The Taxman Cometh, Be Not Afraid

by Christopher Preece, Reviewer

Yes, it’s that time of year again, when we spend endless hours trying to figure out how much Uncle Sam owes us, or more likely, how much we get to fork over to him. “To avoid taxes is legal, to evade taxes is illegal,” wrote Nelson DeMille in his novel, The Gold Coast, and that is the dilemma many Americans face: How can I legally avoid taxes? Further, how can I reduce my risk of an audit? The trouble is, most people don’t know what they can or can’t claim as a tax deduction and a great deal of people can’t afford to shell out a hundred or more dollars to have a professional help them.

This is where online tax software comes in. We recently reviewed a number of online tax software sites, and found the prices agreeable to the wallet, and the products agreeable to the taxpayer. For comprehensive tax return preparation, the most expensive online tax site was around seventy dollars and the least was $16.95. If your tax filing needs are more basic, and you just need to fill out a 1040 EZ, then some sites offer to prepare and E-file your return for free, or at a price under ten dollars. Regarding ease of use, most tax sites have a guided interview process, where instead of filling out complicated tax forms, you simply answer a series of questions and the forms are filled out automatically based on your responses. The top-ranked products even help you find deductions.

Our top-ranked tax site, TurboTax Online, costs $29.95 for comprehensive Federal return preparation, the same for State returns, and E-filing is free. Comprehensive returns meaning for someone who owns a home, has a lot of deductions to claim, and investment and retirement information to claim. TurboTax is more expensive than most other tax sites, but it’s less than what you’d pay a tax professional, especially since TurboTax Online allows for complicated tax returns to be prepared with ease. TurboTax Online boasts the most complete help system we’ve seen, with a deep well of tutorials and tips, a thriving community of knowledgeable users, and should you need it, you can get in touch with a tax professional for an added fee. We found that in most cases, a tax professional’s advice was unnecessary, as TurboTax Online’s help system was more than sufficient for our tax questions, and their site automatically advised us where any deductions claimed might be closely scrutinized by the IRS, which was helpful to say the least. If you need to file what amounts to a 1040 EZ, TurboTax charges nothing for Federal preparation and E-filing, but State costs $25.95.

If around sixty dollars is more than you want to spend, our second-ranked tax site, TaxAct, is a mere $16.95 for comprehensive Federal, State, and E-filing of your returns. TaxAct’s help system is nearly as comprehensive as TurboTax’s, but their interface doesn’t have all the bells and whistles. Still, at $16.95, it’s quite the bargain. TaxAct also offers free Federal return preparation (1040, 1040A, and 1040EZ) and E-filing, but State returns cost $13.95.

Using an online tax site to prepare and file your tax returns is neither as hard, nor as expensive as it seems. For both the average taxpayer and the homeowner with investments, online tax software has your bases covered, without exorbitant fees. For more detailed reviews and rankings of online tax software, visit tax-software-review.toptenreviews.com.

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