Last year, Intuit, maker of TurboTax, tried to force users to upgrade based on what tax forms and schedules they needed. They met a big outcry from customers. When the dust settled, their CEO apologized and they put all the forms and schedules back to the download/CD product (but not the online product). See TurboTax Deluxe Desktop Features Restored, What About Online?
You would think other tax software vendors would learn a good lesson at Intuit’s cost, but no, this year a different company will try the same move that Intuit failed to pull off last year. They are not taking a single defeat as a final defeat.
TaxACT used to have to all forms and schedules in all editions. This year TaxACT created different editions with different forms and schedules. If you need that particular schedule, you must buy the higher-up edition. The Free edition used to have all the forms and schedules. Now it can only do simple returns. The Basic edition can’t do itemized deductions. If you need Schedule D for capital gains, you must buy the Plus edition.
Most people will have to buy the Plus edition, currently $30 if you also want one state return. This removes one big advantage TaxACT had in previous years — the price.
TurboTax Deluxe, with all the forms and schedules and one state return included, currently sells for $40 at Amazon and Costco. H&R Block Deluxe, also with all the forms and schedules and one state return included, currently sells for $35 at Amazon. If you wait and just set a price alert at camelcamelcamel, it will easily go below $30. Just a few days ago it was $22.
So you are looking at roughly TurboTax $40, H&R Block $30, TaxACT $30. When the price difference is this small, I see more people will stay with TurboTax or even switch to TurboTax from TaxACT or H&R Block. After all, TurboTax does much better in importing data from payroll providers and financial institutions. See Import W-2 and 1099 Forms Into TurboTax and HR Block: From Where?
I have been using H&R Block Deluxe in the last 10 years or so. I never paid more than $25. Just when I thought I would switch to TurboTax this year, news came that Vanguard stopped giving free TurboTax to Flagship customers.
Vanguard will still feature TurboTax on its website. They will still presumably earn a referral fee from Intuit when people buy TurboTax off Vanguard’s links. Now they will just keep the referral revenue as opposed to using it to buy TurboTax for Flagship customers. Maybe Vanguard had been upside down: the referral revenue wasn’t enough to buy TurboTax for Flagship customers. Now they won’t be; they will make a profit.
This decision also gives the freedom to Flagship customers to choose whatever software they like: TurboTax $40, H&R Block $30, TaxACT $30. Most will likely stay with TurboTax.
Fidelity is offering free TurboTax to some targeted customers. However it’s not offering it to me. If you have an account with Fidelity, check under Guidance & Retirement -> Taxes. If you get the free TurboTax offer you will see it in the far right sidebar; otherwise you only see the worthless “Save $20” offer as I do.
I’m staying with H&R Block. I bought the Deluxe Federal + State edition directly from H&R Block for $10 from a special promotion. Although I don’t like its cutting corners on self-employed health insurance and ACA premium tax credit, that issue doesn’t directly affect me, at least not yet. I heard they fixed it.
$10 versus $40 is a good discount for a product that does the same thing for me. $10 also makes it not really a big deal for not getting the software for free from Vanguard or Fidelity. This year, H&R Block Deluxe offers a refund bonus, which basically lets you buy Amazon gift card at 10% off. I may buy a few hundred dollars worth. That will make the software free.
Say No To Management Fees
If an advisor is charging you a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.