Putting Tax Software to the Test

By Ashley M. Heher
Associated Press
Sunday, February 26, 2006

As a single renter in my twenties, my taxes used to be so easy I'd do them by hand. In my pajamas. In half an hour.

But this year I moved for work, got a raise and started to focus on investments. Between charitable donations and moving expenses, I thought I might be able to itemize.

So I decided to pit the three most popular tax-preparation programs against one another, rating them for user-friendliness, design and, most important, the ability to calculate my tax tab.

My virtual accountants: H&R Block's TaxCut, Intuit's TurboTax and the comparatively cheaper TaxAct, from an Iowa company called 2nd Story Software.

All three products ask you a series of questions and fill out tax forms based on your responses. How long you travel down the various avenues depends on the complexity of your finances.

I began with TaxCut, which, like TurboTax, first offers the option of importing last year's tax return from TaxCut or TurboTax as well as any financial information you've kept in Microsoft Money or Quicken.

TaxAct will import only from TaxAct.

Before we go further, let's weigh the costs.

TurboTax's basic version runs $19.95, including state software. With fees for electronic filing for both state and federal returns, the total is about $50.TaxCut's comparable package comes out close at $45.94, but you have to mail in for a federal filing rebate.

TaxAct costs $12.95 including state software, and federal filing is free. Electronic filing for the state will cost you $7.95. But thrift, in this case, may come at a price.

I started with H&R Block's TaxCut, which I found user-friendly and helpfully spattered with narrated snippets about changes to the tax code. (Did you know the uniform definition of a child has changed?) The forward and back arrows let me switch pages and didn't delete the data I'd entered -- a much-appreciated feature after I typed the interest from my Roth IRA in the wrong category.

TaxCut walked me through standard and itemized deductions, letting me enter amounts for clothes I gave to a thrift store and the money I donated to a pet rescue program after I adopted my dog.

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