And the winner is...? No, not Crash. At least, not in this contest. While the movie may have been an Academy Award surprise, it's not even in the running here. Here, we're talking about tax-preparation programs. But we're not going to cast the winning vote. You are. We'll tell you what's new and flashy -- kind of like Jessica Alba's shimmering, bronze Versace gown -- but it's up to you to make the final call. So please
let us know who you think are the winners and losers. We'll share your thoughts in a future column. IRS site for a full list.) Each company has set its own criteria for who qualifies, but overall, people with adjusted gross incomes (AGI) of $50,000 or less should be eligible for a freebie. The IRS created a questionnaire to help you find a free site that fits your profile, so check it out. Big note: To take advantage of the free filing, you must go through the IRS Web site. You can click to your favorite tax-prep site from there, but you have to start with the IRS to get the giveaway.
E-File RewardsBack in 1998, Congress declared that it wanted 80% of taxpayers to be electronically filing their returns by 2007. Well, just like Good Night, and Good Luck's shot at the Best Picture Oscar, that goal is so close, and yet so far. "Last year, we were over 50% for the first time, with 68 million tax returns filed electronically," says Nancy Mathis, a spokeswoman for the IRS. This year, they're looking to hit 55%. It's progress, but it's a long way from 80%. But the IRS' Free File program should continue to help. The program was created in 2002 to help people with low incomes prepare and e-file their returns. Three years later, 20 tax-preparation companies are now on board, offering their products to lower-income taxpayers and allowing them to prepare and e-file their federal returns for free. (Check out the
Red Carpet CompetitionIf your AGI throws you out of freebie land, you'll need to buy a product. But whether you buy the software or just prepare your return online, the general suggestion is the same: You're going to be spending a lot of time with this product, so you'd better feel very comfortable with it. Go on to the Web sites and tool around with these products. Many let you play before you have to pay, so take advantage of it. If you need hand-holding, make sure the product has an extensive interview process that walks you through every inch of your tax return. If you don't need much help, look for a product that allows you to drop your numbers on the forms without wasting your time with unnecessary questions. While there are more than 20 tax-preparation companies out there, the same few names seem to be popular each year. Intuit's ( INTU) TurboTax, H&R Block's ( HRB) TaxCut, CCH's CompleteTax and 2nd Story Software's TaxACT continually hold their own. So we'll highlight some of the changes and perks in those products for this tax season.
In addition, if you feel the need to have a pro review your painstaking data entry, pay an additional $29.95 and you can have a Block pro review it before you send it to the IRS (this is only available to software users). The pro will make suggestions, and no matter how much he finds, there are no additional charges, says Derek Swords, director of TaxCut software. Just make the suggested changes and file your return. And finally, if you're looking to push the blame onto someone else, spend $80 for the online-only Signature product and a tax pro will sign your return for you. If something goes wrong, it's his issue. In addition, that $80 buys you access to a tax pro all year long. Call him and ask as many questions as you want during the year.
CompleteTax: CCH, the company that provides tax and business law information to tax pros, created a great product back in 2000 that's very user-friendly. But if you're a trader or someone with extensive investment accounts, CompleteTax offers you an additional perk. GainsKeeper users can import all their data directly into CompleteTax. GainsKeeper is a Web-based program that helps you keep track of the cost basis of all your buys and sells. It also makes adjustments for M&A activity and provides capital gains calculations. Come tax time, you can import your info from GainsKeeper into CompleteTax and your Schedule D is completed. That's just about as beautiful as Nicole Kidman strolling down the red carpet in that stunning ivory sheath. TaxACT: The claim to fame of 2nd Story Software's Web-based TaxACT is its pricing -- it remains the low-price leader. TaxACT's Ultimate Web package will cost you $16 for your federal and state returns and includes e-files for both. Remember, these are only a few highlights of the tax-prep world. So if you find a product that's Academy-worthy, be sure to let us know.