Tax prep softwares vary greatly, but deliver on ease

McALLEN — As the 2007 tax season hits full swing this month, many taxpayers will hunker down for late nights with calculators, pencils, paper and erasers.

Or they’ll rush to the accountant or tax prep service and let the experts do the work. But a growing number of taxpayers are skipping the hand-written forms and the professionals altogether, filing online and using a product from an ever-expanding array of income tax filing software tools.

About 22 million taxpayers filed from their home computers in 2007, up 11 percent from the year before, according to the Internal Revenue Service.Most did so with one of the three leading software titles: Intuit’s TurboTax, H&R Block’s TaxCut and 2nd Story Software’s TaxACT, which is gaining momentum with taxpayers because it’s free.

Put the software programs to a test and it’s easy to see which product is faster, simpler and the most cost effective for readers in the Rio Grande Valley.

Presentation, style and extra perks greatly vary.

TurboTax

TurboTax, by Quicken-maker Intuit, claims to be the best-selling tax software product on the market, selling about 12 million copies last year.

Its slogan, “Choose Easy,” and its attractive packaging have helped the software to become the standard in the marketplace. It’s also the oldest, having been in use since as early as 1993 — though with many updates since then, of course.

Like H&R Block TaxCut, it costs $19.99 for the “basic” edition, and since Texas has no state income tax, that’s all most taxpayers will need.

TurboTax has the best and cleanest software presentation, but it isn’t too far ahead of TaxCut. It is fast, lean and easy to get through.

The program’s online updates work seamlessly, which wasn’t true with the two other programs.

Internet software updates are key for tax software; the products are usually released before final tax forms are published. Because of that, the programs need to use Internet updates to keep up.

One of the program’s strengths is the ability to skip processes or choose an aided walk-through of the tax process. The “Guide me” option allows the program to guide users through the process, step by step. A similar feature is available on TaxCut.In all, a simple tax return shouldn’t take more than two hours to complete if the user has all the necessary information in front of him.

TaxCut

Those less fluent on a computer may be attracted to H&R Block’s TaxCut product because of the recognizable name.

And they wouldn’t be wrong to do so.

Again, it costs $19.99 for the standard program, and in most ways it’s remarkably similar to TurboTax. Both are quick and attractive, though H&R Block sports a green theme as opposed to the blue of TurboTax.

What TaxCut does have that TurboTax doesn’tis instructional videos, such as one that explains tax changes. Overall, it creates to give a better visual presentation because of the multiple mediums used to make complicated tax rules easier to understand. TaxCut also says right up front what forms will be needed to file a return, so users aren’t running to the file cabinet every few minutes for receipts, financial statements and W-2s.

However, the online update feature is tricky.

Based on a personal experience, it popped up with an error message and was not easy for a novice to resolve it. Because of that, the tax-filing process wasn’t completed.

TaxACT

Nearly 3 million taxpayers took advantage of the free TaxACT software last year, according to 2nd Story Software, the company that makes TaxACT. The biggest plus to this software simply is the price — free.

The company charges $13.95 for the premium version of TaxACT. The premium version includes the ability to file state taxes and a free “e-file,” which eliminates the $10 fee to file online charged by tax-filing companies.

Again, the biggest problem was that the downloadable update for TaxACT stalled three times.

The program is slower and clumsier than the pay tax software programs. TaxACT is also less adept at walking the user through the process. Instead, it presents a large list of possible deductions and expenses the user may need to consider. If not careful, it could be very easy to miss something.

But it has some nice extras thrown in, like an option to use the program’s data to file a Free Application for Student Financial Aid (FASFA). For those in college or considering college, it could save a lot of time.

Verdict

Like the saying goes, “You get what you pay for,” and the same is true with tax preparation software.

Each of these three titles walks the user through the process, and most veteran filers would be able to use any of them with ease.

For first-timers to computer-aided tax filing, TurboTax or TaxCut would greatly help the process, while TaxACT is probably better for more adept computer users and people with a few years of experience filing from home.

TurboTax would get the edge over TaxCut, simply because the updates worked on the first time and set-up was slightly easier.

TaxACT doesn’t have the smooth presentation and lightning-fast performance of the competitors, but it holds its own, especially with the free price.

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Kyle Arnold covers business, the economy and general assignments for The Monitor. You can reach him at (956) 683-4410.