TurboTax vs. TaxACT vs. H&R Block at Home: 2012 Lightning Review

Posted on March 20, 2013 // 39 Comments

According to a MyMoneyBlog.com reader poll taken last year, 52% used TurboTax, 18% used TaxACT, and 14% used H&R Block at Home to prepare their tax returns, which agreed with the most popular software overall in the US. The remaining 16% either used an accountant (10%), filed on paper (4%), or used another software (2%).

Last year, I used each of “The Big 3” to do my taxes in order to compare and contract in detail the three software programs. (As an example, my TurboTax 2011 review talks about comma-insertion as a feature…) I plan to do the same thing this year, but to help you early-birds, here’s the highly-condensed version of my reviews:

Accuracy and Maximum Refund Guarantees
In terms of accuracy and interview style, I think all three are comparable if not nearly identical. In fact, I’m certain they all dissect each other’s products annually to ensure this. As such, all three offer a “Maximum Refund Guarantee” as well as a “Accuracy Guarantee” that states that they will pay any penalty and interest assessed by the IRS or your state due to calculation errors on their part (though H&R Block limits this to $10,000).

In my opinion, the remaining major differentiating factors are price, time-saving features, and audit support. Now, there are various discounts and sales that pop up, but here I’m just comparing regular sticker prices.

TurboTax Online

  • The most popular and most polished-looking user interface.
  • Federal Deluxe regular price is $29.99. State return price is $36.99.
  • Best import support from payroll providers and financial institutions for automatic import of W-2 and 1099 forms.
  • Moderate audit support (you get help, but no in-person representation)

Bottom line: The time-saving choice if you have a lot of brokerage and/or bank 1099s to electronically import, or a lot of details to import from last year’s return and you used them last year. For those like me that would pay extra to avoid all that tax lot data entry.

TaxACT Online

  • Cheapest overall with Federal Deluxe regular price at $9.99. Many can get by with Federal Free version. Cheapest state return at $8.00.
  • Again, just as accurate as the others.
  • Limited import support (worst of the three).
  • Limited audit support (worst of the three).

Bottom line: The value choice if you just want reliable DIY tax return software and don’t need any extras.

H&R Block at Home Online

  • Federal Deluxe regular price is $29.95. State return price is $34.95.
  • Moderate import support for 1099s and W-2 (not as broad at TurboTax, better than TaxACT)
  • Best free audit support, as it includes an H&R Block Enrolled Agent actually attending your audit in-person. Neither TurboTax and TaxAct not offer representation. However, you must think about whether you would hire your own representative in the actual event of an IRS audit (probably depends on severity).

Bottom line: The sleep-well-at-night choice if you want the assurance that a federally-authorized enrolled agent will guide you for free through a potential albeit unlikely audit.

Filed Under: Reviews, Taxes //

Capital One Consumer Bank Savings Account Review

Posted on March 11, 2013 // 20 Comments

Capital One bought ING Direct USA back in early 2012, and has finally completed their transition and re-branding. Their new savings account product is called Capital One Consumer Bank Savings. Since I’ve had an account with them for over a decade (September 2001, as they remind me every time I log in), here’s an updated review of my 2nd oldest bank account meant for both new and existing customers.

User Interface

At first glance, the only thing that really changed was that the primary colors went from orange and blue to Capital One’s red and blue. However, there are a few other tweaks that I noticed were different from the ole’ ING Direct days.

Login. This is still a little unique amongst online savings accounts. You login with either a username/account number and a PIN number (not an alphanumeric pA$sW0rd). If you have an old 4-digit PIN, they’ll ask you to change the PIN to a 6-digit number for better security. In addition, while the default entry method is via mouse clicks to avoid keystroke loggers stealing your password, you can also use a keyboard to enter the PIN with a creative key-to-number conversion that changes each time. See screenshot below:

Main account screen. The home screen is simple and straightforward, as always. There is better integration with their brokerage arm, Sharebuilder, with your balance automatically showing and the ability to perform same-day transfers between accounts. So if you have a Sharebuilder account, you essentially have a high-interest sweep option instead of a money market fund paying zero interest. Screenshot:
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Filed Under: Banking, Reviews //

