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updated 3/9/2010 7:42:03 AM ET 2010-03-09T12:42:03

Most people who use software to prepare and electronically file their income tax returns now opt for Web services, as opposed to the desktop products that pioneered the category. The major players in this market — Intuit TurboTax, H&R Block at Home (formerly TaxCut), and Second Story Software's TaxAct — continue to refine their offerings with features that ease the pain of data entry and help decipher IRS jargon.

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Which tax service should you use?

If you've tried any of them in the past and have been satisfied, there's no compelling reason to switch, especially since sticking with the same provider generally makes importing data from last year's return easy. (Support for importing files from competitors varies — check with the sites.)

If you're new to Web-based tax preparation, H&R Block and TaxAct can handle most returns and are both very easy to use — plus, they're less expensive than Intuit TurboTax. But Intuit's service offers the best data-import functions (especially for brokerage accounts, which is a major consideration for investors) and also has first-rate support options, including a lively online community where you can find helpful answers to your questions about taxes in general or the software in particular.

Since all of the services let you begin returns without having to enter credit card info, you can always try before you buy. But while all three tout their no-cost versions, don't count on a freebie unless your return is extremely straightforward and doesn't involve itemizing deductions: You'll get little or no help, no support for data import and lots of upsell attempts (plus, you'll still have to pay to complete your state return, unless you're lucky enough to be filing in a state that doesn't collect income taxes).

Speaking of freebies, however, remember that if your 2009 income was $57,000 or less, you probably qualify for free Web-based tax software through the Free File program, which you can access only through the IRS Free File site. And there's no income restriction on free filing via electronic forms.

TurboTax Deluxe Online
Intuit's big ad campaign for TurboTax compares this software to a GPS navigation aid (it presumably guides you through the treacherous twists and turns of tax preparation), and the online versions (there are four) seek to reinforce that metaphor with graphics that make tax-prep milestones look like billboards on a highway.

However, Intuit can be a little heavy-handed in forcing a destination on you: In my tests, it repeatedly tried to get me to upgrade to the Home & Business version after I indicated that I had income as a freelancer, when the less expensive Deluxe version had all the Schedule C (for self-employed filers) help I really needed.

TurboTax has historically been the priciest service — but also the most polished. And this year is no exception. The paid products support automated importing of data from more institutions than the other services do, which can be a real timesaver (it was, for example, the only service I tried that could import 1099s from my Fidelity Investments accounts).

TurboTax's first-rate user interface offers easy access to the service's Live Community forums, where you can often find answers to tax questions that aren't fully explored in the service itself. Navigation aids include a useful Flags bookmarking feature, which lets you easily return to a specific page you're not ready to complete. Like all of the major online filing services, TurboTax provides a refund meter that tells you how much you owe or will get back based on the current state of the return.

This year, Intuit says it has beefed up TurboTax's ability to identify audit risk situations. Also new is the option to split any refund between up to three accounts, or to use some or all of it to buy U.S. savings bonds.

The least expensive version of TurboTax costs $15 (exclusive of state filing fees); it simply guides you through a basic interview. The $30 Deluxe version targets people who have deductions to itemize, the $50 Premier version is for people who manage their own investments, and the $75 Home and Business edition is for those who derive some or all of their income from self-owned businesses. Home and Business may be overkill if your business doesn't involve inventory or additional employees, so I'd recommend starting with one of the less expensive versions and upgrading only if you decide that you need more help. (You can upgrade at any time, but it's much more difficult to downgrade.)

State returns cost another $37, so the bill can easily mount up. TurboTax is worth its price premium for anyone who can benefit from TurboTax's superior data import capability, or its superlative context-sensitive help and navigation features. If your return is fairly simple and straightforward, however, you might be just as well off with a lower-priced competitor.

H&R Block at Home Deluxe
H&R Block has ditched its TaxCut brand and now labels its consumer offerings H&R Block at Home--a logical next step in the company's strategy of leveraging its considerable brick-and-mortar tax-prep presence to promote its online services. And if you'd like to have in-person access to a live human tax expert, you may particularly appreciate the company's Best of Both service, which includes access to a tax professional.

H&R Block at Home has two paid versions: the $30 Deluxe, designed for people who itemize their deductions and have investments, and the $50 Premium, which adds help for small-business or rental-property owners. H&R Block's $100 Best of Both service lets you consult a tax pro as often as necessary while you're filling out the online form; when you're done, the completed return goes to the expert for review, approval, and e-filing.

Whichever version you choose (including the free service, which lacks the forms for investments or self-employment income), you will have to tack on $30 if you want to e-file a state return as well.

H&R Block has given its service's user interface a complete makeover: The questionnaire now sits atop a cheerful turquoise blue background, with green accents. Individual pages are handsome, and context-sensitive help pops up in the right pane. Help is just a couple of clicks away via the 'Ask a Tax Advisor' and 'Help Center' buttons at the lower right. H&R Block's support for data import isn't as good as TurboTax's, but it continues to grow — this year, I could import my W2 data from ADP, for example.

But the service still suffers from some usability issues. You can't, for instance, jump ahead in the interview. (H&R Block's FAQ says that doing things in order minimizes errors, but some users might like the option.) I was also unable to figure out how to view forms while I was working on the return.

People who are willing to take care of data entry but who like the ability to consult with a tax pro as needed might find H&R Block's Best of Both a good compromise between going to an H&R Block office and doing their taxes entirely by themselves online. Otherwise, however, I find the competition easier to use.

TaxAct Deluxe Federal Edition
The traditional budget alternative, TaxAct, looks a lot like H&R Block at Home, with a blue background and green accents. Like the other services, it invites you to start with the free edition, but as soon as you indicate interest in more than one major life event with tax implications (unemployment, retirement, marriage, and the like), TaxAct pushes you to its paid version — which, at $10 for a federal return and $18 for a federal-state bundle (including e-filing), really is a bargain.

TaxAct's navigation is first rate. You can easily jump around to different topics and fill in data as you receive it. The life events are presented before you even begin the regular interview; after reading about the possible implications of those that apply, you can enter pertinent data immediately — or hold off and go through the usual Q&A.

TaxAct has one nice data-import trick: The service can harvest data from last year's return if it's available as a PDF.

This feature worked like a charm for me. Unfortunately, however, TaxAct offers little support for other kinds of data import. The only W2s it can import are electronic ones prepared by TALX W-2 eXpress, and it provides no support for institutional 1099s.

Given that most people will have to enter this data manually, TaxAct at least gives you the option of filling in a version of the form online (which for me was easier than answering interview questions, but you can go the interview route if you wish). In general, TaxAct makes it very easy to switch between forms and the usual Q&A format that tax software follows.

TaxAct's tax help is adequate for many situations — I had no trouble using it for my freelance writing business — and it's a terrific deal, especially if you don't stand to benefit from the data-import options available in TurboTax and H&R Block at Home, and if you aren't interested in support from a tax pro.

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