Taxes aren't most people's idea of a good time. That means when it comes to
getting them done, the main goal is usually keeping the pain to a minimum.
Reducing the pain factor of the annual ritual of doing taxes is the top job of a battery of tax-preparation software programs. The big dogs of the do-it-yourself tax world, Intuit's TurboTax, H&R Block At Home and TaxAct, make big promises that they can help maximize refunds, save time and save money, as opposed to hiring an accountant.
That may all be true, yet each of these software packages comes with a morass of complications, including convoluted pricing, a confusing array of different versions and lofty fees to electronically file state returns.
With April 15 looming, the options for consumers looking to use their computers to file are dwindling.
Taking the time to understand tax-preparation software, though, can bring consumers huge savings.
Rather than paying $400 or more to hire an accountant to put together a tax return, most consumers can easily use software to whip out their own.
Here are a few key rules of thumb:
--Understanding whether to use software or the websites. The biggest decision people must make when using tax-prep software doesn't have anything to do with 1099s or W-2s. The decision is whether to use the software or the Web version of the products.
TurboTax, H&R Block At Home and TaxAct all run either as software on your computer or on their websites. Which one is best is largely a personal decision, as the basic functions of the software installed on the computer are nearly identical to the Web-based offerings.
The decision is important as it will determine the price, how many returns can be filed and on what types of devices consumers can work.
Taxpayers who use the online versions for tax prep benefit from the convenience. There's no software to install and no worries about saving the data on your computer hard drive.
Plus, the tax information can be accessed from any computer or mobile device that can run an Internet browser. Roughly 75% of TurboTax customers use the online products, Intuit's Bob Meighan says.
On the other hand, taxpayers who download the software gain control over their data. These users can work on their taxes on a computer even if it's not connected to the Internet and can keep the data file stored safely on their hard drives.
With TurboTax, taxpayers get more control in that they can call up electronic copies of the IRS documents and edit them.
Generally, the downloaded software works out to be the best value for anyone who is preparing other returns, such as for family members, in addition to their own.
Most retailers also run pretty big discounts on the software in the stores.
--Mind the costs. Tax-preparation costs typically come in well below $100 for most taxpayers, including all the add-on costs including state calculation modules and e-filing. But the fees can vary widely and can be a big consideration for taxpayers where price is the most important consideration.
Nearly all the tax-preparation providers offer a free Web tax-preparation system. But when using the free options, expect just the basics. The free online services for TurboTax, H&R Block and TaxAct each let you prepare a federal tax
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