The New York Times
March 22, 2001
Grab the W-2, a 1040 and Aspirin, Then the Software
By STEVEN E. BRIER
T ought to be simple to do taxes. Fire up the calculator, plug in
the amount earned, multiply by some (preferably minuscule) percentage and send off a
check.
Unfortunately, when you take the perplexities of the tax code and add the complexities
of a two-income family where one of the breadwinners spends half a year in an airplane,
commuting to six different states for six different companies and — well, you get the
picture.
So, turning to my trusty laptop, I started loading software in an effort to tame the
tax beast. Most of the market belongs to Intuit and its various flavors of TurboTax. The
runner-up in market share is H&R Block's personal tax software, Kiplinger's TaxCut.
Of the programs — most of them Web- based — that were new to the market a
couple of years ago, only one of the more impressive ones, TaxAct from 2nd Story Software,
seems to still be around.
These packages all come in standard, deluxe and Web versions. I stayed away from
programs that work on the Web, both because I don't like the idea of having all that
personal information out there online and because it takes longer to communicate with a
Web site than with the drives on your own computer.
For the following reviews, I stuck to the deluxe versions because they offer more
federal forms that most people will need as well as free electronic filing, a program
being pushed very hard by the Internal Revenue Service. They also have more extensive help
files than standard versions. All three products can be downloaded online and are
available by mail; TurboTax and TaxCut are also prominently displayed in stores.
TURBOTAX DELUXE
(Published by Intuit; can be bought at www.quicken.com/taxes; Windows and Mac; Deluxe
version, $39.95; other versions available.)
After a fairly painless installation, TurboTax immediately went out to its home Web
site to check for updates, which were plentiful. During the update, it also downloaded the
free state-tax software that comes with the deluxe version. People on slow modems or who
would rather have a disc can have the state software shipped for an additional $5.95.
The deluxe version also includes a number of video clips with tips and tax advice,
though that advice tends to be so broad as to be almost worthless. New this year, though,
is a Web listing that lets you look for private tax advisers that have registered with
Intuit. When you find an adviser who meets your needs, that person can be reached by phone
or e-mail. The fees are set by the individual advisers and can range from pennies to
several dollars per minute.
If you have used TurboTax or TaxCut in the past, the software can import data from the
previous year, cutting out a considerable amount of the typing needed to enter the
boilerplate information, like names, occupations and Social Security numbers.
Intuit also has tight links between the tax software and its Quicken and QuickBooks
financial management products, allowing customers to import the Quicken information into
TurboTax to speed up the process. In previous years, it was an all-or-nothing proposition
— you had to import all the Quicken data, no matter how out of date it may have been.
This year, the program allows you to import just certain kinds of Quicken data as you move
through the interview process.
TurboTax also has a new program that can download information automatically off W-2 and
1099 forms from participating employers and financial institutions. Because that is a new
program, the list of participants is fairly short, and none of my employers or
stockbrokers were on it. Given the turbulence in this year's financial markets, it's worth
checking. It could save quite a bit of time entering last year's losses.
Like all the products, TurboTax hides most of the forms behind a straightforward
interview process. Based on the answers you give, it either asks more detailed questions
or skips sections. Explanations of most of the arcane tax language is plentiful and
actually helpful. As you proceed, a running tally of your refund (or what you owe) is
displayed in the upper right corner.
The software did a good job asking about deductions for Schedule A (for itemized
deductions), and it asked some of the questions I expected for Schedule C (for a profit or
loss from a business). Someone who is self-employed would be better off paying an extra
$30 for TurboTax Home and Business.
TurboTax Deluxe also did a nice job setting up for the state returns I needed and
checking for errors. It tried desperately to get me to file electronically through the
I.R.S.'s e-file program.
The installation program was annoying when it insisted on depositing icons for AOL and
E*Trade on my desktop. It also kept asking me to register long after I had clicked on the
"don't show me this window again" button (though it finally went away), and it
kept telling me how I could get my refund faster by taking out a loan equal to the refund
— minus fees — from one of Intuit's partner banks.
Tax bill: $17,454.
KIPLINGER'S TAXCUT
(Published by H&R Block; available from www.hrblock.com; Windows and Mac; Deluxe
version, $19.95; other versions available.)
The folks at H&R Block are using their familiar logo to promote their lineup of tax
products. Even though the TaxCut Web page (www.taxcut.com) still exists, the company tries
to steer people to the H&R Block home page.
Installation was again painless. In a nod to an agreement with Microsoft, the program
offered to hook me up to the MSN site and to help me get a trial copy of Microsoft's
personal financial software, Money. (In a store, the software comes with Money.)
TaxCut will import last year's data from TaxCut, TurboTax or Microsoft's TaxSaver (now
discontinued), saving time in the interview process. Importing from Quicken is possible,
but unless you are compulsive about tracking everything, it is probably not worth it.
Money and TaxCut can't yet trade information the way Quicken and TurboTax do.
TaxCut will also tailor its interview process based on the answers given. The help
files are for the most part as good as those in TurboTax, though they use a little more
jargon. And the pop-up window displays for the help files were, annoyingly, too large for
my screen, obscuring what I was working on and leaving the Close button dangling below the
bottom of the screen.
New this year are links that take you directly to H&R Block tax advisers, who will
answer your tax questions by phone or e- mail or in online chats. At $19.95 per subject,
it's potentially cheaper than the per-minute charge for Intuit's similar service.
The interview process again was quite straightforward, though some things that should
have been imported from last year's data — like the names and Social Security numbers
of my children — were not.
There were some minor annoyances. TaxCut went after the Schedule C deductions with a
vengeance, though it still skipped things that I thought it should have asked. The
software later insisted that it could not find the CD and therefore could not use the
multimedia help files, even though the CD was still in the drive it had been for the
software installation. After 20 minutes on hold (not a free call) I finally got a
technical support representative who said I did not want those help files. After
browbeating him to find out how to fix the problem and then looking at those files, I
agreed. They were less informative and of poorer quality than the bad ones in TurboTax.
Tax bill: $16,365.
TAXACT
(Published by 2nd Story Software; Available from www.taxact.com; Windows only; Deluxe
version (with software for one state and e-filing), $19.95 for downloading or $24.95 on
CD-ROM; other versions available.)
TaxAct is the dark horse here. There are no big names behind it, though its creator,
2nd Story Software, has been in the tax business for years. TaxAct isn't sold in retail
stores, only through the Internet and by phone. The plus side is that the software does's
take up much room on a hard drive, and there are no icons from marketing partners strewn
across the screen. If the simpler TaxAct Standard meets your needs, you can download it
free.
If you download it, be prepared to wait. Someone with a 56K dial-up connection, for
example, would spend at least 15 minutes, and maybe 20 or 30 minutes, downloading the
program, which is 5.8 megabytes.
TaxAct can import data only from TaxAct files, so if you used something else last year,
plan to retype the boilerplate information. And the help files are spartan, so be prepared
to decipher some jargon or hit some Web pages for more information.
Tax bill: $15,453.
Why did TaxAct come up with the smallest tax bill and TurboTax the biggest? The size of
the tax bill largely reflected two things: how diligent the software was in nagging me to
look for Schedule C deductions, and how proficient I became in using the software. I
started with TurboTax and finished with TaxAct. People with small businesses or
substantial income from sources other than wages should also look at TaxCut Home and
Business (Windows only, $49.95) and TurboTax Home and Business (Windows and Macintosh,
$64.95).
If you have a little extra time, it may be worth trying more than one brand of software
to get a second opinion on your taxes. And tax software is tax-deductible anyway (or so
the programs say).
