Review: H&R Block TaxCut Online Tax Service

Like popular software TurboTax, TaxCut gives strategic as well as tactical advice.

H&R Block's TaxCut interface is colorful and organized and its arrangement of multiple questions on each page made things move along faster. The refund ticker tracked both my federal and state refunds (some rival services track just the federal), and I liked the "percent complete" bar that indicated how far along I was in the tax-prep process.

TaxCut users can import prior-year information from TurboTax, but TurboTax contends that TaxCut imports only "very basic information." That's about what I got when I imported a 2006 TurboTax file: names, Social Security numbers, addresses, employer IDs and addresses, and other primarily nonfinancial information. It did save a little time, though. In any case, I was surprised that such a prominent site couldn't import 2007 W-2 or 1099 information from payroll providers or financial institutions.

Like TurboTax, TaxCut gave me strategic as well as tactical advice. The site's cost/basis calculator does a good job of determining the basis for complex investment disposition situations, and the FAQ pages were more thorough than most in covering topics related to capital-gains matters.

TaxCut was the only one of the tax sites I reviewed to point out that even though my itemized deductions exceeded my standard deduction, I might want to claim the standard deduction anyway to capitalize on offsetting effects in my state return. The 'Deductions and Adjustments' summary also provided explanations of the differences between what I input and what I could deduct. Such information is helpful for people with deductions that phase out according to income, such as student loan interest.

The site also showed some awareness when it flagged my fake Social Security number (123-45-6789), though it gave the interesting response that the IRS had already processed a return with that number.

But my TaxCut experience wasn't all wine and roses. When I changed my noncash charitable contributions to US$400 from $500, the tax summary still showed $500 (and again, I received little guidance about the value of those items). While I edited and re-edited the information to no avail, the site froze several times, forcing me to close my browser and log back in. Also, users can't e-file in more than one state.

Human backup is a huge selling point, though. TaxCut offered plenty of help and FAQs--even videos--tailored to the task at hand, and one personalized 'Ask a Tax Advisor' phone or e-mail session is available with the service.

But at $19.95 a pop thereafter, that help can get pricey; users with complicated tax situations might be better off heading to an H&R Block office to have their taxes done the old-fashioned way. The federal-state package cost of $44.95 (instead of paying $19.95 for TaxCut Premium and $29.95 for one state return separately) makes TaxCut cheaper than TurboTax and TaxBrain, and it's a better value than the similarly priced CompleteTax.

This story, "Review: H&R Block TaxCut Online Tax Service" was originally published by PCWorld .

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