Some Web-Based Tax Help Sites May Be More Taxing Than Helpful
One word describes today’s online tax-preparation possibilities: disappointing.
Theoretically, selling tax software from the Web instead of on a disk is a good idea. Without the expense of making and distributing disks, companies’ costs are reduced, allowing them to lower their prices to consumers. Consumers, in turn, can access their tax returns from any computer, without having bloated programs hogging their hard drives.
It’s also true that the new Web-based sites are generally cheaper than buying the software disks, some of which are still available in stores. Some sites cost as little as $9.95 for both federal and state returns. Better yet, most Web-based versions don’t require you to pay until you actually print or file your return.
Unfortunately, some of the software makers, notably Kiplinger TaxCut, simply don’t get the concept of a Web-based product. You still have to download TaxCut into your computer, which can take an hour or more without a high-speed connection, and you have to pay upfront for the privilege.
Other sites, such as OneTax and SecureTax, offer true Web-based tax preparation, but their programs have such serious flaws that only the most experienced taxpayers--or those with the simplest returns--should attempt them. Naturally, the programs’ faults are less dangerous if you are using them to help organize your returns before you see a human accountant.
The best bet for taxpayers with high-speed connections is the feature-rich WebTurboTax. Even WebTurboTax has its problems, notably a conflict with firewalls. Don’t expect to be able to work on this program on your office lunch break.
I stress-tested these sites using our own fairly complicated return. My husband and I both had freelance businesses in 1998, as well as regular paychecks. We sold a home, bought another and moved, all of which have potential tax implications. We collected dividends and interest from various accounts; we also sold some stock and converted part of my Individual Retirement Account to a Roth IRA.
If your return is simpler, you may not be as demanding as I was, but you should still look for features such as a logical interview process and good help menus to guide you through your forms.
Universal Tax System Inc.’s SecureTax at https://www.securetax.com needs more of those features. Halfway through my return, the interview function abruptly quit, telling me the rest of the interview was “under construction.” I was forced to cull through a list of forms and enter information manually. SecureTax’s division chief, Joe Angebrandt, admits the interview function is not the site’s strongest asset. He said the company continues to add interview screens every week but that fully 50% of its customers eschew the interview .
The help function offered me none. Despite more than a dozen attempts, I was never able to access the site’s help files, a fact that baffled Angebrandt. I can’t imagine how a less experienced taxpayer would deal with such screens as the one that popped up after I entered our interest income. The screen demanded to know whether the interest I was reporting was nominee interest, accrual interest, exempt interest or original issue discount. It was none of the above, but it sure looked as if I had to choose. Fortunately, SecureTax offers free customer service.
The help menu at Thomson Corp.’s OneTax (https://www.onetax.com) was accessible, but often not very helpful and sometimes incomprehensible. Here’s what I got, for example, when I asked for help with my deductions: “Some people will need to report deductions. One of the most common rules for deductions is that you have a home mortgage.” Huh? OneTax does not seem to offer any customer support, either.
In reality, OneTax is no place for people with even moderately complicated returns. OneTax claims to be able to prepare more than 85% of taxpayers’ returns, but the people it can’t help are legion. If you ran a business, want to deduct employee business expenses, had casualty or theft losses or children under 14 whose income you wanted to report on your own return, you’re out of luck. Unfortunately, OneTax fails to make those exceptions clear, so I went almost all the way through our return before I realized the site couldn’t handle our freelance business returns.
Both SecureTax and OneTax cost $9.95 for preparation and filing of both federal and state returns.
After those experiences, working with Block Financial Corp.’s Kiplinger TaxCut at https://www.taxcut.com was a relief, even if the program is still hard-drive-centric. An easy-to-use layout, smart help screens and a touch of humor made preparing the return almost fun. In explaining capital gains treatment, the program noted, “Last year’s byzantine rules for taxing capital gains were enough to make anyone long for a flat tax.”
TaxCut caught the fact that I paid too much Social Security last year--a not-uncommon occurrence when switching jobs, but one that neither SecureTax nor OneTax noticed. TaxCut also computed the alternative minimum tax to see if we would owe money under that highly complicated, parallel tax system. Fortunately, we didn’t. An especially smart calculator figured the depreciation on my business computer, no small feat.
Some minor quibbles: It was easy to overlook the form that allowed me to use nondeductible IRA contributions to reduce the tax owed on my Roth conversion. Because the rest of the program is so user-friendly--and because the tax savings involved were considerable--that lapse was all the more noticeable.
And of course, having to pay for the software upfront was a drag--the federal and state versions each cost $19.95--as was the fact that I couldn’t access it from my favorite Kinko’s or cybercafe. Customer service was free, but the phone line was often busy.
Intuit Inc.’s WebTurboTax at https://www.webturbotax.com is accessible from almost anywhere--except the Los Angeles Times and many other corporations that restrict certain Internet access using firewalls. For those with a high-speed Internet connection and no firewalls, however, there is no better site. Even easier to use than TaxCut with even more impressive help menus and a useful left-hand menu bar to help you navigate, the site tells you just about everything you ever wanted to know about your return. Curious what the codes in Box 13 of your W-2 actually mean? If you have the time to ask, WebTurboTax will answer.
WebTurboTax also sprinkles tax advice throughout the site, rather than waiting for the end, as TaxCut typically does. The screens pop up quickly and are easily dispatched, although you are pointed to more detailed explanations of the topics if you are interested in pursuing the matter. For example, when I started to enter our charitable contributions, WebTurboTax warned me about trying to take a big deduction for donating a vehicle to charity--an audit flag if there ever was one.
WebTurboTax also had the smartest suggestions for reducing our tax bill, including allocating part of our tax preparation fees to our businesses and warning that people in the entertainment business, such as my husband, are more likely to be audited. Another nifty little feature at the end allows you to see how you stack up against others in your income range in terms of deductions and tax bills.
Unfortunately, you don’t save a lot by using the Web version. WebTurboTax costs $19.95 for a federal 1040 and $19.95 for the state version on the Web, while the deluxe software versions--complete with videos and other enhancements--retail in stores for about $25 each. Customer service is also pricey, at $14.95 a call.
A final caveat: None of these sites can replace an experienced, live tax preparer for a taxpayer with a complicated return. Even after doing our return four times (whew), I will still take it to our enrolled agent. Her experience, availability for questions and help if we get audited can’t be matched by any software program, no matter how good.
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TAX LINKS: Stories, forms and links to tax sites can be found at https://www.latimes.com/taxes.
