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The Best Online Tax Services

BOSTON ( TheStreet) -- Online tax preparation and off-the-shelf software packages are now solidly mainstream. The Internal Revenue Service estimates that as many as 95 million people will e-file this year.

Taxpayers with adjusted gross incomes up to $57,000 can use the IRS's Free File, a service the agency developed with a coalition of tax preparation companies.

Even though more than 70% of taxpayers can use the free program, those with higher incomes or more complex returns will need to pay for an upgraded service. With these customers in mind, we put four popular tax sites through their paces.


TurboTax was last year's best selling tax software and its parent company, Intuit (INTU - Get Report), says its customers received more than $33 billion in federal refunds last year. Online and desktop versions range from $14.95 to $99, depending on their features.

TurboTax is robust and easy to use. For a basic return, you will probably fly through the entire process in about 15 minutes. The more complex your tax situation, the more confusing the program can get and the more important its advice features become. Built-in guidance for more than 350 possible deductions and credits is included, along with an "Audit Risk Meter" that identifies common triggers -- like a home office and rental property -- and recommends ways to minimize your risk.


TaxACT was created by 2nd Story Software, a company formed by the one-time team behind TurboTax. This service is the least expensive of the sites we tried. The federal edition is free and the most expensive variation, the Ultimate Bundle, is only $17.95. All products include unlimited e-mail and Web support and video tutorials.

As an added feature, TaxAct can use your return information to prepare a college financial aid worksheet, a bonus for parents. Interview questions link to tips and extra information from J.K. Lasser's Your Income Tax, among other resources.

Using TaxACT is a bit like ordering dim sum. Even though there are many categories you can click, expand and fill out, these features are on demand. You can select only the menu items you need and the program does a good job of steering you.
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