Fidelity Freedom Funds Review: Avoid High Cost Target Date Retirement Funds

Posted on February 26, 2013 // 34 Comments

Updated and revised. Fidelity Investments does a lot of things well, but their Fidelity Freedom series of target-date retirement funds is not one of them. I’ve been warning people about these funds since 2006, although recently they’ve been getting some heat due to their overall underperformance. Assets in the Freedom funds have been dropping, while the assets in Vanguard’s Target Retirement funds have been increasing quickly. Here’s why the underperformance is not about the glide path, but about the structure and fees.

This post is a bit long, so here’s a roadmap of what I’m going to try and show:

(1) The goal of owning actively-managed mutual funds is to beat their passive benchmark. Pick the winners and not the losers. The problem is that Fidelity Freedom funds hold so many different funds with overlapping holdings, that in the end they basically own everything. It’s exceedingly difficult for them to accomplish such outperformance. Thus, over time their performance before fees is likely to simply match that of their benchmark.

(2) Due to their higher expenses, this means that their net performance after fees (what investors actually get) will be very likely to underperform the their benchmark. Over long periods of time, the amount of underperformance will closely match the amount of management fees charged.

(3) This expected underperformance is confirmed by looking at their historical performance over the past 3, 5, and 10 years.

(4) Instead, investors should look for low-cost index funds to replicate the benchmark give the best chance of higher performance. Options are explored.

[Read more…]

Filed Under: Investing, Retirement, Reviews //

Jemstep Portfolio Manager Review

Posted on February 18, 2013 // 16 Comments

When I first reviewed JemStep in 2011, it analyzed your current portfolio and made customized mutual fund rankings. Flash forward to 2013, and they’ve moved into the portfolio management and advice space, similar to previously-reviewed sites like Betterment or Personal Capital. Now it’s called Jemstep Portfolio Manager.

After signing into my old account and looking around at the new features, I was happy to see they’ve actually gotten pretty close to my wishlist:

  • Import my existing portfolio directly from broker. Check.
  • Track asset allocation across entire portfolio. Check.
  • Customized rebalancing alerts. Not quite. They do give rebalancing alerts, but only customized to their portfolio recommendations, not my personal chosen preferences. See below.
  • Detailed performance stats vs. benchmarks. Incomplete? I don’t see this, but I haven’t be able to get past the trade recommendations.
  • Reasonable cost. During their initial beta, the service will be free for everyone until March 1st, 2013. After that, the service remains free for those with assets of $25,000 or less. Otherwise see fee schedule discussion below.

Test Drive

The first step is to set a goal. They want things like age, income, target retirement age, risk tolerance, etc. You have provide a preference of mutual funds or ETFs. Given their previous support of actively-managed funds with high recent risk-adjusted returns, I was surprised to see the following:

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Filed Under: Investing, Reviews //

FreedomPop Review: Unboxing, Download Speeds, Size Comparisons

Posted on October 11, 2012 // 46 Comments

I ended up ordering a FreedomPop mobile hotspot last week for the 500 mb in free wireless internet each money, and have been playing with it for a couple of days. Here’s a review including what came in the box, hotspot size comparison, download speed test results, and my overall initial impressions of the service.

Unboxing. The mobile hotspot “hockey puck” shipped the next day after ordering, and arrived a few days after that. Inside the box was the hotspot, a USB charging cable, and a USB AC adapter. The charging cable port appears to be the micro-USB standard size. I included a credit card for size comparison.

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Filed Under: Reviews //

SaveUp.com Review: Using Lottery Prizes To Encourage Saving?

Posted on July 9, 2012 // 6 Comments

Another startup designed to encourage people to save more is SaveUp.com. The inspiration came from a new economics idea called “Prize-Linked Savings”. People tend to like lotteries, even though they are mostly a losing proposition. So what if you effectively gave out lottery tickets in exchange for saving money instead? If you think it sounds like a Freakonomics idea you’d be right.

