Ethereal 1040 – tax return preparation – Brief Article – Statistical Data Included
Mary Beth Franklin
TAXES | You have more ways than ever to prepare YOUR RETURN.
WHILE YOU don’t have a choice about whether to file your income taxes, this year you have more choices than ever about how to file your forms. An explosion of tax-filing Web sites promise to make quick work of your return–usually for less than $25 and in some cases free. If you’re expecting money back from the IRS, electronic filing will speed up your tax refund.
Most sites offer a try-before-you-buy feature, requiring payment only when you’re ready to print your return or file it electronically. So you may want to take a Web site out for a spin to see if this is the year you decide to pocket the tax-preparation fee you usually pay your accountant, or swap your software-in-a-box for an Internet address.
Online filing isn’t for everyone. If you are concerned about trusting your personal financial information to cyberspace or you prefer more extensive guidance than most Web sites offer, you’ll probably be happier with one of the leading tax-software products: Kiplinger TaxCut (H&R Block, $19.95, which includes tax advice from editors of this magazine) and TurboTax (Intuit, $39.95 before $10 rebate). Both programs offer a rebate that refunds the cost of electronically filing one federal return and preparing one state return. Not all states accept electronic filing.
The advantages of going online. With online filing, there’s no software to buy or download. You can start your return on one computer (say, during your lunch hour) and finish it at home. Your information is saved as you go along so you can access your password-protected in-progress return from wherever you log on. The IRS’s Web site (www.irs.gov) includes a list of authorized e-file providers.
Jeff Tincher, 45, of Springfield, Ohio, is a believer who says he’ll never go back to filing his taxes the old-fashioned way. He breezed through his 1040 form last year in less than an hour on the H.D. Vest Financial Services Web site (www.myhdvest.com). As with tax software in a box, the Web program uses an interview format to gather needed information about income, deductions, credits and so on. Tincher particularly liked the price: $0. H.D. Vest’s online preparation is free for both your federal and state tax returns if you agree to let the company send you promos about its other financial services based on information gleaned from your return.
“They didn’t inundate me with information,” says Tincher, who received his 1999 refund in less than two weeks. He says the site was easy to navigate and the program’s interview questions prompted him to claim a tax credit for his wife that he might have overlooked if he was preparing his return on his own.
Tincher used the H.D. Vest service to file his 2000 return, but he says the redesigned Web site is packed with banner ads he tried hard to ignore.
Battle of the Titans. If you prefer a big-name provider, TurboTax (www .quicken.com/taxes) and H&R Block (www.hrblock.com) offer online filing. The services are not free, but they have attractive new features this year.
For example, Web TurboTax users can now download W-2 salary and withholding information from participating payroll providers right into their tax returns. Customers of several financial firms, including Fidelity and Salomon Smith Barney, can also download 1099 information about stock and mutual fund dividends and sales transactions.
TurboTax charges $14.95 to prepare and electronically file a federal tax return before April 1 ($19.95 after that), and $9.95 for a state return. For taxpayers with incomes of $25,000 or less, the service is free. Fidelity, Salomon Smith Barney and Vanguard investors can qualify for free or discounted online preparation.
After a tax-filing season plagued by technical problems last year, Block rebuilt its Web site from the ground up and added several new features this year to attract taxpayers who want a little–or a lot–of help with their income-tax returns.
Block charges $19.95 for online preparation and filing of your federal and state tax returns. For an extra $30, you can ask for a professional tax preparer to review and sign your return, or for $20, you can ask a tax adviser a specific question over the phone or by e-mail.
If you have to file multiple tax returns–say, because you live in one state and work in another or own property in more than one state–check out Tax-Engine.com (www.taxengine.com). You can use the company’s online software for as many state returns as you need, including nonresident state returns, as well as for your federal return–all for $19.95. You can file your federal tax return electronically, but you must print and mail your state returns.
Just-in-time tax help. Visit our Tax Center for daily tips. We’ll answer your questions the week of March 6.
If you plan to use an online tax preparation service, get cracking. Forrester Research predicts that six million returns will be prepared online this year-three times more than in 2000–meaning Internet servers could get overloaded and you could be stuck trying to meet the April 16 tax-filing deadline.
–Reporter: JOSEPHINE ROSSI
COPYRIGHT 2001 The Kiplinger Washington Editors, Inc.
COPYRIGHT 2001 Gale Group