Our first look at H&R Block TaxCut for the 2007 tax year reveals some key changes from the 2006 version, but nothing dramatic for the majority users.
TaxCut 2007 comes in four versions. We would advise skipping the $20 Premium because if you also need to manage state taxes, the separate TaxCut State costs an extra $30. The $40 Premium + State is a decent choice only if you plan to snail mail your return, because the $70 Premium + State + e-file covers the cost of filing electronically directly to the IRS. The $90 Home & Business edition is the better choice if you earn income outside of salaried work. All editions of TaxCut 2007 work with both Windows and Mac computers, except for the Windows-only Home & Business. For more hand holding, H&R Block provides the $80 TaxCut Signature, with which an H&R Block representative will review, edit, and e-file a return for you. TaxCut Online Office costs $100 and requires less data entry on your part, as a tax pro will do most of the leg work. The latter may be a good option for those who would prefer to fax data than manage it in a Web browser.
Setup and interface
Luckily, the modest system requirements haven't changed since last year. You'll need a computer running Windows 2000, XP, or Vista (or Mac OS X); a CD drive; and at least 128MB of RAM.
H&R Block also provides online editions of TaxCut that are extremely similar to the desktop counterparts. The new, Flash-based Tango tax preparation option also works within a browser. Although it includes 24-7 tech support, we find its $70 fee a bit steep. The Web-based software may better fit one person, while the desktop application can be used by multiple members of a household.
The desktop TaxCut took about five minutes to install, and another several minutes to download updates. Make sure to be online during setup so that the application will reflect the latest tax details. You'll be asked to register the software right off the bat, but you can fill out that form later.
Once TaxCut was running, we liked the tabbed interface that lets you skip among the topics, such as Federal, State, File, and Plan. Those who have used the company's tax products in prior years will notice a more streamlined appearance. For instance, the checklist no longer pops up in another window (although Help still does). A running tally of federal and state refunds appears too, as with TurboTax. We like the improved search capabilities, which make it easier to find details about tax questions that may leave you stumped, such as whether the alternative minimum tax may affect you.
The software immediately recognized our household's returns from last year--something that TurboTax failed to do in one case. Whether you import or start from scratch, one of the first steps involves telling TaxCut if in 2007 you had big life changes, such as major medical expenses, a move, or served in the military. Married couples should appreciate the Alternative Minimum Tax Estimator, which guides you through the ins and outs of tricky tax law.
H&R Block TaxCut can import data from Microsoft Money, Intuit Quicken, or from TXF files. Unfortunately, since our Money file was loaded with duplicate accounts we've never been able to weed out adequately, this wasn't so helpful in our case.
It was unclear why TaxCut's Guide Me questionnaire didn't qualify our fictional five-year-old daughter as a dependent. Since we described ourselves as single and not divorced, who else could claim the child as a dependent? We felt that TurboTax did a better job walking us through this process.
We felt that neither TaxCut nor TurboTax did a great job explaining some basics, such as how to report state and local tax refunds from prior years. Interest income is another topic that could confound tax newbies. Do you need to list that if your savings account earned pennies last year? What if you earned interest on a bond but didn't sell it? We couldn't find explicit answers. The "Learn More" links pop up answers to questions as you go. Most are helpful, but others, such as regarding military status, offer nothing but a line or so of text.
In addition to W-2 details, we entered information for a home-based business. Here, we felt that TaxCut was slightly less confusing than TurboTax Home & Business, which started by asking details about our side business rather than our primary job. TaxCut explained the basics, like how to describe our home office, nearly each step of the way. At the same time, however, when TaxCut detected Schedule C errors, it was unclear how we could fix them on the intimidating form.
We were also disenchanted that TaxCut failed in little ways that TurboTax did not. For instance, TurboTax sniffed out our bogus New Year's stock purchase date, but TaxCut didn't raise a flag for the day when markets are closed.
Service and support
TaxCut includes very detailed and searchable help menus, FAQs, and helpful topical videos. Customer support via chat is available 24 hours daily. By phone, you can reach someone from 5 a.m. until 10 p.m. PST on weekdays. Weekend hours, which were unavailable last year, now end at 6 p.m. Did we mention that help is free?
H&R Block continues to offer live technical support with tax advisers, as well as free audit support in the coming years should the IRS come knocking. For $20 per topic, the Ask a Tax Advisor service will connect you with an H&R Block tax representative by phone or e-mail. This service is not considered by H&R Block to be part of TaxCut customer care.
Preparing taxes isn't for the faint of heart, but TaxCut does a good job demystifying most tricky topics so that you don't have to scrutinize IRS forms. Nevertheless, we find that Intuit TurboTax provides more new features that the majority of users may find helpful, so it has a slight edge this year over TaxCut. We had a hard time getting some questions answered within TaxCut, despite a well-organized interface and strong support options. That said, we don't advise switching brands if you're already content with one.
We still recommend for people with simple 1040 EZ returns to stick with less expensive, online options, such as the entry level rival TaxAct. It is free except for a state filing fee.