Everyone hates tax time, but it's one of those necessary evils that all citizens must deal with. Fortunately, the modern age has given us a number of tools to assist during this invasive process. These tools range from software to help individuals calculate their own taxes to applications written for use on smartphones and other portable devices. (From community-based services to free software, there are many free resources to help with your taxes. See 6 Sources For Free Tax Help.)
One of the most popular programs is TurboTax, made by Intuit. Turbo Tax offers an online version and a desktop version, where the software is downloaded to your computer or a CD is purchased at the store.
Turbo Tax online and Turbo Tax Desktop/CD come in four different versions – Basic, Deluxe, Premier and Home & Business, with the desktop/CD versions priced significantly higher:
|Home & Business||$74.95||$99.95|
While many may jump at the lower-priced products, there are significant differences between the two. Turbo Tax Desktop comes with one state download for each federal return, while the online charges $36.95 for each state return. (A few tax credits can greatly increase the amount of money you get back on your return. Find out how in Give Your Taxes Some Credit.)
This company makes another popular offering in the do-it-yourself tax space, and it also has online and desktop versions at various prices:
|Best of Both||$79.95|
Like Turbo Tax, H&R Block charges extra for each state return for all of its online versions. The Deluxe and Premium Desktop versions include a free state return, although the Deluxe Desktop can be purchased without the state return for $29.95.
The H&R Block Best of Both online version is intriguing for those with a complicated tax situation. The Best of Both version allows individuals to calculate their own taxes, using every tool that the program offers in the premium version, along with a review and consultation by an H&R Block tax professional.
The H&R Block desktop versions were formerly branded under the TaxCut name and come in Basic, Deluxe and Premium versions.
What Do You Get?
The Basic editions of both Turbo Tax and H&R Block in the online or desktop versions are aptly named. If you have a complex tax situation with multiple income sources and lots of deductions, these are not for you. (If you're a homeowner, deducting mortgage interest is one item you'll want to understand and use on your tax return. For details, see The Mortgage Interest Tax Deduction.)
One decision you must make is whether to use the online or desktop versions of popular software packages. Each has advantages and disadvantages that you should be aware of before purchasing. The biggest issue I have with the online version is security. Since the software is not downloaded to your computer, all your information resides on the server at whatever company you choose, including your Social Security number and salary information. Certainly these companies spend millions to keep this data secure, but it seems that every other day some type of security breach is disclosed.
Determine Your Needs Before Buying
The amount of features and choices can be daunting to the average taxpayer, so here's some advice. Don't rush out and buy the most expensive version under the belief that this will guarantee the best possible performance for you. Decide what you need first, and then match it with the features offered.
Are you a recent college graduate with only one W-2 form, living in an apartment and with no unearned income? Then the basic version is plenty, and anything else just represents expensive bells and whistles.
Are you self-employed, own two homes and have an investment portfolio full of stocks and bonds? Then almost certainly you will need the higher-level Deluxe or Premium versions.
H&R Block also has an application for the iPhone and iPod Touch called Tax Answers. The application allows you to find an H&R Block office, browse a tax glossary, participate in a tax quiz or ask an H&R Block tax professional to answer a question.
Turbo Tax has its own application for the iPhone and iPod Touch called TaxCaster Mobile. This application allows taxpayers to estimate what their tax refund will be based on the information entered in.
Another cool application for the iPhone and iPod Touch is called Tax Tracker. This application allows the user to keep track of business expenses in real time so you can make the proper business deductions at tax time. Users can take photos of receipts and export them to Excel. Keep track of mileage used for business purposes as well.
Everyone knows that personal taxes are due April 15, but when are quarterly payroll taxes or partnership returns due? Get the iTaxMama application and keep track of the multiple due dates for various tax forms.
The Bottom Line
Tax time is painful, but especially so for those who choose the do-it-yourself route rather than handing the job over to a professional. Investigate these software programs and applications to help you prepare and get through tax season with as little discomfort as possible.
Don't miss out on tax benefits and significant savings this year! Our Income Tax Guide has everything you ever wanted to know about taxes but were afraid to ask.