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January 21, 1999
The Uncle of All Tax Sites
hen looking for Federal tax information, it makes sense to start at the Web site put together by the Internal Revenue Service.
Overview
• It May Still Be Certain, but at Least It's Easier
This Week's Articles
• Pared-Down Approach to Returns
Knowing that just the mention of taxes seems to tie stomachs in knots, the I.R.S. has tried to keep its site simple. "A lot of people may not want to talk with an I.R.S. agent," said Linda Wallace, the agency's chief of electronic information services. "The Web site allows them to come in anonymously and get what they need free of charge."
The I.R.S. site contains tax forms, information sheets and explanations of the many arcane rules of the tax business. The tax rules are available online in what the I.R.S. claims is plain language; it is offered on CD-ROM for tax professionals. The site, not surprisingly, is especially strong in the availability of forms. If a taxpayer needs some unusual form, or more information about one of those forms, this is the place to go.
The I.R.S. has greatly expanded its use of what it calls fillable forms. The forms are based on Adobe Acrobat's Portable Document Format (P.D.F.). Unlike the other forms, which must be downloaded, printed and filled in by hand, these allow users to view a form with a Web browser, type information in the appropriate fields and then print or save.
Although the forms are not so fancy as the ones provided by tax preparation software or a professional tax preparer, they can come in handy for those who do taxes by hand or need a copy of a form late at night. Unfortunately, the forms do not have a computation engine built in, so it is still necessary to do all that troublesome math on your own and carry the results from one field to the next.
Younger taxpayers, or those who want the tax code explained in English, may want to check out the Taxi, or Tax Interactive, section of the site. This explains how the tax system works, where tax money goes and what many of those obscure terms mean. The explanations are a bit simplistic, but if you don't know the language, Taxi is a good place to start.
Another useful section is the site's FAQ page. Like much in the world of taxes, it depends heavily on numbers, but it still contains useful information.
When tax time is past, some people may want to take a look at the Statistics of Income section of the Web site. This contains demographic information about taxpayers that may be of some use to businesses that need to target their products or marketing or to people trying to better understand their community. The statistics are general enough that information on any particular taxpayer, or group of taxpayers, cannot be determined. And, by the way, people perusing the entire site can also rest easy, according to the I.R.S.
"We don't count visitors or individual users," Ms. Wallace said. "We feel everyone wants to be anonymous."
A Major Player Goes Online
Overview
• It May Still Be Certain, but at Least It's Easier
This Week's Articles
• Pared-Down Approach to Returns
The undisputed king of the hill for personal tax software is Intuit, with the various versions of Turbotax grabbing almost 50 percent of the market, according to PC Data of Reston, Va., a market research company. Intuit also makes a Macintosh version, Macintax, and several versions of the program to handle state taxes.
This year, Intuit is taking that background to the Web with Web Turbotax.
The Web offers several advantages over desktop tax software. First, you don't have to worry about software conflicts, trashing the computer, running out of disk space or any of the many niggling problems that arise when installing software. Second, the program and data are available to you through any Web browser: just take out your W-2 statement of annual earnings, open the browser, go to the site and enter the information. The drawbacks, as for any Internet service, are slow connections and concerns about security on the Internet.
Intuit, like the other online tax companies, is trying to lay to rest fears about doing taxes on the Internet. The company provides extensive notes about the security of its encryption (128-bit secure socket layers) and about the penalties the company would face if it misused tax data. Concerns over speed are addressed by allowing users to do much of the work without charge and requiring a fee only when it comes time to print, view or send the return.
Web Turbotax begins with an overview of the program, explaining what is required to file and how you organize your paperwork. Whether or not you intend to use the Web to prepare your taxes, it is worth signing up just to use this feature.
The product will handle Federal returns as well as those from any one of the 44 states (and the District of Columbia) that have income taxes. But if you are required to file in two states, you're out of luck.
The site charges $9.95 for a 1040EZ form or the state equivalent and $19.95 for a 1040 or its state equivalent. Finished documents can be printed to be mailed or sent electronically. Taxpayers who earn less than $20,000 can use the program free under an I.R.S program intended to encourage electronic filing.
The information for the return is collected during Web Turbotax's interview process. For the most part, the process is painless.
As the interview process proceeds, an outline down the left side of the screen changes to let you know where you are in the process; FAQ's appear on the right to answer questions relevant to that part of the interview. Although helpful, these additions slow down the process. Also, it sometimes appeared as if the highlighted selection bar outline were being controlled by an inexperienced driver who shot past the appropriate section, then backed up to the correct spot.
Entering the assets needed for Schedule C was painful; a single question was answered on each screen, with three or more screens for each new asset. Users who have just outfitted a home office with a computer, television, scanner, fax, desk and related equipment might find this too much trouble.
When finished with the Federal return, the program asks if you wish to prepare a state return.
Pared-Down Approach to Returns
netax.com is relatively new to the consumer market, though not to tax and financial information. It is an offshoot of Thomson Investors Network, which produces those ubiquitous First Call financial earnings estimates, software for professional tax preparers and other financial products.
Overview
• It May Still Be Certain, but at Least It's Easier
This Week's Articles
• Pared-Down Approach to Returns
Like Web Turbotax, One Tax allows you to do Federal and state taxes using a Web browser, limiting users to a single state. The price is low, $9.95, held down in part by unobtrusive advertisements on screens.
Unlike Web Turbotax, One Tax takes more of a minimalist approach. A checklist that prospective customers can use to see if One Tax can handle their tax returns. If not, there is a recommendation to see a professional tax preparer. Otherwise, a user can log in and get started.
The interview itself is less involved than that of Web Turbotax. It moves much faster than those in other services but requires more tax knowledge. (Just what was that I.R.A. non-deductible basis section, anyway?)
The site is designed for speed and for the average taxpayer.
"We don't do the business," said Jane Moynihan, a company spokeswoman. "We don't do Schedule C. We don't do multiple states." She added that the site would offer more features in coming years, but given the feelings the tax-filing process can cause, the company felt it important to provide a clean, simple product.
That simplicity shows when figuring out just what information is needed at each screen. Everything is clearly labeled, and every field has either a Help button or a Tax Tip button next to it. A quick click, and more information on that field is available. Another click, and you are back at the form.
"We took a lot of time doing a robust help engine and making help easy," Ms. Moynihan said. "We also don't give out tax advice. We do give advice like, 'This is what this means.'"
One major advantage of using a Web interface instead of programs is the ability to get access to the program from any computer. That makes it easier to enter data as you gather it, instead of having to make sure it is all at hand and then going through an interview process.
One Tax takes advantage of this by allowing you to switch readily between the standard "guided entry" process and an "independent entry" system. Independent entry allows you to click on a menu at the top of each page, choosing items like W-2, 1099, dependents and similar items, and then enter the information you happen to have at that time. This is particularly helpful in January, as tax-related documents trickle in.