Tackling US tax returns is daunting at the best of times. Americans spend hours each year gathering W-2s, 1098s and other obscurely coded documents in order to complete their 1040s — aka the US federal tax return.

This year, the filing date has been extended. The pandemic has added extra complexity. Tax filers need to figure out how to account for Covid-19 relief measures ranging from stimulus payments (non-taxable) to unemployment benefits (taxable) and early 401k withdrawals (taxable with caveats). For newly minted retail investors who profited from the surge in GameStop, AMC and other stocks, there is also the matter of short-term capital gains.

Intuit, which makes the popular TurboTax tax prep software, is best placed to benefit from tax return pain. Shares in the company have nearly doubled from their pandemic lows to push the market cap above $100bn. Social distancing means more people who would normally use a brick and mortar tax preparer such as H&R Block are opting to file from home using TurboTax instead.

Intuit is expected to report about $9bn in revenue for the fiscal year ending this July — a 16 per cent jump from the prior year. Net income is projected to grow a quarter to $2.2bn.

At 39 times 2022 earnings, shares are expensive. H&R Block trades on a multiple of only eight times. But there are good reasons for the heady premium. Intuit makes QuickBooks, accounting software widely used by freelancers and small businesses. This helps it to make money all year round while H&R Block’s business is almost entirely seasonal. Credit Karma, the online credit score company Intuit acquired last year for more than $7bn, is helping it to expand into other financial products such as loans. Data from Credit Karma’s customer base will enable it to provide more personalised offers. The deal has made Intuit look more like a fintech. Do not be surprised if it is being valued like one too.

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