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Computerized Investing

Softening the Certainty of Taxes

Paying taxes may be unavoidable, but the right tool can make the process of figuring what you owe a little less painful.

by Jaclyn N. McClellan | March 2016

Benjamin Franklin once said, “In this world nothing can be said to be certain, except death and taxes.”

This is a sad but true reality we all face. If taxes are one of two things that are certain in this world, then having a trustworthy, accurate tax filing process is essential.

In this CI edition, we analyze three of the main players in the tax preparation game: TurboTax, H&R Block and TaxAct.

We surveyed a select group of CI subscribers to find out which tax preparation services they use and what features they like or dislike. The survey was very insightful. Some respondents were very specific with their comments, while others gave general responses. Remember, everyone’s experience can be different. Many commented about lack of customer service, while others reported exceptional customer service. When it comes to software, some users may (unfortunately) experience bugs, while others have no problems.

As you will read in the Tax Preparation Services article, there are some features survey respondents identified as important when choosing a tax preparation service:

  • Downloads tax information from brokerages
  • Handles both federal and state taxes
  • Easy to use
  • Covers different tax situations and complex tax issues
  • Clear instructions
  • Imports all data needed
  • Ability to record investment transactions, including options
  • Accuracy
  • Offers guidance
  • Integrates with Quicken
  • Offers good exemption coverage
  • Handles all forms associated with MLPs (master limited partnerships) and capital gains
  • Good reputation
  • Carries data over from previous tax year

If you’ve had any experience with the tax preparation services mentioned in the article (or services not mentioned), please comment about your experience so other readers can benefit from your point of view and knowledge. We are particularly interested in features that hinder or assist the individual investor.

In addition to our review of tax prep services, this month’s Spreadsheet Corner demonstrates how to track mutual funds using Google Sheets. I explain how to use the Google Finance function to retrieve data from Morningstar, as well as provide a sample mutual fund watchlist tool in Google Sheets that you can use. If you decide to expand on the watchlist’s functionality or create a tool of your own, please share it with other CI subscribers by contacting us at CI@aaii.com.

Lastly, I interviewed Gail MarksJarvis, an award-winning financial columnist at the Chicago Tribune. Gail gave some excellent answers with keen insights. It’s definitely not an interview you want to miss.

Discussion

Joseph Lawton from PA posted over 10 years ago:

I used to use Turbo Tax for more than 10 years. I decided to try H&R Block last year and again this year. I found that they both have similar features. I quickly learned to navigate H&R Block software and was able to import data from prior year Turbo Tax return. I like the Summary feature that H&R Block has in each tab for income, deductions, credits, etc. It shows a quick summary of all itmes on the selected tab. This year, however, I came across a problem that is not allowing me to e-file. The message that I receive is very vague and does not give specific information to resolve the problem.


Jackie McClellan from IL posted over 10 years ago:

That's a very strange error to have!! Definitely let us know if they figure out what the problem is and if there is a resolution. There might be other members with your same issue.


Ben from KY posted over 10 years ago:

I have used H&R Block the past 5 years and decided to try Turbo Tax because of the lack of good guidance for K-2's. As it turns out Turbo Tax is much more robust for the K-2's and easyier to follow. There was one small issue where you can only import K-2's directly into Turbo Tax if you install Turbo Tax on your computer. Hopefully next year they will fix the online version to allow direct import also.


Ben from KY posted over 10 years ago:

K--1's


Terry from TX posted over 10 years ago:

I used TurboTax for years. Thought I would try H&R Block this year. I found H&R Block easier to use in regard to form 1116 - foreign tax credit. Also, easier to use in terms of Schedule CZ in that my wife is a minister and we have a parsonage. However, H&R Block reduced her expenses inappropriately. I call H&R Block and they agreed an error was made, but they didn't tell me how to fix it. I have called or chatted 5 times without resolution. In addition, I had a muni bond that matured and it had OID interest. H&R Block calculated it wrong. I entered the same info into TurboTax and it got it right. TurboTax also got my wife's business expenses correct. So even though H&R Block was a little cheaper, it would have cost me over $1000 in additional taxes if I filed using their SW. H&R Block was supposed to call me within 48 hours to rectify the situation after my last call with their support org, but the 48 hours are up and no call. Net is H&R Block might be ok for a simple returns, but if I can't count on accurate results, I can't use them. I considered TaxAct, but I have a lot of stock and option transactions and I want to import that info and to my knowledge I can't do that with TaxAct.


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