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Review: Web help at tax time
(IDG) -- OK, by now you've received your W-2s, your 1099s from financial institutions, your capital gains reports, and all the rest of that confusing paperwork. It's time to put it all together and determine the damage to your lifestyle. You may wish to turn to the Web. Many taxpayers are going online for help with their 1040s. The original online tax service, Intuit's TurboTax for the Web, is expected to double its customer base to about 3 million this year. New providers are popping up everywhere. For example, PrepTax.com just launched an $8.95-per-return service. That's a very nice price, but the business is competitive and online tax preparers seem to have trouble surviving, including no less a brand name than Microsoft, which subsequently partnered with H&R Block for its online tax services.
Web Brethren of Desktop MainstaysTaxAct Online from Second Story Software is cheaper, and it may have more staying power since Second Story has published TaxAct software for several years. Similarly, H&R Block has taken over the online business of its Block Financial subsidiary, which publishes TaxCut software. H&R Block's Online Tax Program offers a level of expert hand-holding that is unique, if expensive (at $19.95, it's more than twice the price of some alternatives, and help is extra). The IRS makes you keep records for three years, so longevity is something to consider when you pick someone to store your data. Intuit, H&R Block, and Second Story all look like they'll still be around long enough to make good on their promises to pay any IRS penalties you might incur as a result of calculation errors. While each has a strong desktop alternative, their Web-based options are usually (but not always) cheaper. In general, these services are thorough, easy to use, and a particularly good option if, like most people, you file only a couple of tax schedules. And unlike tax software, you can check them out for free because you don't pay (by credit card number online) until you either file your return electronically or download it as a file in IRS-approved Adobe Acrobat format. Are they perfect? No, and here's why. TurboTax for the Web: A VeteranTax preparation is all about tedious data entry, and unfortunately none of the leading tax services lets you read the data of the others or even data from their own desktop software. TurboTax for the Web is alone in letting you import last year's TurboTax for the Web return. It also will upload pertinent financial data from your Quicken file, which could be a huge timesaver if you have a complicated return. But this is far from being as smooth as it could be. You can't import data from versions older than Quicken 2000. In fact, you have to use TurboTax for the Web from inside Quicken. What's more, it must be the fourth upgrade of Quicken 2000 or the second upgrade of Quicken 2001. All this introduces unnecessary complexity with lots of room for disconnects and program hang-ups if you don't follow the instructions to a T. Intuit makes a big deal of the "Automated Tax Return," its principal new feature, and claims "effortless" tax preparation. But the feature depends on your employer and contractors filing W-2 and 1099 forms electronically. The reality is that not many companies are participating in the W-2 download yet, and you can't find out who is, unless yours is one. Downloading investment information works better, but which is easier: Typing three numbers off your 1099 or typing in three different kinds of ID? It depends on how each of your financial institutions defines "password." So what's left with TurboTax for the Web? A solid tax service that's otherwise easy to use, especially if you're one of the millions who file 1040EZ. If your annual income is less than $63,000 (married) or $57,500 (single) and you don't need the more sophisticated tax schedules, and you file before April 1, 2001, you can use TurboTax for the Web 1040EZ for $6.95 and file your state return for free. If you need the full-featured TurboTax for the Web 1040, it will cost $14.95 to file a federal return before April 1, 2001, and $19.95 thereafter. Each state return costs $9.95, and the prices include electronic filing. By comparison, TurboTax software and electronic filing can cost between $62 and $97, depending on which versions you select. TaxAct Online Offers Economy AlternativeTaxAct Online from Second Story is cheaper still. It lets you prepare and file both your federal and state taxes electronically for only $7.95 each. The way it integrates both returns is nice; its list of federal and state forms is thorough. The TaxAct interface is clear and comfortable except for the large blue bar and nameplate that always occupy the upper quarter of your screen. Add your browser's navigation bar above that, as well as the standing menu prompts TaxAct keeps on the bottom of your screen, and you'll find yourself scrolling a lot. Besides lacking data import, TaxAct Online is weak on help. Online help is context-sensitive, but has no search function; online FAQs are even weaker because they never mention TaxAct Online, only the desktop software. Tech support is available only via e-mail, and you must fill out a long form to get a question answered in "24 to 48 hours." The first time I tried to register for TaxAct Online, I got this message: "We're sorry, our system is currently off-line. We are working to fix any problems and apologize for any inconvenience." That was in February. If I get that message in April, I am so gone. H&R Block's Online Tax Program Offers ExtrasJudging from the $19.95 price tag, H&R Block doesn't seem to really want to build up a clientele for its Online Tax Program. The program is more expensive than some versions of TurboTax for the Web, and costs the same as the company's Kiplinger TaxCut Deluxe desktop software, which is about 100 times better. Of the three tax services, H&R Block's Online Tax Program is the least intuitive--actually, it's a little klunky. Its Web pages manage to be both graphically spare and slow to download. The simplest tax question seems to require redrawing the screen three or four times. And some of its state forms may not be available until sometime in March. Online Tax Program clearly exists only to drum up business for H&R Block tax offices. For example, for another $29.95, an H&R Block tax professional will review the return you prepared in the Online Tax Program. Or they'll answer tax questions during the process for $19.95 per answer. In fact, H&R Block will do your federal and state return for you over the Web for $99.95. The hand-holding might be worth it if you have a complex return. You have to figure that H&R Block, the company, will still be around next year, but this service? It's hard to say. Sizing Up What Best Suits YouBy now you're probably wondering what it takes to please me. I admit I'm fussy -- ask my wife. But I still think these companies could do better. Remember, the frequent screen redraws and miscues that go with any Web activity will make these services slower than their desktop counterparts. Factor in heavy Web traffic or a potential server overload and, clearly, these services are best enjoyed over a broadband connection. Therefore, the onus is on them to be cheaper than -- but as easy to use as -- desktop programs. TaxAct Online makes the grade, and as the price leader it's probably the best choice for simple returns. But if your tax situation is complicated, you may be better off with TurboTax for the Web. It's still the best of the breed in terms of completeness, innovation, tax support from third-party experts, and tech support from an experienced staff. It's the only choice that offers telephone support -- albeit at $1.95 per minute. If your return is really complex, you might consider skipping H&R Block's $19.95 Online Tax Program and going for its $99.95 online consulting service instead. Preparing taxes at all is painful enough. You're wise to choose tools that don't add to the anguish. RELATED STORIES:
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