First, you have to link up your financial accounts like banks, credit cards, and student loans (yep, usernames and passwords). Next, whenever you perform a positive activity, you earn credits towards prize drawings for $100 gift cards up to a $2 million prize. For example, every time you increase your savings account balance by $1 earns you one credit, and every $1 that you lower your debt earns you one credit. There are also various small challenges:

How does SaveUp make money then? Here’s a snippet from their press release:

SaveUp’s prizes are furnished through advertising and sponsorships with top consumer brands, including Virgin America and others. SaveUp’s brand partners receive significant exposure to a highly aspirational audience through frequent brand placements, exclusive content or category ownership, social media linkage, and the ability to offer coupons, promotions and other exclusive deals to SaveUp users on the site.

Data aggregation service is provided by Intuit (owners of TurboTax and the popular Mint.com). SaveUp.com is currently offering 100 bonus credits to My Money Blog readers for joining (it’s something, but don’t get too excited as it’s not that much). I opened an account and have been playing with it… the overall user experience is smooth and I do get a little “scratch-off ticket” buzz. I’ve put all my credits towards the drawing for the $100 Home Depot gift card. Daddy needs a new Makita hammer drill… but I’m afraid if I don’t win anything in a couple weeks I’ll probably get bored. :/

Filed Under: Reviews //

ImpulseSave.com Review: Making Saving As Easy As Spending

Posted on July 9, 2012 // 1 Comment

Even though the economic news is shaky, I still see a lot of new startups in the personal finance arena. I’m constantly running behind in keeping up with all of them, but here’s one that reader MF sent over.

ImpulseSave.com tries to making saving as easy as spending. Their intro video throws out the stat that 20% of take-home pay is spent on impulse purchases. So first, you set a goal like “student loan” or “Roth IRA” or “vacation fund”. With ImpulseSave, just sending a text message like “10 to student loan” will move $10 from your checking account to your savings account. At first I thought “Umm… that’s it?”, but here are a couple of ways I see it working:

  • Converting discounts to real-world saving. Many times during the month you’ll “save” money by getting a discount or doing something frugal, but by the end of the month you’re still not ahead because you just spent the money elsewhere. Now, let’s say you brown bag your lunch. With one text message or e-mail, you can shoot $10 into your vacation fund. Went for the $1 DVD rental date at RedBox instead of $20 at the theaters? Move $20 out of your checking account.
  • Match spending with savings. Think 401k matching, but for yourself. Create a barrier to spending by making yourself save an amount equal to whatever frivolous purchase you make. Bought $20 of clothes you didn’t need? Well, match it instantly with a $20 savings transfer. You still got your little buying high, but you saved as well.

These are all behavioral tricks to saving, but let’s face it, that’s what a lot of us need. My main issue is that the service requires you to open up a new bank account at their partner bank, Massachusetts-based Leader Bank. I don’t want to open up yet another bank account just for this service (especially if it only pays 0.40% APY). I hope they keep the central idea but allow you to link your existing checking and savings accounts like Capital One 360. I asked for an invite and got it within 24 hours, but didn’t end up opening an account since I didn’t want to provide my SSN and full personal info for the bank account.

Filed Under: Reviews //

Provident Funding Mortgage Refinance Review

Posted on June 28, 2012 // 63 Comments

We finally signed the closing documents on our most recent mortgage refinance. We ended up going through the same local mortgage broker who linked us up with Provident Funding, which is apparently one of the largest private lenders in the country. Before going through them, I read some reviews online and the main complaint seemed to be that their underwriting was overly strict. I decided to go with them anyway because:

  1. They had the lowest rates at the time for a no-cost refi,
  2. With such high loan volume, I figured I should expect some complaints based just on the numbers (happy people rarely leave lender reviews),
  3. We are very qualified for the loan so it shouldn’t matter anyway. Our loan-to-value ratio was well under 50%, much less than the 80% that most loans require. Great credit score, good income.
  4. We trusted our broker to help guide us through the process.

So how did it go? One reviewer described the loan approval process as “cookie cutter” and a “gauntlet”, and I think that is a very apt description. The underwriting is very robotic and inflexible. For example, my wife already has plenty of stable, W-2 income to support the loan by herself. I decided to keep my name off the application explicitly to keep things simple since I have both W-2 and 1099 income. Yet, Provident still required proof that the “excess” income on our tax returns was connected to me and not my wife. Why would you care where the extra income came from?

