Doing Taxes on PC Means Many Choices

If you prepare your taxes by computer, you have a dizzying array of options this year. First you'll have to decide whether to buy tax preparation software or complete your return online.

I'm going the online route because I'm tired of the clutter of boxed software. As you consider your options, it may be helpful to divide the task into two categories: preparation and filing.

You'll have to pay up-front for boxed software. Generally you can use basic online tax prep programs for free. You pay up when it comes time to print out a return or file electronically.

Some people will never entrust their financial information to transmission over the Internet. If that's you, but you still want to enlist your computer in doing the annual deed, boxed is the way to go. You can use the software to prepare your return and print it out to file.

The big names in tax prep software, Intuit's TurboTax and H&R Block's TaxCut, come in both boxed and online flavors. They work in similar ways, using a question-and-answer format to collect your data. The program fills in forms automatically and occasionally chimes in with advice and info about changes in the tax code.

You'll find the usual lineup of basic and deluxe versions of these programs this year, as well as some new specialized packages. TurboTax, for instance, is offering new versions tailored for investors and retirement planning. There's pretty much something for everyone from EZ filers to small business owners.

What really sets these programs apart are the extras, premium services, and options available for additional fees, such as phone consultation with a tax expert, special "deduction helper" software, or review of your return by a CPA. (H&R Block offers the best options when it comes to getting live help.) However, if you decide to do your taxes on the Web to save money, be forewarned that tacking on too many of these extras can quickly wipe out any cost savings.

In addition to the major names, there are a number of smaller but adequate online players that make the job of electronically preparing and filing easier. While you may not have heard of Taxbrain.com, taxslayer.com, or eztaxreturn.com, such sites offer fast no-frills service.

No matter which method you choose, boxed or online, the IRS is hoping you'll be trusting and file electronically. According to the IRS, filers who use tax prep software make fewer errors, get refunds faster, and help the agency reduce the time and expense of dealing with paper forms.

Last year, about 47 million of 131 million tax returns were filed electronically. In an ongoing bid to boost the number of digital filers, the IRS is dangling deals for free e-filing on its website, www.irs.gov. Offered through a variety of third-party tax prep sites, there are freebies for folks who are 50 and over, or 20 and under, or for those whose adjusted gross incomes are under a set amount. There's even a handy wizard that will match you up with a free e-filing service.

Copyright 2003 Globe Newspaper Company The Boston Globe March 17, 2003, Monday ,THIRD EDITION,
BYLINE: BY MICHELLE JOHNSON, Michelle Johnson is a freelance writer. She can be reached at mijohn@mail-me.com