Tim Gray for the NY Times writes: My
choice of tax preparation software brands me an old coot, or at least
out of sync with the modern moment. My wife, Mary Ellen, says my taste
in music does, too — my apologies, Mr. Jagger.
I prefer the downloadable desktop versions of the leading tax preparation programs. But the makers of all three — TurboTax, H&R Block
and TaxAct — say that most of their customers, and nearly all of the
new ones, choose their online offerings instead. This year, I made peace
with modernity, forsook the desktop and went online, trying out each
program there.
I learned that each online offering has strengths and weaknesses that recall those of its desktop forebear. TurboTax makes doing taxes about as easy as it can be, short of hiring a preparer. Block’s help is best — when I had a tax question, I got an answer from a Block staff member within five minutes. And TaxAct
is a bargain. At $17.99, its Ultimate Bundle, which includes a state
return, was far cheaper than TurboTax Home & Business, at $74.99,
and Block Premium, at $49.99. Filing a state return costs an additional
$36.99 with TurboTax and Block. (Prices can change throughout the tax
season.)
Based
on the 2013 return for my wife and me, any of the three will work fine
for a straightforward filing — consisting of, say, wages, interest and
dividends, and common deductions like those for mortgage
interest and charitable contributions. I also have to file the Internal
Revenue Service’s Schedule C, because of freelance income, and all
three handled that without problems.
If
you’re filing just one return, the online programs are cheaper than
their desktop counterparts. In some ways, they’re also simpler. You
don’t have to download software. You open up a browser, create an
account and start plugging in numbers. It’s nearly as easy as making a
purchase on Amazon. As with the desktop versions, each program uses an
interview to elicit information. You provide the pertinent details from
your records, and the software fills out the welter of I.R.S. forms.
A
shortcoming of the online versions is that you can’t easily jump back
and forth between the interviews and the underlying forms. Those forms
scare me, and I would prefer not to see them. But my wife, a C.P.A.,
likes to check where and how the software is using the information
provided. To my chagrin, she sometimes manages to catch me putting
figures in the wrong place. How might this happen? Once, when using a
desktop program a few years back, I entered our mortgage interest on
both Schedule C and the main return. I sensed that our tax number was
wrong but couldn’t ascertain why. The program didn’t catch the error.
Another
potential shortcoming of online filing is security. The tax software
companies would seem tempting targets for hackers; each holds a trove of
financial data. Representatives of all three companies said they
invested heavily in data protection. The comments of Bob J. Meighan,
vice president for TurboTax at Intuit,
the software’s maker, were typical. “We use SSL data encryption — the
same protocol used by the military,” he said. “All of our communications
with the I.R.S. are on secure lines. And we have independent audits of
our security.”
Here’s a summary of my triumphs and travails with each program.
TurboTax
If
you want ease and speed — always a relative judgment when struggling
with taxes — TurboTax is the choice. It imported the most information —
W-2s, investment reports and all of the nonnumeric entries from our 2012
return — and did so with just a few clicks. Mr. Meighan said the
program could import information from more than 400,000 outside sources.
With
that convenience comes a measure of annoyance: Embedded in TurboTax are
copious come-ons for other services and products, including Mint.com, a
personal finance website, and I.R.A.’s
sold by well-known financial companies. The program even asks if you
want to post to Facebook or tweet on Twitter about how it’s saving you
money.
For
years, TurboTax has nagged me to upgrade to the Home & Business
edition, from the Premier edition, because of my self-employment income.
The program hinted that if I did so, it would find even more
deductions. Home & Business did ask me more questions than I recall
from years past. But my wife and I ended up with the same deductions and
credits as before and in roughly equal amounts. That outcome was
probably right, given our situation, but it also suggests that I didn’t
have to spend $25 more to find out. TurboTax didn’t ask me to tweet
about that.
Some
of Intuit’s add-ons can make tax preparation easier. The company makes
Quicken, a personal finance program, which tracks spending, savings and
investments. You can click Quicken information directly into TurboTax.
And Intuit provides a website called ItsDeductible
for logging charitable contributions. I recommend using the site: It
will store smartphone pictures of items given to charity and help you
value them — and your charitable gifts can be imported, too.
Intuit
also continues to upgrade TurboTax’s help options. A few years back,
just finding some of the help links on the TurboTax website was work.
Now the program alerts you to help options soon after you sign on.
I
tested that help by asking a question about a weeklong trip to China.
For my wife, it was mostly work; for me, mostly sightseeing,
interspersed with a couple of business meetings. I wanted to know
whether we could deduct part of my airfare. I opted for online chat,
waited about 10 minutes and then exchanged messages for another 10 or so
with a representative. I never received a definitive answer. Instead,
the rep directed me to TurboTax online guidance about business-related
travel.
H&R Block
I
encountered problems when using Block this year, though none seemed to
affect the accuracy of our return. They just made the task more onerous.
Part of the problem was probably me; I’m as deft with computers as a
chimp with a tuba.
The
Block website wouldn’t work with my browser, Safari — some of the
buttons did not respond to my clicks — so I switched to Firefox. Then I
signed in and tried to import a PDF of last year’s return. Little of the
information transferred. Pulling in income data stymied me, too. The
program said that our W-2s and Vanguard account reports were not yet
available, though those had flowed into TurboTax. Once I accepted that I
was going to have to type more, Block worked fine.
On
the plus side, Block’s help was the best. I posed the same China
question via online chat. Within about a minute, I found myself in touch
with a representative, who soon told me that I could deduct none of the
airfare. She said the trip did not meet the I.R.S. eligibility
requirements for business-related travel abroad: I’d spent too little
time on work.
TaxAct
Importing
data into TaxAct presented the same problem I had with Block. I
couldn’t make the PDF transfer work and had to accept the toil of
typing. TaxAct also did not pull in as much data from outside companies.
It does not, for example, link to Vanguard or Fidelity. And though the
program said it could fetch our W-2s, I failed there, too. TaxAct asked
for PINs, which I didn’t have and the other programs hadn’t needed. (My
wife, the ever-cautious C.P.A., rates this extra measure of security as a
virtue.)
TaxAct’s
help was the slowest. I had to call; online chat wasn’t available. When
I did, the operator insisted that I prepay for my return. (The other
companies let you pay when you file, even if you seek help.) Once I
paid, I was transferred to the help line, where I spoke with a
representative about the China trip. We talked for about 15 minutes. She
wasn’t sure of the answer; she told me she would research the question
and email me within 24 hours. Her response arrived within 30 minutes.
She sidestepped the original question, telling me where to put the
information on the return if I decided to deduct.
My favorite feature of TaxAct was one that was unnecessary. Near the end, the program provided a chart breaking down the federal budget
by percentage and showing how much of the taxes paid by my wife and I
would go to each category. Thus I learned that more than 50 percent of
federal spending is designated for defense and for Social Security, Medicare and other retirement programs.
On our return, 50 percent of our tax bill equated to enough money to buy an electric car — a dream of mine. And we may do that this year: All three tax programs said that we could receive a big tax credit if we did.
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