A Less-Taxing Solution
Another big bonus offered by TaxAct is the ability to “try before you buy.” Their online Web-based packages enable you to completely prepare your return, and only pay if you’re happy with it and want to print and/or efile it.
The third main entry in the tax preparation software field comes from the venerable tax preparation firm, H&R Block. TaxCut, unlike its two competitors, does not offer a free option. It does offer Web-based online options as well as downloadable (or CD) desktop versions, and its prices include free federal efiling. But its standout feature, as its commercials reiterate, is that it has “people” behind it. Many of the preparation options it offers include one free session with a live tax advisor. It also guarantees that if you efile, H&R Block will give you free audit support should you ever need it. They’re betting on their software to prevent an audit from ever happening.
All the Web-based online options work on any computer system that can use the main Web browsers available. All the desktop versions work on a PC, but only two, TurboTax and TaxCut, offer Mac versions.
So how “free” is free, and what do you get for nothing?
The free Web-based edition of TurboTax, with free efile, is good if you have a very simple Federal return (i.e., 1040EZ, few or no deductions, have no dependents, and so on good for first time wage earners or part-time workers), but preparing a state return will cost you an additional $25.95 – however, this cost includes efiling your state return (in states that offer efiling; not all do). However, many state tax returns are incredibly easy to fill out manually, taking most of their information from the federal return with just a few minor additions or changes. If your state return is simple, you can forego purchasing the additional state package and do your state taxes manually. Visit your state’s tax-related Web site for downloadable forms you can fill out and mail.
TaxAct offers a free Web-based online tax preparation option, as well as a downloadable free desktop version (or $5.95 if you want it mailed to you on a CD). Doing your state taxes with TaxAct’s free online version will set you back a mere $12.95, and that includes efiling in states that are set up for it. It is also best for tax situations that are not very complicated.
There is another free option for preparing and filing your federal taxes, and you can find it at www.irs.gov. The IRS has partnered with tax filing companies in what they call the “Free Alliance.” If your adjusted gross income is $52,000 or less (a pretty generous cut-off point), you are probably eligible.
There are loads of companies in the Free Alliance. Some are restricted to certain states, some offer free state efiling, and so on. The IRS has simplified your decision-making process, however, by providing an online option called “Guide Me To A Company.” This simple screen interface asks you some basic questions and then presents you with a list of companies in the Free Alliance that meet your situation or that operate in your geographic area. Virtually all of these partner companies offer “value-added” services at an additional cost, and the only major company on the list is TaxAct. You’ll find names such as Liberty Tax Online, but the only free service they and many others offer is preparing a 1040EZ. If you have deductions or investments, then you need to file the “long” 1040 form, in which case you’re better off sticking to one of the “big three” discussed in this article. Having said that, it might be worth your time to check out the IRS’s recommendations – you never know, one might be just right for your particular tax situation.
