A Taxing |
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by Suzanne Byrd |
In reviewing these software packages, I chose to use a prototype tax return that was fairly simple but quite detailed in utilizing Schedules B, C (with related office-in-home and depreciation schedules), D, E, and SE.
I wanted to experiment with as many areas of the software as possible and to utilize the main areas that would be needed to prepare most individual returns.
These software packages have a couple of features in common. They each have the ability to import data from a prior year return or from a bookkeeping package such as Quicken. They each allow the user a choice of preparing the return using an interview process or to freestyle the preparation by moving through the forms in the order you choose. In all the evaluations, I went through the interview process. This is the lengthy way around, but it's thorough, organized and recommended.
Another common feature is the choice of filing electronically (no modem needed) or filing a sort of condensed return called 1040PC. I am old fashioned. I would never file a tax return electronically simply because I don't trust that the paper I have in my hands is what the IRS will actually receive. The potential complications outweigh the advantages. A quick refund of three weeks seems to be the main sales pitch for this method, but filing early will achieve the same results.
Simply Tax is by far the simplest package of the four I reviewed. The screens are set up with a minimum of fuss, and all the questions in the interview are accompanied by a little box with an "x" in it. If this area pertains to your return, you simply click on "continue". If not, you click to remove the "x" and move on to the next topic. It's all very efficient and simple if you have a basic understanding of tax or at least your own return. However, if you're unsure, some digging is needed, and this is where I have some doubts. If you don't have any experience in these matters, it would be very easy to miss something using this software. To put it another way, if you don't know the questions how can you ask them?
The system has a built-in data saver that periodically saves the data, and I found that this was a valuable trait. Twice the software froze up and wouldn't respond to any keys or to the mouse. I had to warm boot to restart. The system informed me that data entered since the last save had been lost because of a system failure. Again, after an unexplainable error message, it kicked me all the way to DOS and the C>. I gave up without finishing the return or going through the review and print processes. CD $20; Deaver Brown at 617/642-1700 x222.
Personal Tax Edge by Parsons Technology is a thorough, well-written software package. The CD version features a friendly, enthusiastic gentleman whose voice pops up frequently to explain the software as you progress.
One of the first features presented is a Line by Line switch that guides you through the interview making it difficult to miss anything. Each question must be answered or at least addressed before moving on. The option is available to turn this switch off and move around each schedule freely. It's a helpful feature for inexperienced users. The hot keys shown on the screen under their relevant area are also very helpful. For example, to find the business code for your Schedule C, you are told to hit F8, and the IRS list of business codes pops up. In the past, one of my complaints about tax software has been having to memorize these hot keys. Another feature is the ability to stop and review a form at any time. After review, the return to data entry takes you back to where you stopped. The ZOOM button on the right side of the screen is a great way to move up and down the page rapidly. The little black box at the bottom of the interview screen stating the form to which the questions are referring was very helpful to me. Each software program has its own unique wording and style. Sometimes without a universal reference like this black box it's difficult to determine where you are in the return because of the way the interviews are conducted.
One of the most useful things about this software is the Final Checklist. It gives the taxpayer all the information that would be provided in a professional tax preparer's transmittal letter including due dates for filing the return and related extensions and deadlines for funding IRAs, tax payments and estimated tax payments. It also helps with the final arrangement of the forms for filing and necessary attachments to the return. This is valuable information for individuals even though it has nothing to do with tax preparation.
I noticed a few needed improvements to this program such as the necessity of entering slashes in dates rather than the program inserting them for you. Another frustration was being informed of blank fields that needed to be completed but not being able to identify where they were. This was especially noticeable when entering vehicle data for the Schedule C. In spite of these minor things, this is a well put together program that should meet the needs of any individual taxpayer. Application for completing and filing a 1040 EZ form on the Company's web site is at http://1040online. parsonstech.com/qualifier/1040EZ.html.
Kiplinger TaxCut from H&R Block Financial is the most user friendly of these packages. The ease and logic of this program are impressive. It starts with a brief explanation of the screen setup and how to use the program. Throughout the program are constant reminders of the tools available so that you get full use of the screens. Various IRS terms highlighted in blue are referred to as hypertext, and clicking on these gives you a brief explanation of these terms.
Another feature of TaxCut I like is the customization of your interview. In this stage of the process, you are quickly asked a series of questions to create an outline of your return. This is a big time saver as it eliminates the irrelevant parts of the interview. A rapid find button helps you locate forms quickly. It shows all forms you have already completed, and the listing contains your own text for quick locating.
Other nice features are the option of entering data directly on the form making things like capital gains and losses entries faster, explanations and text written in an informal, friendly manner, and caveats throughout regarding pushing your deductions. The true test is auto expense and depreciation entry for Schedule C, and TaxCut passes that with flying colors.
For $9.95 TaxCut will file your return electronically. Send your file via modem or on a disk. It is possible to import data directly from Quicken, MYM, and Microsoft Money. You can call on the advice wizard for tax tips and advice that is context sensitive. The Audit Buster will flag items that will alarm the IRS. There's also a context sensitive help for IRS instructions.
Printing options let you eliminate worksheets and print only the return or print everything including documents. Be sure your drivers are updated. Mine apparently are not so my tax schedules had some illegible data. A tax summary sheet has instructions about the order of the forms and where to file. A wrap up section allows you to back up on a floppy and do some tax planning for next year. I highly recommend this program to anyone. On CD from Block Financial, an H&R Block Company at http://www.conductor.com.
Turbo Tax Deluxe CD, from Intuit, is the Cadillac of the personal tax preparation packages I evaluated. It is obviously the product of a big research and development budget. The Deluxe CD version features many different interviewers on video. All of them are pleasant professionals who slowly, clearly and concisely explain the basic premise of their particular area including what is and is not deductible and some of the related pitfalls. Their explanations are generated by clicking on a play button which also has a repeat feature.
The Turbo Tax screens are divided into upper and lower portions. The upper portion serves as a question and data entry area while the lower allows you to switch between viewing a listing of your forms or the actual form itself. All the source documents and tax forms are just a click away. Tabs across the top of the screen enable movement to various stages of the return. There is tremendous mobility in this program. At all times the upper right-hand corner of the screen keeps your refund or owe status visible which can be pleasant or painful respectively. The screens are set up well with a minimum of fanfare so that they are easy on the eyes and easy to understand. I found it helpful to see all the features by going through the process more than once.
For taxpayers who file Schedule C (Profit and Loss from Business) there are very good explanations for unusual terms such as material participation and tricky areas like travel and entertainment. The ability to flag estimates for unknown amounts is very helpful for those who extend and complete their return later. Also, in Schedule C the automobile expense area is simple but comprehensive.
Turbo Tax has excellent instructions for putting the finishing touches on your return and making you aware of due dates, filing addresses and things to do for next year. There's a feature to compare your return to the US average that may alert you to "out-of-norm" items. Three other features are worth nothing: tax tips for your 1997 return, a "deduction finder" that will assist you in finding money-saving opportunities, and comprehensive "error checker" - though this is common to most other programs.
One pitfall with Turbo Tax: don't tell it to print the entire return because it prints dozens of unnecessary worksheets. Just print form by form taking care not to miss one. This is a minor complaint about an otherwise excellent product. For more info go to http://www.intuit.com.
After you have prepared your return on a package like one of these, you might even look forward to tax time!
Suzanne Byrd, a HAL-PC member, is controller for Craig, Sheffield & Austin, a Texas construction firm headquartered in Houston and a private tax preparer.
E-mail me at webmaster@hal-pc.org with any comments you have and tell me what you want to see here.
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