Which tax preparation software is the best one to use?

Which tax preparation software is the best one to use?
- Chris

This question was answered on March 4, 2002. Much of the information contained herein may have changed since posting.

In the past, your only option was to purchase and install a program to prepare your taxes, but with the maturation of the Internet, you can now securely prepare your taxes and electronically file your return by simply going to a web site.

Those that have never used tax preparation software because they felt their return was too complicated may be in for a pleasant surprise with the current programs They use an easy to understand ‘interview’ process that is conducted in English to determine which tax forms are needed and can actually be tried for free online!

The two most popular and full featured tax programs are Intuit’s Turbo Tax and H&R Block’s TaxCut There are a variety of other smaller companies that have basic tax programs, but for most users one of these two is the best choice

Intuit, the maker of Quicken, has been a pioneer in tax software and has long held the top position in terms of total sales They currently claim an 80% market share in retail software and also claim the top position in web-based preparation.

Intuit’s desktop products include TurboTax Basic, TurboTax State, TurboTax Deluxe and TurboTax Premium and their online products include TurboTax, TurboTax EZ and TurboTax Premium for the Web which are available at www.turbotax.com

The main differences in the various products are the level of help and tax planning features that are included The will all get the job done, but the Deluxe and Premium versions provide more help, including videos, for more complex returns The Premium editions include extensive tax planning tools based on the upcoming tax code changes.

The ‘best bang for the buck’ is TurboTax Deluxe because it includes one free State tax product and all of the help features.

The ‘For the Web’ products provide several unique features not available in the retail packages The first is the ability to use the program for free until you decide you want to print or e-file your return In other words, you can truly try it before you buy it! The second is a secure place to store and access your tax information for at least seven years, since Intuit is required by the IRS to conform to tax regulations

If your adjusted gross income is less than $25,000, you can actually prepare and e-file your return for free using the Quicken Tax Freedom Project, which is a donated service from Intuit (www.quicken.com/freedom)

TurboTax products also allow you to import information from Quicken and from previous versions of TurboTax if you use it year after year.

H&R Block’s TaxCut (www.taxcut.com) is very similar in scope but does not offer the depth of services that TurboTax does, so if you are just getting started, I would recommend using one of the TurboTax products.

TaxCut is best suited for those that want to import financial information from Microsoft Money or have used it in past years, which allows for the rollover of data.

They also offer a web-based ‘try-it before you buy it’ service and an online professional preparation service where they organize and prepare your tax return for you.

No matter which option you use for preparing your return, be sure to use the <a href="http://www.irs.gov/efile/display/0,,i1%3D51%26genericId%3D15025,00.html" target="_blank">e-file (electronic filing)</a> option for much quicker refunds and better accuracy Remember, when you mail-in your return, a human being has to manually enter your information into the system, which dramatically increased the chances of an error and/or a resulting audit!