Intuit TurboTax Premier for 2005 is the easiest-to-use tax-preparation software for do-it-yourself filers. This year's upgrades, though not dramatic, include a simplified interface that makes the tax interview easier to navigate. This is particularly helpful for nonlinear filers who like to jump between different sections--say, from wages to IRA contributions, then back to investment income. TurboTax 2005 excels at demystifying IRS terms and doing so in as few words possible. Intuit has done away with the much-hated mail-in rebates, and installation is easier now that federal and state editions are included with TurboTax Deluxe and Premier. Unlike its leading competitor, H&R Block TaxCut Premium 2005, TurboTax doesn't provide post-tax-return IRS audit support (with fees starting at $29.95 for a standard 1040 return), but we were impressed by its well-crafted and superior tax interview.
Editors' note: We previously stated that Intuit TurboTax does not provide IRS audit support. It does, but unlike H&R Block TaxCut, Intuit charges a fee for its TurboTax IRS audit support, starting at $29.95 for a standard 1040 return. (1/3/2006)
TurboTax 2005 is easier to install than version 2004. Both federal and state editions, which used to ship separately, now come on a single CD (Deluxe and Premier editions only). Plus, you no longer have to fuss with annoying rebates. This doesn't mean you're paying more; TaxCut 2005 has done away with rebates, and in fact, Premier 2005 costs the same as the after-rebate 2004 version.
For this review, we looked at TurboTax Premier 2005, and setup was a no-brainer; it took just a few minutes. Once the federal program installs, you select your state from a list. TurboTax then installs the state app and downloads updated program files and IRS forms, which can take several minutes via a dial-up Net connection or mere seconds via broadband. If you've moved around a lot in the past year, you can also install and use more than one state program. TurboTax steps you through each state separately. If you changed jobs in 2005, the interview walks you through that as well.
Intuit has done a solid job of fine-tuning the TurboTax interface without gutting the already solid design, giving TurboTax 2005 a slight ease-of-use edge over TaxCut 2005, which is also simple to navigate. In TurboTax, it's easier to hop around the interview, thanks largely to its third row of submenus. This row thankfully replaces the EasyStep Navigator, a pop-up box that provided a lengthy list of interview sections and typically required some tiresome scrolling. If you liked the old interface, fear not: The EasyStep Navigator is still available, although it's buried in the Tools menu. TaxCax, by comparison, provides a navigational tool similar to TurboTax's EasyStep Navigator.
TurboTax Premier 2005 also adopts time-saving features used by online tax-prep services, including TurboTax Online. New summary screens allow advanced users to quickly enter information such as wages, interest, IRA distributions, and so on without enduring a lengthy interview. New users aren't forgotten, though. If you're unsure about what information to enter, simply click the "Walk me through all" button for a step-by-step interview with plenty of hand-holding.
TurboTax 2005 comes in three desktop versions: Basic, Deluxe, and Premier. We don't recommend the $20 Basic package, a bare-bones tax-prep app that lacks a copy of TurboTax State. (Both Deluxe and Premium include State.) Since you'll pay $50 if you purchase Basic and State together, you're better off with the $40 TurboTax Deluxe, which has additional tools for determining educational, home, medical, and other deductions. We tested the $70 TurboTax Premier, which provides additional help for investment, rental, and small-business income and is the best choice for complex tax returns.
Aside from better ease of use, TurboTax doesn't add a lot of new features. One great addition to TurboTax Deluxe and Premier 2005 is TurboTax ItsDeductible, a nicely integrated utility that helps you determine the value of noncash charitable contributions, including children's clothing, toys, appliances, computers, and so on. Last year, ItsDeductible sold separately for $20.
How does ItsDeductible work? Let's say you donated a box of kids' clothes to Salvation Army. ItsDeductible provides IRS-approved, fair-market values for noncash items--for example, Girl's Dress is $14. You can easily transfer your charitable-deductions data from ItsDeductible to TurboTax with a couple mouse clicks. The competition? TaxCut Deluxe and Premium 2005 include a similar tool called Deduction Pro, which doesn't integrate as seamlessly with TaxCut. For instance, it's harder to transfer deduction data from Deduction Pro to TaxCut. Overall, the TaxCut process is less intuitive than TurboTax's.
Overall, most TurboTax 2005 improvements focus on the tax interview. The new "Where do I enter" button makes it easier to find help on a particular topic. You could, for instance, click the button, type income in the pop-up Topic Search box, and choose from a list of income-related topics. TurboTax then takes you to the appropriate section of the interview. This feature isn't perfect, however. Once when we clicked "leased vehicle, self-employed business" in the Topic Search box, the program routed us to the Business Summary screen rather than to one that addresses leased vehicles.
TurboTax 2005 customers have a variety of support options. Intuit provides free phone support for installation-related queries, but calls concerning printing, filing, navigation, and other usage issues cost $9.95 per incident. Online chat and e-mail support remain free for both setup and usage queries. H&R Block, on the other hand, also offers free phone support for TaxCut 2005. Our TurboTax phone, chat, and e-mail queries were answered accurately and politely. We waited a couple of minutes to chat with a tech rep, but our phone calls were answered immediately. Our e-mail query was answered within several hours. Unfortunately, Intuit doesn't provide free audit protection similar to TaxCut's Worry-free Audit Support, in which H&R Block promises to help TaxCut users prepare for an audit if the IRS comes knocking.