Which tax-prep service is right for you?

A correction was made to this story. Read below for details.

The prices for Intuit TurboTax and H&R Block TaxCut have shifted significantly, making it tough to tell how much you'll actually pay to file 2008 returns using their software or online services.

Among the good news is that both brands now offer free federal electronic filing, which has cost up to an additional $20 in the past. But some users of the market-leading TurboTax desktop software are venting bitterly on online forums about Intuit's new charge of $9.95 for each federal return prepared beyond the first user, whether those returns are filed via Web browser or snail mail. Some are threatening to migrate to H&R Block TaxCut, which on Monday introduced federal e-filing for up to five users with each purchase of its desktop product.

But bargain shoppers shouldn't assume that makes TaxCut the better deal of the two. After scrutinizing the tax-prep prices, we've reached a more complicated verdict. TaxCut's sticker prices are cheaper all around. However, once you add fees for state returns, TurboTax online looks like the winner in terms of affordability, as it's slightly less expensive for the majority of users, who file only for themselves. TaxCut for the desktop, on the other hand, is cheaper than most editions of the desktop TurboTax.

Due to Intuit's new charge for federal returns beyond the first user, it might seem that the desktop editions of H&R Block TaxCut would be cheaper for those filing for two or more people. It gets more complicated if you have to wrangle with returns in multiple states.

What you'll pay ultimately for do-it-yourself tax preparation depends on your specific needs. To find the right product for your situation, scroll down for the charts below, which show the hidden fees in both the online and desktop editions of both brands' tax-prep tools.

Simple tax prep for one user
The entry-level price gaps are modest if you're filing alone, or jointly, say, as a married couple. But keep in mind that the supposedly "free" online editions of both services aren't so if you need state filing, which costs close to $30. Once you add state prep and e-filing to the entry-level Intuit TurboTax "free" edition, it's $4 less than its H&R Block TaxCut counterpart. The stepped-up TurboTax costs the same as H&R Block TaxCut Basic + e-file, with state filing included. Drop the state feature, and TaxCut is still just $5 more than TurboTax. And for the Basic desktop products, TaxCut also costs roughly $4 more than TurboTax.

Therefore, if you're a longtime, solo user of an entry-level TaxCut tool, there's little compelling financial reason, or none, to switch to TurboTax. But the difference of $5 or less could make or break the deal for some users. The online options are also the best bet in this case, since they're designed to serve one return.

At the same time, don't rule out a third option: services from small-fry brands. In particular, we've found the Web-based TaxAct from 2nd Story Software excellent for the past several years. It costs as much as $13 less than its bigger-name rivals: $16.95 maximum with all e-filing included. Plus, TaxAct could be a great option for college students because it bundles help for FAFSA loan forms.

Tax prep for one user with investments
Graduate to the more sophisticated desktop options, and TaxCut is more attractive for the pocketbook. The Premium editions of the desktop TaxCut run from $34.95 to $84.85 and are roughly equivalent to the desktop TurboTax Deluxe at $59.95, or Premier at $107.90.

The brand comparisons become uneven as the prices climb for either the desktop or online applications, so read their product descriptions to find the features you need. For example, both of TaxCut's Premium editions offer help with investments and rental property, which are absent in TurboTax Deluxe but included in its Premier editions.

Tax prep for more than one user
The online tax-prep services are built for one user, so buying software in a box or via download will likely be more convenient for those who manage taxes in-house for the whole family. In this case, H&R Block TaxCut for the desktop could be the budget deal because it includes federal e-filing for five returns, the government limit.

However, fees for state filing lurk beyond the prices on the box. That's obviously not an issue for residents of Nevada, Florida, or other states that don't require returns. But if you've worked in more than one state in 2008, the filing fees can pile up.

For example, TaxCut charges $29.95 to prepare a federal return for each state, plus $19.95 for state e-filing. What if you need to file in, say, New York and New Jersey? If you're using H&R Block's $19.95 TaxCut Basic for the desktop, in the end you could pay close to $120.

Intuit TurboTax Basic for the desktop, on the other hand, would cost roughly $136 for the same scenario. It charges $34.95 for preparing and $17.95 for electronically filing each state return. Some editions of TurboTax, however, include preparation for one state.

In either brand's case, if two unmarried people use the same tax-prep service to file individually in the same state, then they only pay for one state return. TaxCut may ask for another $19.95 per person for state electronic filing, and TurboTax would request another $17.95.

The hotly-contested $9.95 fee for additional federal returns from TurboTax, by the way, does not apply to married couples filing jointly, since they're dealing with one return. Similarly, people filing jointly with TurboTax or TaxCut need not pay an additional fee for state filing as long as they work in the same state.

Desktop or Webtop?
Web-based tax apps continue to attract more users each year, while sales of their boxed counterparts are virtually flat. But tax software in a box isn't disappearing from the aisles of Wal-Mart anytime soon. Many users still prefer the seeming security of storing private data on a local hard drive rather than a vendor's servers.

Among the benefits of online tax-prep options, however, is that you can start with a more basic edition and easily upgrade at any time if your return becomes more complex as you work through it. If you buy the software on a disc, you're stuck with the one you bought.

Service and support
Both Intuit and H&R Block guarantee that you'll get the maximum possible IRS refund. If you're unhappy with their products, you can demand a refund from them.

Should you need personalized assistance, H&R Block costs less. From box, TaxCut includes a live consultation with a tax professional for one topic--free in all products but the desktop Federal with e-file--then $19.95 for help beyond that. The people on the line include some 1,500 of the 120,000 agents at H&R Block's streetside offices. For similar support, Intuit charges $34.95 for the first 20 minutes and another $15.95 per 20 minutes beyond that time.

H&R Block also touts its free, live audit support, for which Intuit asks $34.95. Yet, Intuit provides a help-yourself audit support center and continues to expand peer support through its Live Community. It's similar to a question-and-answer service such as Yahoo Answers. If you trust the wisdom of the crowd--which may include fellow users with similar issues as well as bona fide experts who happen to be users--that should be good enough.

CNET reviews
The features of TurboTax and H&R Block TaxCut are so similar that anointing one as superior is a close call when we review them each year. In our tests, each tool has calculated identical refunds for our tax returns. And the look and feel of the online and boxed applications become increasingly similar with each release.

Each product--whether accessed online or installed from a disc--walks you through the filing process with relatively straightforward questions, and tallies an estimated refund as you work. TurboTax tends to have more natural-sounding queries, although TaxCut does a decent job of skirting around the jargon.

Intuit tends to be the industry leader, claiming 80 percent of the desktop tax-prep market. That's likely helped by its ecosystem of finance applications including Quicken and QuickBooks. H&R Block, however, does import data from Quicken, TurboTax, and Microsoft Money.

We'll formally review the tax-preparation tools once our 2008 paperwork is in order. Check back early in 2009 for our final verdict, which will appear on the CNET Tax Guide page.

Correction: This story initially gave an incorrect total for TurboTax Basic with e-file. The total price is $49.90. Also, the charts misidentified the number of e-filings included with the Intuit pricing listed. They have been corrected.