As a new year begins, it's time to prepare your federal tax return. Filing taxes can be stressful, but there are a number of services available to ease the process. 

Among the most popular services are H&R Block and TurboTax. They both offer a friendly user experience. Both give you information along the way so you know what you're doing, and both offer affordable filing options. Due to this, they are both viable options for filing taxes, though the best option will depend on your needs.

Although no one likes filing income tax returns, companies such as H&R Block and TurboTax make the process easier. Both companies allow you to prepare tax returns online or by downloading software to print and mail them in.

When it comes to minimizing your taxes, you may want to consider working with a professional accountant.

H&R Block

Since 1955, H&R Block has provided tax filing services to consumers. Since then, it has become one of the most popular filing services because it combines simple tools with helpful guidance.

No matter if you are new to filing taxes or have been filing for decades, that's helpful. However, tools and guidance don't come free. Currently, H&R Block offers four online filing options.

Listed below are the choices, their features, and their prices:

H&R Block Filing Options

Filing Option Features Cost
H&R Block Free Online

Best for new filers and simple tax situations

Supports form 1040 with minimal tax credits

Federal: Free

State: Free

H&R Block Deluxe

Best for maximizing tax deductions

Includes forms for homeowners

Allows you to itemize your deductions 

Federal: $50

State: $37

H&R Block Premium

Best for investors and rental property owners

Provides accurate cost basis

Includes Schedule C-EZ, Schedule D, Schedule E, and Schedule K-1

Federal: $70

State: $37

H&R Block Self Employed

Best for small business owners and self-employed

Provides all previous features, plus Schedule C

Federal: $110

State: $37

The free filing option is the cheapest. However, only basic returns are supported by this option. The 1040, Schedule EIC for earned income tax credit, and Schedule 8812 for additional child tax credit are the forms it supports. Form 1095 (A and B) can also be used with some other common tax forms: Form 1099 (B, DIV, INT, and R), 1098 (E and T), and 1095 (A and B). You will need to upgrade to a paid plan to file other forms.

Depending on the plan, federal filing can cost around $50 to $110. The paid plans charge $37 per state for state filing. In most cases, filers can get by with the Deluxe option, which costs $50 and includes tax deduction software. Freelancers and small businesses will likely need to upgrade to the Self-Employed plan, which costs $110 at a base level.

H&R Block's physical locations are one of its most notable features. For those who don't want to file online, you can visit one of the 10,000 U.S. tax offices. Tax professionals there will guide you through the process.

For federal returns, filing in person starts at $69 per return. H&R Block also offers an online tax professional service so that you can work with a tax pro without visiting a store. You upload records and the tax pro does the processing for you. A tax professional can also review your tax return for you before filing if you purchase Tax Pro Review.

TurboTax

TurboTax was established in the mid-1980s. Intuit's ownership plays a part in the popularity of the program. The company also makes Quickbooks, which is used by millions of companies to manage their accounting. In addition to its user-friendly design, TurboTax also offers step-by-step guidance and is easy to use.

TurboTax has a free filing option like H&R Block that allows you to file your federal return and one state return for free. However, the free filing option supports only simple 1040 tax returns. In order to itemize your deductions or to use any other forms, you will need to upgrade to a paid plan.

For federal tax filing, TurboTax offers three paid plans that range from $60 to $120. The paid plans always include state filing at $50. The free option includes filing one state return for free.

TurboTax offers the following options:

TurboTax Filing Options

Filing Option Features Cost
TurboTax Free Edition

Best for simple returns and Form 1040

Easy import, error check, refund explanations, and dependent deductions

Federal: Free

State: Free

TurboTax Deluxe

Best for maximizing deductions and for homeowners

Charitable donations calculator

Federal: $59

State: $49

TurboTax Premier

Best for investors and rental property owners

Focus on stocks reporting, refinancing deductions, and investments

Federal: $89

State: $49

TurboTax Self Employed

Best for self-employed, independent contractors, freelancers, consultants, and small business owners

Access to tax experts

Federal: $119

State: $49

TurboTax's free version supports the 1040 with some child tax credits, like H&R Block. Those who want a paid option will be able to get by with the Deluxe option. It costs $60, which is the same as H&R Block's Deluxe plan. However, it includes slightly more features. Small businesses and self-employed individuals must upgrade to the Self-Employed option, which costs $120. During tax season, TurboTax frequently runs sales on its services and products.

TurboTax does not have physical locations like H&R Block, but it does provide access to tax experts such as CPAs and EAs. Getting access to an expert will cost extra, but there are four plans available, corresponding to the four plans listed above. Plans for federal returns that offer only expert advice range from $79 to $199. For federal tax returns, however, you will have to pay anywhere from $199 to $389 if you want full expert service. Filing state returns still costs $54 per state with each of these versions.

TurboTax vs. H&R Block: Pros and Cons

TurboTax Pros and Cons

Pros

  • An interactive user interface: Both TurboTax and H&R Block software programs have an interactive user interface that walks you through the filing process step by step, but TurboTax does so in a more friendly way. The steps are more akin to a conversation with a tax preparer than filling out a form, and the clean design makes the process less overwhelming while still letting you jump around between sections.
  • Integration with QuickBooks: QuickBooks is a bookkeeping platform for small businesses. It is owned by Intuit, the same company that owns TurboTax. As a result, TurboTax can integrate with QuickBooks to simplify your tax preparation process. You can import your information from QuickBooks into TurboTax if you're self-employed or own a small business.

Cons

  • TurboTax may have the highest ratings, but it is also the most expensive. There is a free version, but it only supports simple tax returns, so many people will need to purchase the Deluxe version. The Deluxe version costs $60 for federal filing, plus additional fees for state filing. 
  • If you use the Live edition of TurboTax basic, deluxe, premier, or self-employed software, you can get live tax expert support via video chat. It might not be the best option for you if you don't feel comfortable with video chatting or if you only want to go to an office since TurboTax does not have brick-and-mortar offices.

H&R Block Pros and Cons

Pros

  • H&R Block's free edition is more robust than TurboTax's, and it can handle more tax situations, including student loan interest deductions and tuition and fee statements.
  • Support in person: H&R Block offers Online Assist, an add-on to its online software that allows you to get on-demand tax assistance. H&R Block has about 11,000 retail offices for you to choose from if you prefer to file in person. Alternatively, you can drop off your tax forms at an H&R Block office without having to meet with anyone.

Cons

  • If you have a complicated tax situation and require forms for things like rental property income, stock sales, or small business expenses, H&R Block isn't the cheapest solution.
  • There is no military option: Not all tax preparation companies offer discounts or special products for military personnel, but many of them do. Active-duty members of the U.S. military can file their taxes for free with TurboTax's online products, but H&R Block does not offer this.

Which is better - HR Block or Turbotax?

So, who is the winner? That depends on what you're trying to accomplish. With its free filing option, H&R Block covers more filers. In terms of price, both Deluxe options are the same, but TurboTax's Deluxe option supports more forms that self-employed, freelance, and contract workers may need. TurboTax is somewhat simpler with clearer language than H&R Block, but both services are user-friendly.

Which tax filing service you choose may be a matter of personal preference beyond these factors. One may simply prefer the look of one over the other. Additionally, H&R Block may be a suitable option for those who prefer to file in person.

For many people however, using a professional accountant can help you save more money than what you may pay for a tax software. It is worth consulting with an accountant to make sure you are making the right choice.

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