Another example is regarding bank statements. I understand the need for historical bank statements, but any deposit or withdrawal over something like $5,000 needed full documentation as to source and reason. Never mind what our total balances were. If they don’t like the reason, it is grounds for denial. This is annoying, especially if you move money around a lot like I do. The really stupid part? I finally discovered that the bank doesn’t even need to be the deposit source for your paycheck. In that case, since they don’t care about long-term balance history but instead want the appearance of blandness, I luckily had lots of bank accounts to choose from and simply chose the “cleanest” one to finally satisfy them.

In addition, the bank account that you submit the statement for is the one that you need to fund closing costs via cashier’s check. I suppose this proves you own it? The only bad news was that my “clean” account was an online bank, so I had to pay for a $30 outgoing wire fee in place of the free cashier’s check I could have gotten from a local bank.

Recap: Provident Funding has very competitive rates, but with strict underwriting requirements that often lack common sense. You should be wary of them if you are a non-standard applicant in any way (self-employed income, recent job change). There are many complaints that people lost the house they had under contract because they were eventually denied their loan or did not close on time. The total time from loan application to closing on our refinance was approximately 45 days. If you have a great credit score and nice, stable W-2 income with good ratios, then go for it if their rates are the best and you’re willing to trade a few headaches for it.

Compare with rate quotes from:

Related mortgage refinance articles:

Filed Under: Real Estate, Reviews //

Scottrade Review: Trading Experience & Tips (Updated 2012)

Posted on June 11, 2012 // 14 Comments

I’ve had an account with Scottrade for several years now, and here is an updated, in-depth review for 2012 (last one I did was in 2006!). I will focus on all the little things that make brokers different from each other, from completing your taxes to buying a stock on a moment’s notice. This review will be from the point of view of a casual private investor who does not trade daily but does mostly buy-and-hold ETF investing and also trades some individual stocks with a small portion of his portfolio (less than 5% of overall portfolio).

Unique Characteristics

  • 505 physical branches nationwide. No other discount broker has nearly the same footprint. If you like the feeling of knowing there is a physical branch with friendly humans to interact with nearby, this is the broker for you.
  • Fiercely privately-owned. The current CEO, Rodger Riney, is the same person that founded the company in 1980. He has rebuffed repeated offers to be sold to public corporations like E-Trade or Ameritrade. I kind of like this independence and unwillingness to cash-out. It helps them not have to worry about profits all the time. For example, even during both recent stock market busts, no one has ever been laid off, and no office has ever been closed. Their branch brokers don’t offer advice to customers and do not work on commission.

Commissions and Fees

  • Stock commissions are $7 a trade. No maintenance fees, no minimum balance fees, no inactivity fees. $500 minimum to open the account. Options trades are $7 + $1.25 per contract.
  • Electronic statements and trade confirmations are free, but paper ones are not. Mailed statements are $2 each, mailed trade confirmations are $1 each. It’s easy to download the statements as PDFs and print if necessary.
  • No account closing or transfer-out fee. This is rare, as nearly all the other places charge you $50+ to move your positions away to another broker.
  • No free dividend reinvestment. There is no free dividend re-investment plan (DRIP) at Scottrade. What I do is wait until enough dividends accumulate and then reinvest them along with new money, because I don’t like dealing with many small tax lots with partial shares.

[Read more…]

Filed Under: Investing, Reviews //

FutureAdvisor: Free Online Portfolio Management and Asset Allocation

Posted on April 11, 2012 // 3 Comments

Another new online portfolio management tool is FutureAdvisor. I want to say they were invite-only for a while, but they appear to be wide open to new accounts now. Their basic account is free “forever”, and you can add 24/7 portfolio rebalancing alerts along with an annual videoconference call with an advisor for $49/year. The process of setting things up is pretty simple with the following steps laid out:

Personal Profile
Enter pertinent information such as current age, current income, desired retirement age, and desired retirement income. I like that they don’t just assume that you want to spend 80% of your current income in retirement. However, the total of your portfolio holdings entered here will be replace by whatever you share in the next step. I’m not really sure why they bother asking.

