Its 2009 Tax Time: Tax Preparation Software!
Wouldn’t it be great if paying your taxes was as simple as it was in the game of Monopoly?! If only!
Yes, it’s that time of the year again – the time of year when you figure out if Uncle Sam owes you money back, or if you owe Uncle Sam a fat paycheck. If you’re like most people, you find the whole process of filing taxes a pain in the rear. However, I’m here to tell you that filing your taxes has never been easier, thanks to a few of the popular tax preparation software options in the market today.
A word of warning – the purpose of this article is *not* to provide tax advice (you can easily get that advice from Intuit’s “Ask a Tax Expert”). I simply want to show you that tax preparation has matured over the past decade and is now a do-it-yourself tax preparation option worth a look. If you’re still paying the local bookkeeper lots of money to prepare and file your taxes, or wasting hours of your life sitting in a brick-and-mortar tax preparation store, you may want to read further before you you do the “same old” tax prep this year.
TurboTax – Taxes Made EASY!
I’ll freely admit that I’m a fan of TurboTax. It all started for me in 2002 when I double-checked the return prepared by my bookkeeper against TurboTax. As it turns out, TurboTax would have gotten me an additional $200 on my return. I’ve been using TurboTax ever since and haven’t looked back. Over the years, I’ve come to appreciate a few of the following aspects of preparing my taxes with TurboTax:
- The “Wizard”: This was especially useful the first few times I used the software. Basically, TurboTax asks you questions and helps you determine all the Income and Deductions that apply to you. Once you’re familiar with the software, you can also do your taxes by looking at a menu of options and picking the subjects that apply to you.
- Come Back Later: You never have to worry about doing your taxes in a single sitting. TurboTax allows you to save your information and then come back at another time and pick up where you stopped in your previous session.
- Its on the Web: While you can still purchase a “boxed” version of TurboTax, you can also do everything completely online. I like this as I never have to worry about the “upgrades” year-to-year, or making sure that my computer meets the minimum requirements (except for having an up-to-date web browser like Firefox or Chrome).
- E-Filing: While this isn’t necessarily a feature exclusive to TurboTax (you can e-file with most popular tax software), it’s integrated, flawless, and free! Plus, the online version of TurboTax provides a method to get notified if your tax file has been accepted by state and federal organizations.
However, I realize that different folks have different priorities. Here is a slightly more exhaustive list of features that you may be interested in exploring:
- Free Online Federal Tax Return Preparation for “1040EZ” forms: If your tax situation is very simple and you would normally only file a 1040EZ form, you can generate your Federal tax return for free with TurboTax (Online Only – it’s roughly $30 for the downloadable/boxed software).
- Continuous Error Checking: TurboTax monitors your return for errors and notifies you when you may have made a mistake.
- Audit Risk Warning: TurboTax can analyze your return and notify you of situations that may cause you to get Audited by the IRS.
- Audit Support Center: TurboTax includes a downloadable “Audit Support Center” which can help you understand why you’re being audited and what the letters from the IRS mean. A handy feature to have if your return is a member of the “One Percent Club” (i.e. the one percent of all tax returns that get audited each year). Yes, an audit is rare, but do you really want to be without help if it happens?
- Imports Data: TurbTtax can import your previous year’s data (if you become a regular TurboTax user) to speed up the tax preparation process. Additionally, TurboTax integrates with Quicken and can import data from Quicken/QuickBooks to help make tax preparation easier.
- Live Tax Answers: Intuit fosters an active community where you can get free answers to many of your tax questions.
- State Preparation Available: You can also prepare and e-file your state tax returns (for an additional fee).
As you can see, Intuit’s TurboTax software gives you a pretty hefty bang for your tax preparation buck. Additionally, Intuit does a great job of improving the software year-to-year. They always make sure that the software is up-to-date and optimized for the tax codes/deductions that apply.
H&R Block At Home – “TaxCut” Gets a New Name!
