Tax Preparation Software

April 15th. Does that date scare you? Well, have no fear because tax preparation software  can make things run alot more smoothly come spring time. Though there are many different opinions about the real utility of tax preparation software, it can certainly be a useful time saver for those willing to spend the money.

To start, there are two main options to choose from: online filing devices and computer-installed software. If you have very complicated information to file, a desktop version is probably best, particularly if that is what you are used to in previous years. The benefits of using downloaded digital software are numerous.

  • Mistakes are virtually invisible, so there is never a need to restart or erase a form because of an error.
  • Errors are reduced overall because the computer automatically reproduces pertinent information.
  • Choosing the right form is painless.
  • By using the same software year after year (with the additional cost of the upgrade), you save time by not having to re-enter last year's information.
  • In sum: it can be quick, easy and inexpensive.

For new tax filers and for those who have yet to adopt a standard tax preparation method, online tax preparation is fast, simple and usually quite secure. It also happens to be less expensive than desktop software programs. The only flaw with using online tax preparation programs is that you are required to retype all the information each year you go back to file unless otherwise stated by the company.

For more information about the government's incentive for consumers to adopt online tax filing, please visit the IRS Web site.

Software Breakdown

TaxAct

TaxAct: This online tax preparation Web site offers a free basic filing package (with only the cost of postage after printing out the required forms), a $10 standard package, and a premium package at only $15, making this by far the least expensive tax prep option available.

  • Not as fast and simple as TurboTax. It requires going through more steps to get the information completed.
  • Best for those who are accustomed to filing and who have an understanding of taxes.
  • Does not have compatibility with any other financial software programs.
  • Not suitable for those who have to deal with schedules.

TaxBrain

TaxBrain : Essentially, this has the IRS forms ready to be transferred to the computer so that you can fill them out electronically. Other than that, the Web-based program does not offer any outstanding features and is quite pricey.

TaxCut

TaxCut: By H&R Block's program for filing a 1040EZ or standard 1040 ($10-$20). The standard package offer slightly more guidance and help with more difficult situations. It also offers a tax preparer signature edition, which is reviewed by an actual tax professional.

  • Good overall for beginners, as it guides you slowly through each step.
  • More advanced packages are good for small businesses and more complicated filing needs.

TaxNet

TaxNet: supposedly offers free online tax prep. However, e-filing will cost $10, versus the $8 fee by TaxAct. Another problem with this site is that it is not quite up and running to its full potential.

TurboTax

Turbo Tax: Allows you to file online for as little as $10 (with the most basic package). Snap Tax is even free (except the cost of postage to mail the documents). Their basic package costs $20, but helps with more complicated tax filing regarding charitable donations, medical and educational expenses, mortgages and more. For those of you who trade stocks, have rental properties or who file a Schedule C, A or D, the Premier package is your best bet. Buying the software as a download from the Web site will cost from $10 to $80.

  • Great for anyone with lots of financial information to take care of because it is very simple to use and eliminates going through any unnecessary or irrelevant questions.
  • Perfect for Quicken users because the data can be automatically transfered from Quicken to the Tax Prep Software.
  • Recommended overall for being comprehensive and easy to use, as well as remaining inexpensive.

Complete Tax

Complete Tax: This simple tax prep software is primarily an online-based tax filing service that allows you to interview and e-file with minimum hassle (as long as your state of residence permits e-filing). Since last year, it has improved the interview section, making it faster to get through questions by filtering out unnecessary or repeated questions.

  • Includes a helpful how-to guide before starting.
  • Great for first time tax filers or those who have never used online or tax prep software before.

Features To Consider

  • Compatibility with other software. If you use MS Money or Quicken to manage your finances, you will probably prefer using TaxCut or Turbo Tax, respectively.
  • Double check rebate information. You might be able to get a deal on desktop software with a mail-in rebate. Learn about whether you can e-file for free after a rebate (federal only).
  • State and federal filing. Check to make sure that you can e-file in your state, as well as whether or not you can complete both federal and state forms with the same software.

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