Financial experts who have tried the latest versions of the most popular tax-preparation products say their simplicity may result in a false sense of confidence.
Tax columnist Tom Herman called Intuit Inc.’s TurboTax and TaxCut, by H&R Block Inc., “impressive and remarkably easy to navigate.” But he also spoke with tax preparers who say that some people zip through the process too quickly without fully considering every tax-saving opportunity.
About 40 percent of American do their own taxes, but taxpayers with a complicated financial life or a home business will want to consult with their CPA.
“Unless you have a reasonably straightforward situation, you've got a financial risk in doing it yourself — even with the help of consumer software," said Claudia Hill, owner of Tax Mam Inc. of Cupertino, Calif., in the Wall Street Journal.
Another option is to do it yourself, but have a professional review your return to see if there’s anything you or your software program missed.
Herman recommends TaxCut if your tax situation is fairly simple; TurboTax for more complex issues. He especially liked being able to download the information on the W-2 form from his employer. TaxCut doesn’t have that feature.
USA Today came up with similar results in its test drive of the two products. TurboTax is more expensive, and the extra money is worth it if you’ve got investment returns, self-employment income or complicated deductions. Turbo Tax Deluxe costs $74.95 to prepare and e-file a federal and state return. TaxCut’s top-of-the-line package is $59.95 for the same services in addition to audit support and one free consultation with a tax professional, the newspaper reported. Online versions are cheaper.
Consumer Reports also tested both programs: "For ease of use and more comprehensive information, we lean toward TurboTax. But TaxCut is nearly as convenient and costs less.”
Remember that you can file free. If your income was $52,000 or less in 2006 and your tax situation is fairly straightforward, get free federal tax-prep and filing services online at www.irs.gov and click on “2007 Free File.”