Tax Preparation Software: Types and Examples
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(Previously: Tax Preparation Software: The Basics)
When you go searching for tax preparation software, there are two places where you should go: your friendly computer store and the World Wide Web. Many tax programs are in CD-ROM format that can be bought from computer shops. These software are desktop applications that you need to install on your operating system (most commonly Windows). These desktop or PC-based programs can also be downloaded from the Internet.
On the other hand, several tax programs are Web-based. They basically carry out the same tasks as the PC-based ones, but only online. One advantage that Web-based software provide is their cheaper cost. However, this usually comes at the price of less power – PC-based tax programs offer a complete version of tax help, something that Web-based software usually lack. Keep in mind that some tax preparation software allow you to electronically file ("e-file") your tax return.
Tax preparation software come in three different varieties – basic/standard, deluxe, and premium. Of course, software companies might play around with these names, but basically these three types sum up the whole picture. Usually, basic tax programs are good only for simple tax returns and error checking, with bare documentation. Deluxe is a notch up the scale, and thus provides greater documentation and help with tax deductions, along with other stuff. Premium tax programs take the cake – these are the best ones around, able to help with small businesses' taxes as well as the personal. Premium software offer the most extensive documentation and tax-related resources.
Of all the tax preparation software in the market, TurboTax is arguably the most popular. TurboTax comes in both Web-based and PC-based versions. You can choose between three editions: essential, basic, and premier. TurboTax' strength lies in its ability to handle complex, unique, and advanced tax situations/returns. It's also extremely valuable to self-employed people and those with real estate interests. On top of these, the program sports a good user interface for easy navigation.
TaxACT, on the other hand, is great for people preparing simple tax returns. TaxACT comes in both Web-based and PC-based versions, too. The most expensive TaxACT suite includes all state and federal tax return forms. By the way, even this "highest" edition comes at a reasonable price, making TaxACT a good choice for many taxpayers.
Like TaxACT, TaxCut is a great tool for preparing simple tax returns. What's great about it is that it automatically retrieves information from your installation of Microsoft Money, a program for personal finance record keeping. TaxCut also offers a one-of-a-kind free audit defense support from the software company, in case you'll need to defend your tax return against an IRS audit.
Other tax preparation software include CCH CompleteTax (fast, simple, and easy-to-use) and Tax Slayer (free Web-based program with tax forms for federal and state tax returns).
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