Financial Profile
You can either manually enter your portfolio holdings or have them import it automatically using your username and password. Most major brokerage companies including 401k accounts are available, but I did notice some that are currently not supported. The supported list includes Vanguard, Fidelity (w/ Netbenefits), Schwab, Merrill, and TD Ameritrade. The unsupported list includes TradeKing, Zecco, and Interactive Brokers.

Asset Allocation
Based on the information given and that same ole’ multiple-choice risk questionnaire, they will suggest to you a model asset allocation. You can tweak the target by picking between Conservative (60/40 stocks/bonds), Moderate (80/20), and Aggressive (90/10). Here’s the conservative asset allocation assigned to me:
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Filed Under: Investing, Retirement, Reviews //

MarketRiders Portfolio Manager Review: First Look, Asset Allocation

Posted on March 29, 2012 // 5 Comments

Time to try out another online portfolio manager – MarketRiders.com. While previously-reviewed Betterment is an website/broker/advisor combo that handles all the decisions and trade executions for you, MarketRiders is more like an online portfolio coach telling you what trades to place yourself at the discount broker of your choice. Both services offer diversified portfolios using low-cost index ETFs, but think of it as one cooks you a nice tray of lasagna while the other one provides you a detailed, step-by-step recipe.

Free Trial Sign-up
To find out what the recipe is, you have to sign up for a free 30-day trial with your credit card information. The regular price for the service is $149.95 a year or $14.95 per month. You will be auto-enrolled after 30 days, but MarketRiders promises that canceling is easy and can be done completely online within two clicks. I can confirm it is indeed that easy. Just go to My account > Manage my subscription > Cancel my subscription. You still even get to use the rest of your free 30 days after canceling. Now, what do you get?
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Filed Under: Investing, Retirement, Reviews //

TurboTax 2011 Review: My Experience and Comparison With TaxACT

Posted on March 6, 2012 // 25 Comments

I just finished filing my federal and state income tax returns (again) using TurboTax Deluxe Online edition. This is the 2nd part of my series comparing the three major tax preparation websites: TurboTax, TaxACT.

You can see my TaxACT 2011 review here.

Tax Situation
Again, here’s a quick summary of our personal tax situation.

  • Married filing jointly, subject to state income tax
  • Both with W-2 income, as well as self-employed income (Schedule C).
  • Interest income and dividend income from bank accounts, stocks, and bonds (Schedule B).
  • Contribute to retirement accounts (401ks and IRAs).
  • Capital gains and losses from brokerage accounts (Schedule D).
  • Itemized deductions (Schedule A), including mortgage interest and charitable giving.

Retail Price
Although their website shows a “retail” price of $49.95 for TurboTax Deluxe, anyone who visits the site will at most pay $29.95 for Federal including e-File. TurboTax State is $36.95 including e-file. If you are a Vanguard Flagship Services or Asset Management Services client, you get a TurboTax Online Federal Deluxe + State + efile for free. All other clients get discount of about 25% off; you must log in to get your discount. There is also a free edition available if you have a very simple tax return – no itemized deductions, investment income, but remember that State is $27.95 extra in that case.

TurboTax Premier offers “additional guidance” for investment income from stocks and bonds and also rental income. However, I had the usual stock and bond sales and was able to complete my return without upgrading to Premier. I did not feel I needed any extra guidance, but if you do it will run an extra $20 for a total of $49.95. Finally, TurboTax Home & Business ($74.95) offers “additional guidance” for self-employment income including dealing with business expenses. However, if all you have is a couple of 1099-MISCs to report as I did, you can get by with Deluxe.

User Review

With all these tax sites you can start your return for free, and only pay when you file. Since I had already input all my tax data into TaxACT.com, I simply opened that up in a web browser tab side-by-side and start filing things out. The Q&A interview questions are in roughly the same order, but there are enough differences to make you jump around a bit.

