Quick Reviews – TurboTax, TaxAct, & OLT

I had intended to do a more comprehensive review of these three options, but as I tried to use them, I realized the choice, at least for this year and for me, was pretty clear.

OLT

Honestly, I just couldn’t get past the interface. Yes, lots of people recommend OLT. Huge advantage is that Federal filing is free, for everybody, whatever forms you need.

But I just found the interface very cumbersome. For example, entering UK bank interest required simulating a 1099 for each account, with lots of required questions that have no actual bearing on the final tax return.

If you find OLT easy to use, great for you – I’d love to hear about it in the comments, maybe there was an easy solution I was just missing. But I found the interface clunky and frustrating, and gave up.

TaxAct

TaxAct was much more user friendly, with one critical fault: it didn’t really support the new Form 1116 Schedule B (the foreign tax credit carryover). It popped up the form, asking you to fill it in, but scrolling left and right was broken. Given that the form is built in landscape format, this meant I couldn’t actually see all of the form, making it impossible to use. Minor technical bug, but made it completely unusable for me.

I liked the interface, and it’s a little cheaper than TurboTax. I will definitely consider TaxAct again next year, hoping they get the bugs worked out with the Schedule B.

I did complete my return on TaxAct except for Schedule B, and got the exact same refund result as TurboTax. Everything looked good, and I would have been happy to use it, except for that one critical bug.

TurboTax

I actually don’t like TurboTax – Intuit lobbies to keep the tax code complex so they can make more money and I don’t particularly find the TurboTax interface very user-friendly in situations common for US citizens abroad. But at this point I feel like I have Stockholm Syndrome – I know how to make TurboTax do what I need it to do. They’ve got all my information saved from the last few years, which saves time, and I can just get it done.

I did find a coupon code online (just google “TurboTax coupon”, they change all the time), which got the price down to only $10 more than TaxAct. So I paid that extra $10 just to get my taxes done.

Note that this was using the online version. I have heard good things about the downloadable version, I may explore that next year, if it can import all my existing data.

Other Options

I filed my extension using Free Fillable Forms this year. It worked perfectly well for that – definitely no reason to pay for an extension, it’s a one-page form. My taxes are complex enough (44 pages this year) that I’m not comfortable doing my full return with Free Fillable Forms. If you have a simple situation, it could definitely work (it’s the AMT FTC and Schedule C parts that make mine kind of complicated, plus a bit of complexity from my pretty boring dividends and interest in two countries). “Simple” might mean earned income with the FEIE, or just one category of FTC, that sort of thing.

Same logic applies to just doing taxes on paper. I actually do print mine out on paper to trace all the numbers through the forms, I find that much easier to review than on screen (and I did catch one number where TurboTax’s guidance didn’t do what I would have expected – easy fix, and made no difference to the final number). But I’m not enough of a glutton for punishment to do it all by hand.

What method are you using for your US taxes this year? Have you finished them, trying to finish in the next 10 days before the extended non-US resident deadline, or already filed an extension to later this year?

6 thoughts on “Quick Reviews – TurboTax, TaxAct, & OLT

  1. I’ve been filing IRS tax returns as a UK resident since 1995. In the early days I used pen and paper, then moved on to fillable pdfs, but always sent them off in the mail, with no response from the IRS – but then there was no tax payable or refund expected. I then moved on to the free version of TurboTax. I had to stop using TurboTax for my father’s return when he no longer qualified for the free version. Not because I didn’t want to pay a small fee, but because I had no form of payment that TT would accept. Even with a US bank account and a PayPal account, anything with a non-US address would be rejected. One year I had a US colleague pay using his credit card and I reimbursed him, but I didn’t feel I could keep doing that. One year I tried using TaxAct, but I think I ran into the same problem. I ran into the same problem again with OLT when I volunteered to use the paid version. I had to contact OLT customer support and they were able to downgrade me to the free version again. This I feel is the biggest barrier to use the online tax packages.

    I was happy enough using TT at the time, but I eventually found it to be too opaque. You couldn’t see the final forms until you were completely finished and could only guess where they were getting their numbers from. Whereas with OLT at any point in the process you can see what forms are being generated. I didn’t spend long enough with TaxAct to form an impression.

    For the last few years I’ve used OLT for myself and my dad because things were simple enough and I thought I knew what I was doing. However, things got a little too complicated for my dad in 2021. I couldn’t figure out how OLT was calculating the FTCs. I’d never delved that deeply into the instructions before and found multiple layers I simply never applied before (AMT, adjustment exception, carry forward, US/foreign capital gains and qualified dividend treatment, correct usage of the ‘resourced by treaty’ category, etc). Every time I tried to do the calculations manually I would get a different result and it would never match with OLT. So for my dad I went with MyExpatTaxes.com. I don’t know how long they’ve been around, but I was impressed with the level of understanding they have given the relatively low cost they offer (compared to one-on-one tax prep). Whilst I was able to spot one minor error in their return, they re-educated me in at least three aspects of the FTC calculation that convinced me I would never be able to rely on my own calculations for my dad’s situation. For example, where losses can or cannot be offset again gains (such as in calculation of the adjustment exception threshold).

