Ease the pain! Tax-preparation software can be a lifesaver for your business - includes a related article evaluating eight tax-preparation packages

Home Office Computing, Feb, 1992 by Margie L. Haddon

The same is true if you prepare your own return. Go ahead and enter all the information you have and enter estimates for incomplete items--all of the programs I reviewed will let you mark a figure as an estimate. You'll get an idea of what your bottom line will look like. This gives you time to decide whether you'd like to invest in an IRA, to look for those lost receipts that you didn't think would add up to much, and to scrape up enough cash to pay your tax bill (you were expected a refund, weren't you?). Then, as you receive or locate the rest of your information, you can simply replace the estimates with the actual figures.

Q: Can tax-prep software help me with tax planning for next year?

A: Nearly all of the programs include what-if tax planning. For example, when you select What-If from an EasyTax menu, you can compare four side-by-side scenarios. Your current-year data is in the first column, and the other three columns can show various situations, such as the effect of taking an IRA deduction, filing separately, and so forth.

Another way to use tax-prep software for tax planning is to purchase the 1992 version of the program as soon as it comes out next October or November. This lets you do a lot of your calculations ahead of time and test different tax strategies. However, if you do purchase one of these early-bird or headstart versions, be sure to mail in your registration card so the publisher can send you the final edition when it is released. Some of the features, such as electronic filing, are not included in the early edition. The IRS forms and instructions are also not finalized in the early edition, so you won't be able to file the forms you prepare until you obtain the final version (usually released by early February).

Q: I use financial software. Do I have to type in the information all over again, or can I import it into the tax-prep package?

A: Nearly all of the programs will import financial data, such as Schedule C deductions, from such popular programs as Lotus 1-2-3, Quicken, Managing Your Money, and others (see chart for more info). Some tax-prep programs accomplish this more easily than others. For instance, I was somewhat intimidated by Personal Tax Edge's 24 pages of instructions for importing from MoneyCounts. J.K. Lasser, on the other hand, offers a simple process for importing from Quicken: When you set up the categories for your tax-related accounts in Quicken, you use category codes recognized by J.K. Lasser. At year's end, you use Quicken to produce a Tax Summary Report, which you then draw into J.K. Lasser.

However, I don't consider data import to be a make-or-break feature for any of the programs. In many cases, it's quicker and easier to input your data directly into the tax-prep program rather than trying to master the import function.

Q: Will I have to buy a new copy each year to stay abreast of tax changes?

A: Since the tax laws, forms, and tax tables change each year, the publishers must put together a new product each year. You can purchase an upgrade for about half the cost of the original package. If you've registered your software, you'll get a notice late in the year offering to send you the upgrade. If you don't receive the notice, you can still order an upgrade through the publisher.