Online Tax Prep: An Upgrade Year
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.
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 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.
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.