By Rob Pegoraro
Thursday, March 12, 2009
I knew I was doomed about five minutes into this year's tax-prep ordeal. Two different programs -- having been fed nothing more than basic personal info and the contents of a pair of W-2s -- did not agree on the total tax bill for my wife and me.
H&R Block's TaxCut Online and Intuit's TurboTax Online should have coughed up identical responses to such a simple input, but instead they were $857 apart.
Sadly, I wasn't surprised to see the two dominant home tax-preparation programs disagree, merely disappointed to see them part company so quickly. I have long since abandoned all hope of understanding how these applications compute my tax bill; I just want to know which one can end the agony first.
When judged on those limited criteria, tax-preparation software has improved a little -- especially the Web-based versions that most people use, which need no software installation, securely encrypt work online and are free for simple returns. Others can try them for free, then pay to print or file (or, at no cost, copy data from them into the IRS's new, free Web-filing system).
This year, I tried roughly comparable Web applications: Block's $19.95 TaxCut Online Basic and Intuit's $29.95 TurboTax Online Deluxe. Each worked in Internet Explorer 7 and Firefox 3 in Windows; Safari 3 on a Mac. Intuit supports Windows 2000 or newer and Mac OS X 10.2 or newer, while Block only allows Win XP or Vista and OS X 10.3 or newer.
After some long nights of plugging in numbers for two salaries, a little freelance income, multiple bank accounts and investments, a mortgage and too many other details, TurboTax left me with a slightly higher tax bill than TaxCut. And yet I felt more comfortable with TurboTax's estimate and less annoyed by its performance.
That's partially because TurboTax required less work. While both Web applications could import tax-prep files saved by 2008-vintage desktop programs, TaxCut kept asking me to type in information it should have pulled from that file, such as names of mutual funds.
TurboTax can download tax-return data from many employers and brokerages. It also linked to Intuit's ItsDeductible site for quick estimates of in-kind charitable donations (if you don't need that feature, get the $14.95 TurboTax Basic edition that Intuit doesn't list on its home page). Block doesn't offer its comparable DeductionPro service to any of its TaxCut Online users.
That oversight wasn't TaxCut's only unforced error. It demanded too much scrolling up and down and clicking through consecutive screens to enter data on one form. And when I left a field blank instead of typing a zero -- a common occasion with investments, thanks to all the flavors of capital gains the tax code serves up -- the site scolded me to finish the form.
Other TaxCut issues went beyond mere aesthetics. Its Web version lacks important features available in the disc-based edition, like the ability to inspect the 1040 form the program is creating, then save an offline copy of your data. It also omits such lesser-known options as the tax credit for first-time homebuyers in the District.
And if you decide you'd rather not use TaxCut, there's no one-click way to wipe your data from the site.
TaxCut does include the extra-cost option of a consultation with one of Block's own tax advisors. But you have to put up with a lot of aggravation first.
Intuit's pricier program offered its own annoyances. It kept asking questions only an accountant could answer, such as the chunk of a mutual fund's dividends subject to foreign tax -- a detail absent from the fund's 1099 form.
At other times, TurboTax's overall edge in efficiency vanished, like its plodding tour of deductions and credits repeatedly held up by a prompt to "Find More Deductions," or its clumsy method of recording cash donations to charity.
TurboTax, however, allowed more confidence in its numbers by showing more of its work. I could click the running total in the top-right corner to see a summary of the factors behind that number, with my 1040-in-progress another click away. At the end of the process, a semi-plain-English explanation added context.
But both of these programs, along with every other tax-prep application I've tried, too often fail to explain why we must subject ourselves to these contortions.
The tax code represents the single worst interface -- bloated, inefficient, unreadable, unreliable, downright grotesque -- I have ever seen. And to what end? We try to reward good behavior and punish bad conduct with all these cryptic little rules, but how can people follow them when they can't understand them?
Along the way, we've corrupted a basic obligation of citizenship -- paying the cost of civilization -- into a Kafkaesque game that only lawyers, lobbyists and accountants seem capable of winning.
I would like to see tax-prep applications deal with this misery more effectively. But I would rather see them made obsolete by a tax code that people can understand and follow without any extra software.