    My OLT return ended up being 37 pages long and my dad’s MyExpatTaxes return was 60 pages long plus 11 pages of “for your records” info. It’s ironic really considering HMRC actually told me this year that I no longer need to file a UK return if I don’t want to!

    I recommend OLT to most people because it’s completely free (federal only) so doesn’t require a US payment method; they accept NRA spouses; and they recognise that US social security benefits are tax exempt in the US if you are resident in the UK. However, the interface is pretty basic and leaves you pretty much to your own devices on how to deal with the more complex aspects – just giving you links to the relevant IRS instructions. However, being able to see the actual forms being created as you go means it’s easier to reverse engineer and the number of forms they support is pretty extensive.

    If you had multiple sources/types of income in multiple countries, especially capital gains, and your income high enough to be potentially taxable, then I would recommend considering MyExpatTaxes. I paid £215 in the end for my dad’s return, but it was the first time I was convinced his return was done “correctly”. I intend to use them again this year because he situation is even more complicated and includes a large Roth IRA conversion, and potentially AMT and/or NIIT.

    I’m named as executor in my father’s will and I’m not looking forward to the extra forms this will entail. I will seriously considering professional advice when the time comes…

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    1. The payment thing is definitely a barrier, and doesn’t seem to make much sense – why should they care where a credit card is from? I fortunately still have some US payment methods, but that certainly doesn’t work for everybody.

      Completely agree on the TT opaqueness, it’s one of the things I really dislike about it (and pushed me to try new things this year).

      Thanks for the MyExpatTaxes.com recommendation – good to know there’s a reasonable middle option between the software and the really expensive personal approach.

      I’ll definitely try OLT again – it’s different enough to TurboTax that I may have just not given it the patience necessary to learn it. I don’t mind spending some time with the IRS instructions, and I trust them more than TurboTax or TaxAct’s help articles.

      And there’s definitely a time and a place for professional help – I don’t want to rely on it every year (both because of the cost and because I want to understand my own taxes, how to optimize them, etc.), but this stuff can get complicated enough only a professional will do.

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  2. I love your blog! I’m in a very similar mindset and situation, and have the same research findings around how and where to invest given all the rules.
    I moved to the UK in 2011 and used TurboTax ever year until I had more complexity due to stock options, pension, and two categories of FTCs. TT had an error with Schwab 1099s, so it made it super tedious to try to make sure it was accurate. I’m now trying to learn all I can from using the expensive professionals to go back to doing it myself asap.
    Sadly, the first professional I used in 2019 had error after error, and so it was like I was doing it myself with the addition of tiring arguments with someone who is supposed to be the best in the “industry” and IRS enrolled agent etc etc. I moved to another professional and they also had errors but more like typos that were easy to catch.
    Now this year they changed the FTC category my gains are in, and now I’m undecided how to proceed for 2021 filing since they believe my gains should be in “re-sourced by treaty” and previous professional filed same gain type as “passive” FTC. I want to be able to use the FTCs in the future, and each supposed expert claims the other company is wrong.
    I’ve asked on facebook groups, and got conflicting thoughts there too. Maybe the IRS allows either way if the code is really explained two different ways for this. In my situation, it’s US capital gains that are re-sourced using the treaty. I sold shares in a US company, via a US brokerage, while resident in UK and paid HMRC proactively during the same calendar year to align for US FTCs.
    The professionals always want to convince us “it’s fine just file it” but don’t have to deal with the lifelong worldwide IRS view on the story we’re telling via our tax filings.

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    1. I won’t pretend to be an expert, but I can tell you my interpretation 🙂 Based on this IRS training: https://www.irs.gov/pub/int_practice_units/ftc_c_10_02_05.pdf

      Slide 20 makes it pretty clear to me that, even without applying any treaty rules, sales of US stock while UK resident are UK source income, because that’s where you live. Dividends are not – they’re based on the location of the company – but stock sales are based on your location. So you could have a mix of passive income locations.

      Because that’s how the IRS rules work for stock sales anyway, there’s no reason to mess around with “re-sourced by treaty” – you’re just following normal IRS rules, nothing to do with the treaty at all.

      For dividends from US companies, I think you’re pretty much stuck with them being US income – the dividend part of the treaty is excluded from the savings clause. But, unless you have enough taxable dividends that you’re exceeding the UK dividend allowance, that’s probably all US-only taxable anyway. Another reason to use tax-sheltered accounts as much as possible, including, in this case, ISAs if you can.

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      1. That’s how MyExpatTaxes treated my father’s capital gains on the sale of US shares also, i.e. as foreign source because he is UK resident.

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  3. I can give another recommendation for MyExpatTaxes. I’ve used TT and a useless ‘professional’, but for the past two years have used MyExpatTaxes and found them very good – both the interface and the support.

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