Ouch. it's tax time again--time to roll up your sleeves, rummage through your receipts and update your computer files. Of course, you could leave the dirty work to an accountant, but with today's plethora of tax software programs, you may not need to.
The tax software game has been the same for several years. There are the dominant programs--namely, Intuit's TurboTax and Block Financial's Kiplinger TaxCut--and a few other less popular programs, such as Personal Tax Edge from Parsons Technology (which is also owned by Intuit), all reviewed here.
Because IRS forms and schedules aren't completed until the end of the year, final versions of these programs were not available at press time. I reviewed beta versions of TurboTax and Personal Tax Edge and, for TaxCut, a shipping product called "The Planning Edition."
As I'm not an accountant (nor especially adept at tax returns), I focused on the usability of each program. All three work under Windows 3.1 or Windows 95. Both TurboTax and TaxCut also offer Macintosh versions, while Personal Tax Edge still comes in a DOS version.
Full Speed Ahead
Intuit, maker of popular accounting programs Quicken and Quickbooks, has created the only tax program dedicated to the needs of the small-business owner. TurboTax for Business is robust and very easy to use. Intuit got some complaints about complexity in the past, so they've tamed this year's interface quite a bit. The result is an environment that uses notebook-like tabs to keep subjects organized and easily navigated.
The screen is split horizontally, with the top half containing full descriptions of where the user is in the process, including questions that need answering. The bottom half can switch between a "Where Am I?" tab and a view of the current form. The "Where Am I" tab lets users see where they've been and preview their tax returns at any time.
Tabs at the top of the screen let users bounce back and forth between key steps, including the Interview process, which takes users through the basic tax questions an accountant might ask.
TurboTax easily imports tax data from Quicken and Quickbooks. You don't even need to export the files to the common tax file format (.TXF); instead, TurboTax just goes out and grabs the data. Of course, if you use another accounting program, you can import .TXF files into TurboTax.
If you don't use an accounting program, TurboTax's interview process helps you through the steps. Even if you import data, you will still be prompted to double-check it. The interview process is straightforward and full of information to help business owners figure out what fair deductions might be. Of particular note are video tutorials that pop up throughout the interview process. One of the most interesting explained the concept of depreciation and how it can be used to write off home office equipment.
TurboTax for Business is the only program that includes a variety of filing forms, including the 1040 (individual), 1120 (corporation), 1120S (S corporation), or 1065 (partnership). The "go to forms" button leads to every work sheet, schedule and form you'll need. Here, users can scroll through and work directly from a form.
An addition to this year's version is "Smart Final Review," which checks your return and gives hints for saving more. For example, I was encouraged to print out my Schedule C to look for any missing expenses, such as advertising.
TurboTax also offers state returns on CD-ROM or floppies ($24.95 or $39.95, depending on your filing status) for all 45 states that require them. TurboTax for federal filing comes on either CD-ROM or floppies as well; both are priced the same. The CD includes all the books and multimedia functions; the disks include only a few key resources. A full installation (including books) eats up 41MB of space; the program alone takes up 20MB.
Cutting Your Taxes
TaxCut is TurboTax's main competition, and rightly so. I was very impressed by this program's interview process. The unique partnership between Block Financial, an H&R Block company, and the Kiplinger Washington Editors Inc., publishers of the popular Kiplinger's Personal Finance Magazine, means this program offers extremely credible tax advice. Be aware, however, that this advice applies to individual returns rather than business returns.
TaxCut's interface has matured significantly over the years. To make this year's version as easy to use as possible, TaxCut has created a simple, yet extremely functional, interface. Every step is carefully outlined and described so novice users feel comfortable. Point-and-click buttons let users easily call up tips from Kiplinger or IRS instructions.
The TaxCut interview process is less videocentric than TurboTax's, though videos are readily available--you play them as needed. I preferred TaxCut's interview process over TurboTax's because it helped me understand the numbers I was entering. TaxCut's import function also made it easier to work with numbers imported from accounting programs. Once your .TXF file is imported, TaxCut displays the data, shows you where the information will be input, and lets you change it if you've made an error. This was exceptionally worthwhile, as the numbers I had previously set up in Quicken weren't always correct.
When you've completed your return, TaxCut's Audit Buster alerts you to anything you may have overlooked, as well as any numbers that may look fishy to the IRS. TaxCut makes it easy to zip from the IRS forms to the work sheets and back to the summary page (where you see how much of your income you get to keep).
TaxCut supports just 23 of the state tax forms for Windows users and only two (California and New York) for Macintosh users. The state versions will be available by February 10 and cost about $25. The main program costs $19.95 for the diskette version and $39.95 for the multimedia version on CD-ROM. TaxCut ate up just 8.55MB of disk space (videos run directly from the CD-ROM).
Getting An Edge
Intuit actually owns Parsons Technology, but it doesn't look as if the makers of TurboTax have anything to do with Personal Tax Edge. This program is clunky and difficult to navigate. The CD-ROM version includes tips from tax expert J.K. Lasser, but they aren't very interesting to look at or read.
Though this program will probably get you through the tax process, it will require a lot more work than the other programs reviewed here and won't be much more pleasant than filling out the forms by hand. If you're a DOS user, however, Personal Tax Edge is the only choice you have. All Parsons products come with a 30-day money-back guarantee, so it can't hurt to give them a try.
My personal choice for tax software is TaxCut. I loved this program's usability--it really made me feel in control of the tax process while it held my hand through all the nitty-gritty tax issues. Intuit's TurboTax is also a great program with plenty of strong features, including support for all 45 states that require tax forms and an easy-to-use interview process. Personal Tax Edge is by far the least appealing of these packages and recommended only for die-hard DOS users.
New and notable software
LapLink for Windows 95 7.5: Road warriors who use notebook computers love Traveling Software's LapLink. New and improved, this bestselling remote access software lets you easily synchronize files from the road. Check it out at (http://www.travsoft.com), or call (206) 483-8088.
Small Business Legal Pro Deluxe: This CD-ROM includes searchable text from four of Nolo Press' bestselling small-business legal books, including The Legal Guide for Starting and Running a Small Business, Tax Savvy for Small Business, The Employer's Legal Handbook, and Everybody's Guide to Small Claims Court. For just $59.95, you'll have a virtual lawyer at your fingertips. Visit (http://www.nolo.com), or call (800) 992-6656.
Block Financial Software, 4435 Main St., Kansas City, MO 64111;
Intuit Corp., 2650 Elvira Rd., #100, Tucson, AZ 85706;
Nolo Press, 950 Parker St., Berkeley, CA 94710, (510) 549-1976;
Parsons Technology, 1 Parsons Dr., P.O. Box 100, Hiawatha, IA 52233;
Traveling Software, 18702 N. Creek Pkwy., Bothell, WA 98011, (800) 343-8080.
Cassandra Cavanah is a former executive editor of PC Laptop magazine and has reported on the computer industry for eight years.