As mentioned before, there are multiple options out there for tax preparation software. Being a huge TurboTax fan, I don’t have personal experience with any of the others, but wanted to bring one other option to your attention – H&R Block at Home. This is H&R Block’s competitor to Turbotax. I’m not sure if the interface is as easy as TurboTax, but I did notice a few worthwhile features in their product info:
- Five Free Federal E-Files: Handy if you are married filing separately, or filing for yourself and a few relatives/children.
- Unlimited Federal Return Prepare & Print: If you’re doing taxes for the whole extended family, you can prepare their returns and print them. Unfortunately, they’ll need to mail these in.
- Audit Support: H&R Block will also assign you an agent for representation if you get audited.
- Imports Data: The software can import data from most other software packages to speed data entry.
Conclusion:
Let’s face it, tax preparation is a task that seems daunting and/or mundane. However, tax preparation software has seen some huge improvements over the past decade. If you’re like me and trying to be mindful of your spending, you may be able to save some money by preparing your taxes on your own this year using one of the above mentioned tax preparation software packages. Are you a current TurboTax or H&R Block at Home (or “TaxCut”) user, let us know your experience as well. Have either of these packages found you some great deductions also? I welcome comments as to your own personal experience. As always, if you have questions feel free to Contact Me directly!
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I too was a huge fan of Turbo Tax ‘online’ until last year when we received a notice that the ‘additional’ funds Turbo Tax carried over from a previous years stock sale were “Not valid” and the IRS was charging me for those plus interest and penalties. My husband and I turned to Turbo Tax for answers, and were told “sorry” you didn’t answer a question correctly to ensure this information was stored and could be retrieved (we too selected save, save, save everyplace we could think of so were dumbfounded when we were told this) I believe we even paid to save this info on Turbo Taxes site. Therefore Unable to prove the values Turbo Tax calculated and added to that line for us we had to pay all of the costs. This year we are back to the ‘old box’ version, so we can save our information ourselves on our own pc should, heaven forbid, we have another occurance like that. To be honest we were tempted to go with Dragonslayer or one of the other tax systems, but wanted to give them a year to prove themselves before diving in.
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MW2ML Technology Reply:
March 1st, 2010 at 10:14 pm
Valerie,
I’m sorry to hear you had such a rough time with your previous tax returns. I guess sometimes there are instances where you can’t always rely on a machine, eh? Could you give us some more detail on your particular situation? Did you pay for the optional “Audit Defense” services when you filed with TurboTax? I did see the following on Intuit’s website: “Remember, TurboTax guarantees 100% accurate calculations. If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we’ll pay you the penalty and interest.” Did you follow-up with Intuit to see if you were eligible for reimbursement from Intuit?
If you decide to go with another product (such as H&R at Home) this year, definitely let us know your experience! I welcome your comments as it can help give our other readers some food for thought!
Rob
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UPDATE: One quick item to note, the Intuit blog had a great article titled “Where’s my Refund?” Check it out for details on how to find out the status of your tax returns filed with Turbotax!
http://blog.turbotax.intuit.com/tax-tips/where%E2%80%99s-my-refund/
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I just completed my taxes using TurboTax Deluxe Online tonight and am happily waiting for my refund. I have to say that I was quite impressed with the Web based version. I used the “GPS” Step-by-Step Guidance features which very thorough and it helped me to find several significant deductions/credits I might have missed. Based on my experience, I really don’t see any reason to ever purchase a packaged version of TurboTax. It even allowed me to save my return along w/all the reams of schedules and forms to a PDF in addition to storing an electronic copy on TurboTax’s site. As an added bonus, if you bank with National City or PNC you can get a 25% break in price in addition to the FREE Federal/State E-filing
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MW2ML Technology Reply:
January 28th, 2010 at 10:47 am
Charlean,
Glad to hear that your experience has been as positive as my own! I agree with you, I prefer the web-based version over the boxed version as well, but I have to believe there are still folks out there that prefer something more “tangible” and would prefer the boxed/retail version. Ahh, the thrill of the sale! Which reminds me, I totally forgot to add that many banks include discounts, so thank you for the reminder! A 25% discount is quite significant!
Rob
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