Online Tax Prep: An Upgrade Year

TaxAct, TaxBrain

TaxAct: Low Price (Total Cost: $23)

Like its shrink-wrapped counterpart, 2nd Story Software's Web-based TaxAct remains the low-price leader. TaxAct's Deluxe Web package will cost you $10 for the federal return plus $13 for the state. For those who don't need help, the real bargain is the standard package, available for free to everyone. This includes all federal forms and schedules, as well as federal e-filing. Adding the state will still cost $13.

TaxAct asks only basic questions about dependents.
But the company seems to have let its Web site slip. For example, when I answered questions about my dependents, TaxAct didn't blink at my claim for a (hypothetical) 25-year-old daughter who lived at home for all 12 months. The other four programs asked a few more questions, such as whether she earned over $3200 (correctly noting that if her earnings were greater than $3200 she could not be claimed as a dependent).

But TaxAct did want to know whether my (also hypothetical) 21-year-old son was a full-time student. Why they had questions about someone under 23 years old but failed to ask anything about a 25-year-old is a mystery. The most egregious omission, however, was for an unrelated 22-year-old who had been living with us all year and who was not a student. This person was accepted as a dependent with no questions asked!

TaxAct compounds these problems by including many screens trying to sell you various services, upgrades, and add-ons. This year the other products have pretty much eliminated "upsell" screens from their software and Web sites.

TaxBrain: Odd Man Out (Total Cost: $100)

Petz Enterprises' TaxBrain is the only site I looked at that doesn't use tabbed navigation: While its initial screen, with 14 checkbox-style questions, appears straightforward, any item for which you check "yes" may open another set of questions.

TaxBrain's interview starts out with a flurry of questions to determine what screens you'll see down the line.
Once you've answered somewhere between one and five pages of these questions you can actually begin your return--and proceed very efficiently. But this works only for superorganized types who have all their paperwork in hand and don't expect to be working on different parts of their return at different times.

TaxBrain's sales tax deduction calculation screen looks forbidding.
TaxBrain is also expensive. It would have cost $70 to prepare my sample federal return and another $30 for the state. It's not particularly easy to use, nor is it easy on the eyes. For example, its sales tax deduction calculation screen is a forbidding conglomeration of questions and tables. Of the three shrink-wrapped products and five Web products I checked out, this is far and away the worst handling of sales taxes.

TaxBrain's dependent entry screen makes entering multiple dependents confusing by providing a large Save button that dwarfs the small link for additional dependents.
And there are other annoyances. When entering multiple dependents, after each one you have to click a link in small print that says "additional dependents" and is located on top of the data entry fields. If you forget, and click the much larger Save button at the bottom of the window, you'll return to the main menu and have to remember to click the link to "Dependents information" to start the process all over again. Granted it's only one extra click, but it's still poor design.

TaxBrain is laid out pretty much the way IRS forms and schedules are laid out. That means, for example, that you can enter employee travel expenses and a few other items on Form 2106, but must go to Schedule A to enter any depreciation or other employee expenses.

Since most of us organize our paperwork by category, I tend to put all our employee expenses in the same shoebox. Sorting them out for TaxBrain's convenience seems like unnecessary extra work.

The Schedule A displayed is very rudimentary: There's no way, for example, to break out mortgage interest paid to different lenders, so you have to do those calculations yourself offline, increasing the chances of math errors. Also, the entry field for "state taxes paid" includes a warning not to include W-2 amounts. It would have been nice to see the W-2 total transferred automatically, and also a new line for any additional state taxes paid.

Conclusion

Online tax preparation sites are catching up with shrink-wrapped software. In fact, TurboTax uses virtually identical interviews for both. Luckily, the Web sites are moving in slightly different directions from each other, giving customers more choice about the experience they will have filing this year's return.

So choose carefully and maybe you'll only need the medium-size bottle of tax headache reliever this year.

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