Yes, it is Tax Time, by Sally Hamilton
Programs to Help + Money
Charles W. Evans, Reviews Editor
TaxACT is best for the least complicated returns. It is complete, but has no audio/video. The Help is basic. The price is right if you don't have a lot of tax work to do or a need to import data. Last year TurboTax and TaxCut were neck and neck, but this year the latter has pulled ahead. Although TurboTax is a bit more elegant, it suffers from extensive sales pitches and "partnership" icons. You are now required to activate TT (does this sound familiar to XP users?) The basic program will suffice for most returns. TaxCut pulls ahead in designing a better and more efficient user interface, plus a more useful help function.
These software packages have a couple of features in common. Two can import data from a prior year's returns or from a bookkeeping package such as Quicken or Microsoft Money. They each allow the user a choice of preparing the return using an interview or freestyle process by moving through the forms in the order you choose. In all the evaluations, I went through the interview process. This takes more time, but it's recommended if you don't have much tax knowledge. The reminders and questions prevent costly omissions both in deductions and unreported income that the IRS will remind you about later.
E-Filing is available from all the programs; some for a small fee. Using e-File and direct deposit can cut your refund time to about ten days versus about four to six weeks for a paper return with a refund in the form of a check. A few commercial preparers will even write a check for your refund virtually on-the-spot, but the "loan" fee will cost you dearly.
If you have your info handy, three to four hours is enough to complete the average return.
TaxACT Standard 2002.
If you're using TaxACT Standard 2002 (free), by 2nd Story Software, you will be offered countless opportunities to upgrade to the Deluxe version for $9.95. These nagging reminders of what you're missing by not using Deluxe make you wonder why they even issued the Standard version. Import features are only available with the Deluxe version. The Deluxe version also includes JK Lasser's Your Income Tax Guide, which is not consistently available. Beware. The $9.95 is only the beginning. Don't look for any fancy extras or advanced technology. The Standard version will not import its own prior year data!
Your tax refund or amount owed is always displayed. To further assist you, at the top of each IRS form (detailed view) is to whom it is applicable: single, joint, or not applicable. This will insure consistency in your return. At any time, you can go to any particular form or schedule to review it, change data already entered or print it. At first glance, when you complete your return, it appears that you must print the entire return. This is, in fact, true...at this point in your preparation. However, when you are at any one of the forms, you can print just that one or go to the main menu under File and selectively print a series of forms or schedules or worksheets.
One distinct disadvantage is that it will not import from personal finance programs (e.g., Quicken and Money) or payroll info (W-2s). On the other hand, TaxACT does not require a lot of configuration, so you can just get right to the tax form. There's a slick drop-down menu called Step that, with one click, lets you jump from one major section to another. It even checks off those parts of the return you have completed. The Back button is way down in the Tool bar.
How about errors? TaxACT calls them Alerts and there are three levels: Red, Yellow and Green, all of which you are likely to see when you begin the "Alert Reviews" phase. It again is direct and will take you to the specific form or schedule dealing with the reason for the Alert (e.g., missing data will be a red Alert). In addition, there are other functions which are helpful, but of limited practicality, such as the Comparison with other similar returns in the US. It is interesting, but you cannot factor this info into your return. I think these sorts of things just inject worry into the process. The red alerts prevent you from e-Filing if there are any errors in your data. Every word and number on W-2's and 1099's must be included before the e-file process begins.
TaxACT is presented in browser format with back, forward and home buttons. The interview process is on-screen. There are no live interviewers. The software is not fancy, but it is thorough enough for most uncomplicated, personal tax returns. NOTE: This Standard version is a one-time only use. For more info go to www.taxact.com.
TaxCut Deluxe 2002.
TaxCut, by H & R Block, starts by asking you a series of brief questions about your return to eliminate the irrelevant parts of the interview. It imports from sources such as previous year TaxCut or Turbo Tax and personal financial programs like Microsoft Money. Download financial data from various participating financial institutions or W-2 data if your employer is participating. If you get lost, click on the program's Where Am I? button for a quick status report.
TaxCut is a bona fide mini tax course. Informative areas include the 2002 tax law changes, stock options, the increasingly complicated IRA/401k regulations, and the calculation of mutual funds basis, a confusing area where too much tax is often paid. For a fee per topic (no matter how complicated), you may go on-line and get help from an H & R Block tax expert. Deluxe will check for errors and suggest deductions you may have missed.
One of the main advantages of tax software is to move you from entering your name to the final form as easily and practically as possible, and it should be done in a logical and linear fashion. You should be guided almost seamlessly through all the forms, schedules, etc. without losing your mind or place on the return. TaxCut does this nicely and you can toggle between the interview and actual form. Another helpful feature is the Q&A topics available while on a form. This is especially helpful when dealing with a new or unfamiliar form. Help Central is on the H&R Block web site for more comprehensive info and tax matters. RapidFind is a thorough, word(s) sensitive search option.
Its customized interview is a real time saver. After a series of questions, all but the forms and/or schedules your individual return needs are eliminated. Sounds simple, but with the multitude of forms and questions, it is a useful feature. Another useful feature is that anytime you wish, you can enter data directly on a form, even while in the Interview mode. Text and explanations are written in an informal, understandable style. Like other programs, you can select to print the entire return, selected forms/schedules or worksheets.
