TurboTax, H&R Block, Tax Act, or a Certified Public Accountant – Who Can Do Your Taxes Better?

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Well folks, the results are finally in – I have done the unthinkable by completing my 2012 personal/business tax return 4 times! 

Ohhhh the horror, right?!!?

Why on Earth Would I Do My Taxes 4 Times?

I think we could agree that for most people, doing one’s taxes would not exactly be considered “fun,” and definitely not something that you would want to subject yourself to 4 times over in one year!

However, my purposes for going through my taxes 4 times were two-fold:

• To compile/utilize what I had learned in the 4 posts I wrote in the past month, first taking an in-depth look at the TurboTax, H&R Block, and Tax Act online tax preparation platforms and then comparing and contrasting all of their features at once to conclude which is best.  
• To compare the performance of these online tax preparation platforms to having a tax professional (CPA) help me in an effort to determine if the extra cost of the tax professional is warranted by the bottom line figures of my tax return. 

My 2012 Tax Return Results Using TurboTax

My 2012 Tax Return Results Using H&R Block

In my overall comparison of the popular online tax prep platforms, H&R Block was a very respectable option that featured middle-of-the-road pricing. In my opinion, it was the most straight-forward, easiest to use, and least confusing platform.

Below is a summary of my experience when I entered my 2012 tax return numbers in to H&R Block:

• As was the case with TurboTax, since I had business/self-employed income in 2012, I had to upgrade to the $50 Premium (most expensive) version of their software. 
• For some reason that I could never figure out, the H&R Block system said that I could only contribute $4195 to my Roth IRA for 2012 (lower than the maximum contribution of $5000). 
• I’m not sure why it stated this since I had made at least $5000 in income in 2012 and was below the maximum Roth IRA income limits.
• After entering all of my numbers, it resulted in the following return amount:
• $802 Federal Income Tax Refund.
• It did not calculate my expected state income tax return/owed numbers. 

My 2012 Tax Return Results Using Tax Act

Conclusions

In reviewing all of the numbers above, we can make the following conclusions:

• Assuming of course that I used the platform correctly (hopefully I did!), using TurboTax would have been an extremely costly mistake. 
• It would have resulted in a loss of $1139 vs. using Tax Act. Crazy!
• As is the case with their platform pricing, H&R Block again represents the “middle-of-the-road” return amount with a federal income tax refund of $802. Not too bad!
• As I mentioned above, Tax Act, along with offering the lowest fees, resulted in me getting the most money back from the IRS / owing the least amount of money to the State of Virginia of all three online tax prep options. 
• Looking solely at the federal return and state taxes owed numbers, I got a $30 net gain/improvement in using a CPA over the best online tax preparation option, Tax Act. 
• However, this does not take in to consideration the $200 fee I had to pay the CPA and $19 fee to use Tax Act. 
• If the fees of using Tax Act vs. a CPA are considered, the $30 improvement shown above turns in to a loss of $151 by using a CPA over Tax Act. 

So, purely from a bottom-line numbers perspective, Tax Act delivers the highest value.

However, there are some other non-numerical considerations that makes the Tax Act vs. CPA usage more complicated (and hence will be the subject of the future post described above). For example, you get a nice level of assurance when you use a CPA that your taxes are done correctly. They also reduce the amount of work you have to do, along with me as a business owner, being able to bounce questions off of them throughout the year. In addition, they calculated and prepared my 2013 estimated tax payment stubs and numbers as well, so that is a nice service!

How about you all? How did you file your taxes this past year – an online tax prep platform, through an accountant, or filing out the forms directly?

In general, do you feel the guidance provided by an accountant is worth the fees required for their services?

Share your experiences by commenting below!