Tax software for the do-it-yourself crowd
Programs can take a bit of the pain out of preparing your return
It is inevitable: You have to do your taxes. The question is how are you going to get them done.
You could pick up forms and do them the old-fashioned way. You could go to a tax preparer. Or, as millions of other self-preparers do, you can use tax prep software.
The main players in the business, TurboTax, TaxACT, and Tax Cut, all let you do your taxes online if you don't want to buy their out-of-the-box software. It is typically cheaper to use the online product. Each offers several versions, allowing those with less complex taxes to pay less.
All the programs use a series of interview questions to fill out the forms for you. For typical users, the cost of doing federal income tax returns for individuals or families online ranges from free for the basic TaxACT to $49.95 for TurboTax's "Premier" edition, for those with investments and/or rental property. If you're self-employed, it will cost $74.95 to use the TurboTax "Home and Business" edition. The costliest version of TaxACT is $16.95 and includes filing one state return, which is an add-on with its competitors. H&R Block's Tax Cut premium version is $34.95 online and $79.95 for the "Home & Business" version, which users must download.
H&R Block tries to take advantage of its reputation for preparing people's taxes by also packaging up bundles that include tax advice from real people that can cost $99 or more. It also has basic versions of its programs available for online users free of charge, or for $19.95.
For those who want to purchase or download the full software rather than use the online version, third-party vendors often sell it for less. In addition, certain financial institutions also offer discounts for one or more of the tax programs.
The National Association of Enrolled Agents - the folks who can prepare your taxes and represent you before the IRS - doesn't think using the software is a great idea, particularly this year with so much in flux.
"This tax year there were eight changes to the IRS code that affect almost everyone in the United States," spokeswoman Martha Lockwood said. "A tax program can't take into account the nuances in a person's life. There's just too much complexity."
The software providers, however, boast of being current and thorough and offer guidance, a widely ranging series of options, and some support in the event of an audit.
TurboTax is the flashiest of the bunch, providing information along the way that creates an illusion that you're dealing with a knowledgeable person. In addition to more attractive graphics, TurboTax also allows users to import certain key pieces of information, including W-2s and mortgage interest statements, directly to your return rather than having you type all the information.
Tax Cut does not allow importing of data, and TaxACT allows only those whose employers contract with a specific vendor to download their information. H&R Block also doesn't allow importing.
There is a certain sense of commitment using these products since you can carry forward prior year's information, again, making things simpler for the user. You can import a prior year's TurboTax return into Tax Cut if you used the software rather than doing your return online. Tax Cut also allows users to import from Quicken even though it is made by the same company as TurboTax.
TURBOTAX
Cost: Free for no-frills federal edition to $74.95 for version for self-employed. State returns typically extra.
Pros: Attractive, sophisticated, easy to use with a solid track record. Bells and whistles make for an experience that feels comforting based on the amount of information provided.
Cons: Costlier than its rivals and lacking in customer support.
The final word: If you're intent to go it alone without much human interaction, but still need some guidance, TurboTax is probably for you.
TAX CUT
Cost: Free for no-frills federal edition to $100 or more for a full-service tax prep service with unlimited advice. State returns typically extra.
Pros: Backed by the folks at H&R Block. Users are afforded a range of options providing advice and guidance not available from their competitors.
Cons: The software isn't as attractive or easy to use as TurboTax, and you can't import data from employers, investment companies, or mortgage holders.
The final word: If you want to do your own taxes but need to know there's someone to talk to and get some answers, this software is a good fit.
TAXACT
Cost: Free for no-frills federal edition to $16.95. State return included.
Pros: By far the least expensive. It is relatively easy to use and gets you where you're going.
Cons: Not flashy or as informative as TurboTax and without the user support provided by Tax Cut.
The final word: If you don't need any hand-holding and want to save money on tax preparation, TaxACT is a winner.