TaxCut will file your return electronically at no charge. Another option is to go on-line and use their on-line tax program, saving you the trouble of shopping for the software. TaxCUT offers more sophisticated choices for filers who know their way around, but is simple enough for basic filers. If your return justifies it, the prices are reasonable and features excellent. For more info go to www.hrblock.com, including support assistance.
Turbo Tax Deluxe 2002.
Turbo Tax Deluxe, from Intuit, is very similar to TaxCut. The Deluxe version features many different video interviews. It carefully explains various areas of the tax laws and the related pitfalls.
Along the right hand side of the screen, helpful FAQs related to the topic on which you're working appear. Drop down menus across the top of the screen make it easy to navigate your return. Turbo Tax also has the ability to import data electronically from your financial institution, if it is supported. The Basic version is adequate for most users, but it will not import the prior year's TT data.
Like the other programs, it begins at the beginning using its own Easy Step: What is your name....then continues the Interview process until you know if you owe or will get a refund. It includes some third party tax info assistance. In this case, it is Money Magazine's Income Tax Handbook plus the usual array of web sources, including a handy source of its own. If you need it, there are two additional handholding features, in addition to the basic Interview process. One is a large ?Help button on each screen that will take you to a separate screen and provide line-by-line assistance. Second, and just under the ?Help button, there is usually a typical question to further aid you in determining if you need to respond to an item for your return. It, too, is hot-linked to a help topic.
The proverbial multimedia video? Sometimes helpful, but not usually. Like others, it is general and often gets in the way of the Interview. I'd rather see a button on the appropriate item's page, rather than the nuisance of a separate page. Big item? No, but cumbersome. TT does hold your hand rather tightly. If you enter a questionable number, or something in a complex area of the return that might trigger an audit if incorrectly done, it will stop and ask for a corrected entry or more info. It is also helpful to see the actual return when you enter data during the Interview. If it gets in the way, you can hide it. I'd suggest you not hide it.
I must admit TT is the most direct when looking for a form or schedule. Do a quick search by topic or words and there it is. Or simply click on the right side of any line on the form and you'll zip to either the details of the worksheet or the basic line on the 1040. The software also allows you to retrieve and input your wage, mortgage interest, and investment data with instant data entry by automatically retrieving W-2 wage data, 1098 mortgage interest, and 1099 investment data from participating employers and financial institutions. It then enters the data in the right forms, reducing manual data entry and simplifying tax preparation.
Kicker? To use TT you now must activate it. The purpose, of course, is to prevent piracy and I support that premise. You can install it on a second computer, but can only print out on the original computer. So what's the problem? Virtually any change: e.g., new hard drive, reinstall your OS or upgrade it, etc. will void your original install and you'll need to buy another package. Intuit, this is neither a smart nor flexible move. You really need to work on this.
Turbo Tax has on-line Live Tax Advice charged by the minute or a flat fee for an e-mail reply. e-Filing may be free if you qualify. A Quick Cash Advance is available at the time of electronic filing but loan fees apply. An added bonus on the CD is a Tax Library with the IRS publications and other tax advice publications. For more info go to www.intuit.com.
Microsoft Money 2003 Deluxe.
Money now easily wins over Quicken, even with the latter's new and improved setup wizards, especially for first-timers. I think Intuit is resting on its laurels and past successes. All said, both Money and Quicken do an excellent job of tracking your finances, but Money's superior service and support make it my first choice. I'm impressed by its smart, on-line features - especially MoneySide, a browser display that gives you instant, secure access to your most important financial info while you're on-line. Money makes you obtain a Passport account to access many of its services. For all but dedicated Quicken users, Money 2003 is this year's pick.
Although Money's setup takes time - about 15-20 minutes, the step-by-step process helps you configure all your accounts and schedule all your bills (such as mortgage, utilities and cable TV). Like last year, Money does a thorough job of converting Quicken data files from versions up to and including vs. 2001. You can jump between modules most often used. This program earns top honors for its long-range Lifetime Plan. This comprehensive tool lets you build a financial plan that accounts for all kinds of life events, from buying a house to caring for aging parents.
Money has achieved Web integration that, in my book, puts it above Quicken. Personal financial programs have had on-line components for years (e.g., electronic bill payments), but Money 2003 dramatically ups the ante with Background Banking. This utility automates all on-line communication between you and your bank (or broker). NOTE: Your bank or brokerage house must support Money files. It's nice to see a financial program this user friendly, and one that balances my checkbook and keeps track of my 401k. I can enter deposits and bills to my register automatically. I easily print a copy of my checkbook register each week just in case. It has remarkable integration with my banks and credit cards so I can just download the statements directly into Money. My Pocket PC is running the Pocket PC 2002.
There are problems using the Automatic Match feature for the downloaded statements in Money 2003. I was a little disappointed with the fact that I couldn't see a running balance anymore on the Pay Bills page. Some good points about Money? 1) Great budget planner, 2) Excellent cash flow analysis and 3) Very customizable. Enter in your budget, your bills (which can also be added to your budget) and you can easily see how much money you have left to spend throughout the month.
On-line features are good too, but this raises security concerns. And I don't need Passport! Combine Money's new Web sense with an attractive interface, easy setup, excellent planning and record tools, and a capable portfolio, and you have this year's winner.
Sally Hamilton is a HAL-PC member who has her own bookkeeping service. For questions about the software reviews, send them to firstname.lastname@example.org.
Charles W. Evans is a HAL-PC member and the Magazine’s Reviews Editor who can be contacted at email@example.com