Tax preparers that shine
ST. LOUIS — If you dread filling out tax forms, maybe this is the year to do something about it.
Tax software's popularity is booming. It has become more useful than ever. Electronic filing is easier and cheaper.
So, if you're comfortable using a computer, lay down that pencil and pick up a computer mouse.
Most filers who do say they'll never go back to paper 1040s.
"I'd be absolutely dead in the water without tax software," says Bob Borgmeyer, a consultant in Tucson, Ariz., who also has a South Dakota cattle ranch on the side.
"I have a really complicated return," says Katie Gable, a pro bowler and computer consultant in Quinton, Ala. So this time of year, when she's not knocking down bowling pins (with a 204-per-game average), she's knocking out tax returns for herself, her family, and friends.
"The biggest advantage is being able to handle everything from home - not having to get everything together and take it to my accountant," she says.
Last year, 1 in 7 Americans used a computer to prepare personal tax return. This year, tax software companies estimate their business will grow by a third. And for the first time, taxpayers can fill out a full return, even a challenging one, over the Internet. And if they meet certain criteria, they can do it for free.
"We've really streamlined and customized" the software, says Elizabeth Dougherty, product manager for Web TurboTax, the online version of the industry-leading tax program. The software guides users through an interview. "Having these questions is similar to having an accountant ask you questions."
Human touch recommended
That doesn't mean everybody should start keyboarding their 1040 or fire their accountant. Even software executives don't advocate that.
"If you're going to a tax preparer now, keep going," says Gene Goldenberg, vice president and publisher at Block Financial Corporation, which sells Kiplinger TaxCut, the nation's No. 2 tax software. "We're not competing with them."
A tax preparer can be especially useful if your return is complicated - or if you'd just rather pay someone else to fill in those little boxes.
No matter how advanced it is, a general computer program just doesn't stack up against a live professional looking over the specifics of your return.
"The tax software that's out there, although pretty good, is not at the level of sophistication that you're going to see in the typical CPA firm," says James Jenkins, president of his own CPA firm in Southfield, Mich. "Even for low-income people, there are a lot of things that are now coming into play that make their returns relatively complex."
Nationally, half of taxpayers use a paid preparer - a statistic that hasn't changed much over the years. Many people who use tax software are do-it-your-selfers.
Take an Internet test drive
Four major companies are offering tax programs for the individual this year. And if you're not sure you want to buy the software packages - which costs anywhere from $10 to $50 - you can try them out first on the Internet. If you like how they work, then you can either buy them or, for a few dollars less, use them directly over the Internet (see story, page 21).
Even if you don't want to use the computer to prepare or file your taxes, you might want to fire it up to pull down forms and other valuable information over the Internet (see item on Internet sites, page 21).
However you decide to file this year, remember to organize your receipts and start early. That way, if anything goes wrong and you need the help of a professional, you won't be making a mad scramble at the last minute - and paying top dollar for someone's help.
In February, "you're getting a fresh CPA rather than a tired one," Mr. Jenkins says. "If you wander into any CPA office on April 7, you're not going to get any break on the cost."