Import from TaxACT & H&R Block at Home
Last year, I used TurboTax for my tax return. Thus, this time around TurboTax had all my old tax info pulled up immediately. Filing status, dependents, address, DOB, SSN, etc. They also had all my old W-2 and 1099 providers to reduce my data entry needs a little bit more. For example, all my Employer Tax IDs and addresses were pre-filled. This did feel rather convenient, and it helped make sure I didn’t forget any 1099s from old bank accounts.

However, as a result I was never asked if I wanted to import a previous year’s return from another provider like TaxACT or H&R Block. Perhaps someone can shed some light on this in the comments?

W-2 and 1099 Direct Import from Providers
One of the strengths of TurboTax is that you can directly import your W-2 and 1099 information from a number of partner providers. However, the W-2 part didn’t really impress me. Our W-2s came from Ceridian and we had to enter some sort of username and password which I’ve never set up before. It was faster to just type in the 10 numbers and get on with it.

1099s were a different story, at least for me. I was able to provide my Vanguard username and password and have my 1099-INT, 1099-DIV, and 1099-B data imported in seconds. Other partners that I was able to use included Betterment, Chase Bank, Capital One 360 (Sharebuilder), and Pentagon Federal Credit Union. USAA, TD Ameritrade, E-Trade, and Wells Fargo were also available. For those with a lot of transactions, this is a great time-saver.

In addition, after comparing with my TaxACT data, I found that I had made a data entry error of $300 with one wrong digit when manually entering all those capital gains and losses from stock sales. The TurboTax import would have help me avoided that mistake, which I don’t think I would have caught otherwise.

Finally, a cool feature is that if all your accounts are linked to the aggregation site Mint.com, you can simply log into your Mint account and have all your available forms imported with one login (Intuit owns both TurboTax and Mint).

The Small Stuff
This time around, I did notice that TurboTax has something called “Flags” that are the same as Bookmarks with TaxACT that allow you to mark confusing questions to come back to. The icon is small and there is no text, so I probably would have missed it again if I wasn’t looking for it. A minor positive I noticed is that TurboTax automatically enters commas when you reach thousands (ie. 3,459 instead of 3459). It helps with data entry, as I have already shown that I am error-prone!

A minor negative is that TurboTax had many more server delays where the page would not load or would be blank and I had to refresh the page. I did not have any such problems with TaxACT, which I was using simultaneously on the same internet connection and computer.

Foreign Tax Credit
After everything was entered, there was a difference of less than $50 in my total calculated refund between TurboTax and TaxACT. After some research, I found that it was due to my treatment of my foreign taxes paid as a deduction vs. credit. TaxACT appeared to be more aggressive and just allowed me to take it as a credit, while TurboTax seemed to require more information and otherwise steered me towards taking it as a deduction. This was partially my own fault, but the two questionnaires definitely had a different approach. In the end, I got everything to match up between them. (Take the credit if you can.)

Upselling and Price Tricks?
There are some upsell attempts during the tax return to upgrade to Premier or Home & Business, however it was only a couple times and didn’t feel overly pushy. At the end, the price total was as expected with no bogus charges. There was a final pitch for a product call Audit Defense for $39.95, which provides you “professional representation in the event of an audit” and covers both federal and state returns. As before, I am not convinced of the quality of such representation.

Recap
Turbotax showed why it remains the best-known and popular tax software. That is, it covers all of the tax aspects about as equally as well as the others, perhaps with a bit more thoroughness (anality?). However, where it separates itself is the importing of data from financial institutions. It is indeed more expensive – for most people TurboTax will cost $30+ more than TaxACT but if it saves you both time and effort in data entry (and potentially prevents errors), then I can definitely see how people would be willing to pay a premium.

There is also the familiarity factor. I definitely kept feeling the benefit of using it last year and again this year. It compared all my 2010 and 2011 numbers side-by-side, which was nice for us financial geeks. It also remembered little things like my old IRA basis, so I wouldn’t have to look it up again. On the other hand, if my return was simple and would not benefit much from automatic importing, I would probably rather stick with TaxACT.

Filed Under: Reviews, Taxes //
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