The tax man cometh - 12 tax-preparation software packages - Software Review - includes summary - Evaluation

Home Office Computing, March, 1994 by Stephen L. Nelson

IF YOU STILL HAVEN'T FILED YOUR INCOME TAX return--and Internal Revenue Service statistics suggest many of you haven't-don't worry. We're here to help. No, we won't prepare your return for you, but in a way, we'll do something even better. For this review, we're looked at the best tax-preparation software packages available and run them through their paces--using a fictional return.

Meet the Tax Family Robinson To test each of the programs, the editors Of HOME OFFICE COMPUTING created a fictitious family combining the tax characteristics common to many of our readers: The Tax Family Robinson. The Robinsons are a married couple with two children (both under age 18), own their home, live in a state with its own income tax, and are filing a joint return.

Jane Robinson is a school teacher and earns $35,000 annually (gross).

John Robinson runs a computer consulting business called Square One Computing out of his home. Last year he enjoyed his fifth year of business success as detailed in the cash flow statement to the left.

In addition to their earned income, the Robinsons have a substantial investment income, including $1,500 in interest, $5,000 in dividends, and this last year, a $10,000 capital gain. They also pay $5,000 annually for health insurance.

The Robinsons also paid $4,000 in state income taxes, $2,500 in real estate taxes on their home, $7,200 in mortgage interest, $2,000 in cash charitable contributions, and $1,000 in noneash charitable contributions. Except for the home-office deduction, the Robinsons' income tax situation is pretty ordinary.

About Our Tests We used our data from the Tax Family Robinson to prepare a federal income tax return with each of the 12 tax packages we evaluated. Note that all of the programs we looked at were not final versions but, rather, "head start" editions that allow you to get a jump on return preparation before the finals ship (these include the IRS's forms for the new tax year). As a result, we were unable to complete our fictional return, although extensive experience with previous versions of these packages told us that they all come up with essentially the same numbers (differing only by a dollar or two).

Tax-prep software offers three methods of collecting the information that goes into the forms and schedules:the interview, where the program asks you a series of simple questions; a tax records approach, where you go through your tax receipts and enter all the pertinent information; and a direct approach, where you fill in the IRS forms onsereen. We used the interview approach whenever it was available because it's easiest for people who aren't CPAs or other tax professionals.

FOR WINDOWS

And rew Tobias' TaxCut 1993 for Windows Rating. * * * 1/2

TaxCut for Windows closely resembles its sister versions for DOS and the Macintosh. This year's program provided a sturdy interview called Navigator. Like other interviews, it asks you questions and then fills in tax forms and schedules based on your answers. We found the Navigator very good. In fact, it was clearly the second- best interview we looked at--next to TurboTax. (We would have liked the Navigator a bit more if it hadn't jumped around the forms and schedules so much.)

Two interesting program options worth mentioning are the availability of both a special multimedia version of TaxCut for Windows on CD-ROM ($90) and Kiplinger TaxCut (from Kiplinger Washington Editors, publishers of financial advice periodicals such as the Kiplinger Washington Letter), which combines MECA's TaxCut software with the tax advice and expertise that has made Kiplinger famous. Kiplinger TaxCut, available in DOS, Windows, and Macintosh versions, is not sold in stores. To order your own copy of the $40 program, call Kiplinger at (800) 235-4060.

CA-Simply Tax Rating: * * *

CA-Simply Tax is an intriguing product. It turned in a respectable return preparation time, provided a reasonable interview, and did a darn good job of moving data among the forms and schedules. However, we had some problems because of the way the program stops the interview to tell you to fill in a form. John Robinson, for example, took a $10,000 Section 179 depreciation charge for computer equipment he purchased. When we told Simply Tax about the equipment charge, it stopped the interview and told us to fill in Form 4562. This was OK--except that we couldn't figure out how to enter this figure without going to the documentation.

CA-Simply Tax isn't as good a product as TaxCut or TurboTax. But it's still worth looking into for one simple reason: It's practically free (CA charges you for shipping and handling--around $10).

Personal Tax Edge for Windows Rating: * * *

Personal Tax Edge for Windows was one of the fastest Windows- based programs we evaluated. Like its DOS counterpart, it provided three options for collecting the Robinsons' tax data: an interview, a tax organizer, and the basic onscreen forms approach. And like the DOS version, we felt it relied a bit too much on tax accounting jargon.