Over the years that tax filing software has been on the mass-market, the lines between the different major programs has largely blurred. At their heart, each program does the same thing: help you file your taxes by making it easier to get the right data where it needs to go, doing the math for you, and allowing you to NetFile if you wish.
The opportunity for differentiation largely comes in two areas: the add-on tax-related planning tools such as RRSP planning tools, and tweaking the user interface (UI) to provide a more pleasant, friendly experience, be it to the tax novice or the tax expert.
This year I reviewed the three major tax preparation software programs available on the consumer market: H&R Block Premium, UFile Standard and QuickTax Standard. UFile and QuickTax also offer Web-based applications, but I only tested the boxed software available through retail.
It should be noted that the H&R Block Premium and UFile Standard programs are essentially the same: Dr. Tax Software licenses the UFile application to H&R Block who rebrands it and markets it as its own program. Other than adding a green hue to the UI, it’s essentially the same program as UFile.
Where H&R Block differentiates, besides leveraging the brand value it has through its retail business, is by offering the opportunity for purchasers to buy-up to different H&R Block services, such as assistance with more complicated returns or assistance with an audit. Purchase select services, and they’ll even refund the software purchase price. Otherwise UFile and H&R Block’s applications are identical, so consider my comments on UFile to apply to both.
One thing I noticed this year is the vendors have really worked to speed install an activation. I had UFile installed, updated and ready to go in about five minutes. For novice users, a slideshow tutorial is available before you dive in.
The program beings with an interview format to populate your name, address and other information, which can also be carried-forward from a past year’s return if you used UFile the year before. It also asks you to indicate from a list what sort of deductions and income you plan to claim, such as charitable donations, T4s, and so on.
From there, you’re asked to enter the appropriate numbers for each form and deduction, being prompted with the line number on your T4, for example, to make it easier.
UFile includes an RRSP analyzer tool to help you dynamically determine your tax savings based on different contributions you could make. H&R Block ads a retirement planner tool. You enter your age, savings, estimated rate of inflation, and desires income at retirement; it tells you if you’re on track or not.
QuickTax Standard is similar in many respects, although it took me closer to 10 minutes to complete the install, activation and update process. And it also offers a buy-up Audit Defence service, which will help you in case of a government audit of your return.
While it’s similar in many respects, I found the UI of QuickTax a little more feature-rich and nuanced. For one, it gives you a choice up front of how you want to prepare your return: straight to the forms if you’re old school and experienced, or the interview method, which they dub EasyStep.
I choose the interview method and it went through a similar process to UFile to identify my income and deductions, but with a twist. Rather than giving me a list of income sources, for example (such as a T4, self-employed, investment income, and so on) it asked me simpler questions, such as “did you work this year?” If I clicked yes, then the list dropped down of income types to select. It asked if I was a student or had retirement income, and had an icon for each one, such as a present for donations.
It was an easier, and less daunting, way to get the information from a novice user. Of course, there are potential pitfalls. I haven’t been a student for years, but I still have student loan interest to claim. I wouldn’t want to miss out on that deduction by not clicking the student box.
A few additional things that set QuickTax apart for me: regular summaries of how the information I’ve entered is being interpreted, a FAQ in the right column relevant to each screen, and a window in the top right that updates my refund/amount owing each time I enter a number. It also estimated my likely GST credit.
On the tools front, QuickTax was also more feature-rich, offering an RRSP tool as well as an RESP planner and optimizers for charitable donations and medical expenses, to help you maximize your savings in each.
While it’s getting more difficult to find new ways to tweak software that does, at its core, very basic things, and not have the changes just be tweaks for the sake of tweaking, I give credit to QuickTax for making some really good UI improvements with this year’s software. For the more experienced user it’s unlikely to make a difference, but for the novice I’d definitely give the nod to QuickTax. All three programs get the job done well, though. And, most importantly, I got the exact same refund with each.
Other factors to consider when buying tax software: how many returns do you plan to file, and how many are included with the software? This will vary, so be sure to look closely.