By Jay Garmon
TaxSlayer is the darkhorse in the online tax preparation space, but it's garnered a great deal of recent attention for its slick marketing and cheap price tag. Is TaxSlayer all hype, or can it really outdo the big boys for less? We break it down in this review.
First, a word about my tax return, which I will be using to test-run TaxSlayer and a few other tax preparation Web apps. In 2009, I received unemployment pay, did freelance work, started a new job for an out-of-state employer, paid down a student loan, had a child in daycare, bought one house and sold another, and maintained a home office as a primary workplace. In short, mine is not a simple tax profile, and if these tax apps can handle what I throw at them without making me want to tear my eyeballs out, they should be able to stand up to the typical taxpayer pretty easily.
TaxSlayer really wants you to think it's free. It isn't. Filing your federal return will run you $9.95 -- which is cheaper than everyone but TaxAct's actually free 1040EZ filing -- and you can file a state return for $4.95, which is the cheapest rate I've seen yet. For anyone who needs a more robust return than the 1040EZ, TaxSlayer will actually be the cheapest option, but it isn't generally free.
That said, active duty US military personnel can use TaxSlayer to file for free. If you got a W-2 from any of the US armed services -- and can provide a recognized military employer identification number (EIN) -- TaxSlayer will wave both its state and federal filing fees, period.
While it's not really free for most of us, TaxSlayer is very direct and streamlined. There's just one version, TaxSlayer Premium, which sidesteps the confusing tiered service offerings that TaxAct, TurboTax and H&R Block At Home (formerly TaxCut) throw at you. The program also makes no pretenses that you can set up a return on TaxSlayer without creating a TaxSlayer account, a claim that the aforementioned trio all suggest.
Setup is stupefying simple on TaxSlayer, with an option or two at most presented on any given screen. Once TaxSlayer has determined that you're a new user, gotten your social security number, and introduced you to its new features, you're off and running. At no point does TaxSlayer offer to import you last year's tax return unless you are an existing TaxSlayer user, which is a welcome change from the services that claim to import PDF or text-based returns and then do nothing with them. TaxSlayer keeps it simple.
INTERFACE & EASE OF USE
The TaxSlayer interface consists of two columns: The main left column and the Help column on the right. There are virtually no help icons or explanations to be found in any left-column content; that's what the right column is for. This keeps the main area nice and clean and free of intrusive pop-ups or overlay videos.
The Help column lives up to its name, automatically surfacing answers to the most common questions about content in the main column -- like "What is the difference between Direct and Indirect home office expenses?" -- and supplementing that information with robust keyword-driven knowledgebase searches.
In most cases, TaxSlayer gives you the option of jumping right to an entry form, or using a Wizard to help you decide how to fill out a form. Am I first-time homebuyer? The Homebuyer Wizard will ask you a series of questions to determine whether you fit the IRS definition of first-time home buyer, and can thus choose the correct option when asking for a homebuyer credit.
Where this approach falls down is when you finally get to the actual forms, after the wizards have advised you. TaxSlayer's wizards don't actually fill out the forms, they just tell you how to fill them out. TaxSlayer was originally designed for tax preparation professionals -- the people you pay to file your return. As such, it can be very intimidating and expect a great deal from the user. Thus, the Help column and wizards to aid you when you get lost. But at the end of the day, you're still filling out complex forms.
The upside to this form-centric approach is the little bells and whistles designed to make filling out forms easier. For example, when filling out a W-2, once you enter your Medicare-eligible wages, the form automatically calculates how much Medicare tax should have been withheld. This perfectly matched what was on my W-2s and saved me the trouble of inputting the data. Where my figures differed from TaxSlayer's expectations, it was easy to change them. TaxSlayer offered similar functionality on addresses, auto-filling city and state fields after I input a ZIP code. These touches may seem trivial, but they really add up over the length of a complete return.
What TaxSlayer did not offer was a means of directly downloading my W-2 s from my employer's payroll system -- an option that every other tax prep app offered (but almost all screwed up). Frankly I appreciate TaxSlayer just skipping an option that probably wouldn't have worked anyway.
What should have worked but didn't were non-text characters. If you enter a period, comma, or slash into any TaxSlayer text field, the form throws an error and asks you to remove the offending punctuation. This seemed unnecessary, as I should be able to put a period at the end of "Inc." or in "TechTarget.com".
Like almost every tax prep app I've reviewed, TaxSlayer simply could not comprehend that I had two home offices in the same year. I couldn't convince the program to create two deductions for two different addresses -- the system wasn't set up for it. In contrast, TaxSlayer was almost too accepting of my freelance writing income, never asking for 1099-MISC data but instead requesting the total income from my freelance work. While this was very easy to input (after some math) it left me wondering whether I had input my info correctly.
Data-entry quirks aside, TaxSlayer has one unforgivable flaw: It doesn't support filing returns for eight US states. If you live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas or Washington state, TaxSlayer is not for you. While these states have no nominal income tax, all of them require reporting from small businesses, and even for nontraditional (interest or dividend) income from individuals. Not addressing these filing issues at the state level may lull you into a false sense of security.
Beyond these gripes, TaxSlayer performed adequately. It didn't blow me away with its robust line of inquiry or its bells and whistles, but it also stayed out of my way and let me finish my return in a timely fashion.
According to TaxSlayer, I am owed $724 from the federal government and owe $140 to the Commonwealth of Kentucky. It took me an hour and 15 minutes to complete TaxSlayer's returns, and it asked $14.90 to print or e-file my forms. TaxSlayer, frankly, let me fill out my return faster than any other program I reviewed -- largely because it was dead simple with no extraneous features (or help guides) interfering with the process.
TaxSlayer was originally a program for seasoned tax preparers, and it shows in the barebones ask-for-help-if-you-need it interface. If you're a comfortable, confident tax filer, TaxSlayer will save you time by skipping all the built-in hand-holding. It will also save you money by asking the lowest fees for anything outside a no-deductions TaxAct 1040EZ file. And if you're active duty military, TaxSlayer makes a compelling case for you use its services, simply by refusing to charge you.
For those of us with complex returns that require lots of tax advice -- and lots of complex filing forms -- TaxSlayer isn't appropriate. I'm all but certain the money I didn't spend on TaxSlayer was more than lost in my inability to list a second home office.
Bottom line: Don't expect TaxSlayer to save you money, but it will save you time and effort.
You can also check out our Buyer's Guide to find the best tax preparation software for you.
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