Because I’m switching from TaxCut to TurboTax this year, I have a unique opportunity to compare the two desktop tax software side by side.
The two products being compared are TaxCut Premium 2007 Federal + State and TurboTax Deluxe 2007 Federal + State, both for Windows. Both let you prepare the federal return plus one state return. Both do not include eFile. I tested using the same data on two different days a week apart. My tax return isn’t overly complex but it does include a good number of elements. I have
- salary on W-2
- self-employment income (for my $150 ad revenue from this blog)
- interests, both taxable and tax-exempt
- investments: dividends, both qualified and non-qualified; short-term and long-term capital gains distributions; sales with short-term losses; foreign tax credit; capital loss carryover
- non-qualified stock options exercise and ESPP non-qualified dispositions
- mortgage interests
- property taxes
- charity donations
- IRA contributions
- Alternative Minimum Tax (AMT)
So I think it’s a good test.
Installation: Typical software installation experience. No problems. Although I noticed that TaxCut installed a PDF software pdf995 without asking. That’s not nice.
Update: The software that came on the CD for both program is just a stub. It’s incomplete because by the time they shipped the software, the IRS forms were not finalized yet. You have to get the latest update and perhaps updating a few more times before you file the returns. Updating was pretty smooth for both programs. Just follow the prompts.
Launch: TaxCut requires logging in as an administrator. TurboTax does not. I already mentioned this before. This is the reason I’m switching to TurboTax. Both programs show the software registration screen but you don’t really have to register. Just skip directly to a new return.
Import last year’s data: Both imported my file from last year (in TaxCut format). TaxCut has an advantage here because the data format is its own. TurboTax still imported most of my data. The only thing it missed was the state tax I owed last year. It didn’t include it automatically in the taxes paid number. Instead it asked me whether I paid state tax for 2006 in 2007 with the box defaulted to unchecked.
Import W-2, 1099, etc.: TurboTax offered to import my W-2 and 1099s from payroll providers and financial institutions. I didn’t use that feature due to privacy and data security concerns. TaxCut did not have this feature. Importing probably will save some time if it’s done accurately. I didn’t mind typing them. It wasn’t too bad.
Interview and Data Entry: I don’t see any major difference between the two. Both ask a bunch of questions. Both present the W-2 and 1099 tax forms almost exactly as the printed form. There isn’t any ambiguity for where the number should go. Both have a topic list which lets you jump ahead or jump back. The topic list also shows you the completed steps with checkmarks. Both programs let you open a form directly. TaxCut did one thing better. When I entered tax-exempt interest, it asked me right away how much of it is also exempt from state tax. With TurboTax, I had to split the single 1099 into two separate 1099s — one exempt from state tax, the other one not. Clumsy.
Finding Deductions: Both programs bundle a deduction finding module. I didn’t use or test either one.
Built-in Help: I am familiar with the tax ramifications of my transactions. I didn’t really use or test much of the built-in help in either program.
Refund Calculation: My returns from both programs turned out identical, except for rounding a dollar here and a dollar there. TaxCut rounds every entry to the whole dollar. TurboTax keeps the cents on the worksheets and then rounds the total to the whole dollar for entering into the form. No big deal either way. The result being identical didn’t surprise me. That’s the way it should be. The software is like a fancy calculator. Given the same inputs, the result should always be the same.
Time Consumption: Both programs took me about 1.5 hours from start to finish.
Conclusion: Both TaxCut and TurboTax handled my moderately complex tax data and produced identical returns. Neither was significantly faster or easier than the other. I’ve seen reviews saying TurboTax is superior and TaxCut is crap or vice versa, but my actual testing does not support that allegation. I’m glad my switch from one program to another wasn’t too painful.
Refinance Your Mortgage
Mortgage rates hit new lows. I saw rates as low as 3.25% for 30-year fixed, 2.625% for 15-year fixed, with no points and low closing cost. Let banks compete for your loan. Get up to 5 offers at LendingTree.com.