Comparing Tax Prep Software
The use of computerized tax preparation software has risen with the number of taxpayers filing their returns electronically. According to the Internal Revenue Service (IRS), some 68.5 million individual returns were filed electronically in 2005. That is more than half of all returns filed and 11.3 percent more than in 2004. Of those, 17 million were prepared on home computers, up 17 percent in 2005, according to the Associated Press.
Lois Forsythe, owner of MMP Computers, told the Associated Press, “It’s so much easier. You can have your taxes done in two hours.”
H&R Block says their sales of its TaxCut® are booming. Their chief competitor, TurboTax®, accounted for more than 29 percent of Intuit’s revenues in fiscal year 2005. Turbotax raked up sales of $570 million in 2005, according to the Associated Press.
Both programs sell for between $30 and $40; that is less than the $150 a taxpayer might spend at one of H&R Block’s 12,000 offices for the preparation of their personal tax returns. There are five tax preparation software packages that we can compare and contrast. They are:
- Intuit’s TurboTax®
- H&R Block’s TaxCut®
- 2nd Story Software’s TaxACT®
- PEI’s TaxBrain
- CCH’s CompleteTax® and CompleteTax Pro(TM)
TurboTax provides a customized tax interview to help automate the preparation of your federal and state return, according to Intuit. They guarantee your return to be 100 percent accurate. Your return is double checked for errors and omissions and life events prompts are provided. You can transfer data from year to year and import data from TurboTax, Quicken(R), Quickbooks(R), Microsoft Money(R), or Intuit ItsDeductible(R). Basic, Deluxe, Premier level software packages are offered. Preparation is also available using TurboTax Online covering the same three levels. You get a single downloadable state product with Deluxe and Premier TurboTax products. You also receive ItsDeductible with Deluxe and Premier TurboTax products.
Intuit is offering to increase the size of your $1,000 refund by $200, or more, in gift cards from over 50 popular retailers including Lowe’s, AMC Theaters, and Dell, according to TurboTax. Learn more about this offer at http://www.turbotax.com/refund_bonus/.
If your return is audited, TurboTax has partnered with TaxResources, Inc. (TRI) to provide customers with TurboTax Audit Defense. This service can only be purchased through TurboTax software or TurboTax for the Web through October 16, 2006. Starting October 17th, customers should visit http://intuit.taxaudit.com if they would like to purchase Audit Defense, according to TurboTax. This service must be purchased prior to receiving a notice of audit.
TaxCut(R) offers one state product free with Deluxe and Premium TaxCut products. H&R Block guarantees your return to be 100 percent accurate. Any errors and omissions are double checked as you proceed through your customized interview. Life events advice is also provided. You can transfer data from year to year and import data from TaxCut, TurboTax, Quicken, MS Money, H&R Block Deduction Pro(R), or Intuit ItsDeductible. Audit Support(TM) is there for you if your federal or state return is audited, according to H&R Block.
You could double the amount of your federal refund with the Double Your Refund Instant Win Game just by filing your taxes with H&R Block. Enter one of three ways: have your taxes prepared at a participating tax office, use one of our online tax programs, or obtain a game card without purchase by mail, according to H&R Block.
TaxACT(R) provides personal and professional tax products. They offer Standard, Deluxe, and Deluxe with State bundles, according to TaxACT. Free e-filing is available with each individual and state return prepared online. Taxpayers can download the TaxACT software or order the CD at extra cost or use the low-priced online option. Each option has Standard, Deluxe, and Ultimate bundles with stepped pricing and features. Any errors and omissions are double checked by the program. Life events guidance is also provided.
TaxBrain is an online tax preparation service that replaces the return-long interview process with a single questionnaire. Appropriate input sheets are selected by the program based on the short questionnaire, according to PEI. A Personalized Organizer is provided to help the taxpayer put together all the necessary paperwork. The program validates every entry and flags potential audit items and tax-saving opportunities while the federal and state individual return is prepared. TaxBrain also provides expanded Schedule C support for small businesses.
Each TaxBrain client builds a personalized tax profile stored on a customized page that can be used to manage taxes into the future. Filings can be managed and tax payments can be made from this page, according to TaxBrain. TaxBrain Online is always available for taxpayer assistance. SmartCoverage(TM) Audit Defense provides representation if your federal or state return is audited.
CompleteTax(TM) is CCH’s entry in the tax preparation arena. You can take advantage of an online chat service there, according to CCH. The CCH Online Tax Guide, and the Ernst & Young Tax Guide, are also available, as well as a financial calculator and a tax projector. You can also check on the status of your e-file.
CompleteTax Pro(TM) is a professional affiliate program providing an online individual tax preparation system with Standard and Private Label service options, according to CCH. Customers can prepare and process their own returns for $24.95 using the Standard service option. The Private Label version allows firms to create their own brand name for the CompleteTax Pro(TM)-based program. Learn more about CompleteTax Pro(TM) at tax.cchgroup.com/completetaxpro.