax products we've tested, TaxSlayer has a ticker that shows how much you'll owe or save you as you progress through the guided interview. While we couldn't directly download Chris' W-2 information into the program, we liked that TaxSlayer automatically filled in Chris' Social Security and Medicare taxes, something Block's software didn't do.
But TaxSlayer had some clunky features that made it harder to use than Block's At Home. Clicking on a link to the Earned Income Tax Credit (EITC) Assistant took us to an IRS page; we would have preferred an explanation from TaxSlayer itself. TaxSlayer's drop-down yes-no boxes were annoying; when there are just two choices, it's more convenient to have two buttons to click.
Problems dealing with college expenses
Neither product was ideal in helping us fill in qualified college expenses to glean a tax credit. (The IRS offers a few education credits, which cannot be used concurrently.) To fill IRS Form 8863 on education credits, TaxSlayer asked us which credit we wanted to use. But how were we to know? In contrast, Block selected the credit it deemed best for us. But Block's questions weren't always as clear as TaxSlayer's; at one point it left us wondering whether we were referring to the proper boxes on the student's tuition statement (IRS Form1098-T).
(The IRS recently reported problems with thousands of tax returns that included Form 8863 and were prepared and filed early in the tax season by "a limited number of software company products." While it didn't mention any company by name, H&R Block acknowledged that its clients had been affected by a transmission error. The error has been fixed, but some 600,000 Block customers may have to wait up to six weeks longer to receive their refunds. On Friday, Block's President and CEO Bill Cobb apologized for the catastrophe.)
Google Chrome not supported
TaxSlayer gave us trouble when we tried to pay to file Chris' state return. After she clicked to activate her credit card payment and electronically file her return, the program froze. We couldn't tell whether her payment had gone through or was stuck in the ether. To TaxSlayer's credit, a telephone service representative answered our call fairly quickly, even at 9 p.m. ET. She found Chris' account and told us that the payment had indeed gone through.
I later looked on the TaxSlayer website and found that, unlike H&R Block At Home, the TaxSlayer currently doesn't support Chris' browser, Google Chrome.
